Forensic Update

Reflections on information management within the legal and regulatory arena

Trade Secrets and Departing Employees…A Cautionary Tale

Posted by Johnny Lee on February 14, 2011

Employers would be wise to review the fact pattern from a Columbus manufacturing company which was involved in a federal investigation related to the theft of trade secrets from a departing employee.  The former employee, Kevin Crow, admitted to stealing highly confidential information from Turbine Engines Components Technologies Corporation (“TECT”) in violation of the Economic Espionage Act.

Crow’s plea deal with the government resulted in a three-year jail sentence, another three years of “supervised release,” and a $10,000 fine.  The deal details Crow’s misbehavior from 1979 until 2007 (when he was laid off), at which time Crow joined a competitor.

Crow admits to walking out the door with close to one hundred (100!) compact discs containing top secret informationincluding blueprints as well as cost and pricing information.  Both TECT and Crow’s newest employer are in the business of “manufacturing and selling engine blades for military aircrafts.”

According to a press release from the United State Attorney’s Office in the Middle District of Georgia, “As an employee of TECT, Crow continually provided policy statements with explicit direction on identifying trade secrets within the company and how to protect those trade secrets. During Crow’s exit interview he signed a document stating that he had returned all documents containing any trade secret information to TECT, when in fact, he had taken approximately 100 computer discs containing multiple pieces of information considered trade secrets from TECT.

Crow was later employed by Precision Components International (PCI) in Columbus, Georgia, a competitor of TECT…After being employed with PCI, Crow made numerous contacts with employees of TECT requesting forging price sheets containing vendor and customer information. He also requested copies of TECT’s 2007 and 2008 contract reviews that contained trade secret information.  Crow admitted in a conversation with a TECT employee that he took computer discs, blueprints, and cost and pricing information belonging to TECT, and admitted that providing the information could be considered industrial espionage.”

United States Attorney Michael Moore said, “This type of industrial espionage is a serious matter, especially when it involves the production of parts for our military aircraft.  The damages alone to TECT and its employees might be calculated in dollars, but the potential harm to our military equipment readiness is still unknown.”  The parties involved in the plea agreement stipulated that TECT suffered losses of up to $14 million.

So, how can companies protect themselves from employees as unscrupulous as Crow?  The above fact pattern makes it clear that this is no easy proposition, but a robust data governance program seems like the most reasonable first step.  When considering the nature and sensitivity of the information used and protected by TECT (and similar firms), it strikes this editor as quite odd that more advanced data leakage and information security protocols were not employed at TECT.

The FBI employs highly competent investigators, and I have little doubt that Crow might have evaded detection for quite some time but for this fact.  Likewise, Crow might not have been caught if he were less overt in his attempts to obtain sensitive information (not to mention his rather myopic and incriminating admissions to former co-workers).  The take-away here is that the technology exists to send up flares long before a problem surfaces, as it did here, “procedurally” (as opposed to tripping a wire via one or more monitoring controls).  But for Crow’s brazen missteps, this theft of information might have gone undetected for a long, long time.

 

 

See also: Microsoft accuses former manager of stealing 600MB of confidential docs

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