California businessman appealing trade secret theft conviction

Los Angeles employers don’t assess job candidates simply for qualifications, talent and a good fit with the internal business culture. Companies are more concerned than ever about internal information security. A rogue player on the payroll can pilfer a trade secret that rattles or collapses the foundation of a business.

A federal judge recently sentenced a business owner for stealing confidential information from his ex-employer. The defendant once worked for the San Francisco-area executive recruitment firm Korn/Ferry International and later opened a business of his own.

Prosecutors said that after the former regional director resigned in 2004, the defendant persuaded three Korn/Ferry workers to download protected inside information. Stolen customer lists and other trade secrets allegedly were used to help the ex-employee’s personal business succeed.

The defendant was found guilty last April of downloading Korn/Ferry trade secrets and computer fraud. The business owner recently told the sentencing judge he never urged his former colleagues to provide him with the confidential information.

The defense noted that the man’s finances and reputation already had been damaged by the court case. The private business apparently lost millions of dollars and valuable employees, when the company owner was convicted of intellectual property theft.

The judge took the defendant’s hardships into account when he sentenced the man to a year-long federal prison term, below recommended guidelines. Prosecutors had pushed for a term of over two years.

In addition, the former Korn/Ferry manager will serve hundreds of hours of community service and pay a $60,000 fine, plus yet-to-be-determined restitution to his old employer. An appeal is planned.

Intellectual property attorneys can provide businesses with trade secret defense strategies like limiting employee computer access to prevent security breaches. Worker non-disclosure agreements also add protection by curbing what employees can say and do about the internal workings of a company. Lawyers also know where and how to look for evidence of intellectual property theft.

Source: San Francisco Chronicle, “Ex-manager sentenced in trade-secrets theft” Bob Egelko, Jan. 09, 2014