Economic Espionage

How to Protect Your Clients' Trade Secrets

By Robert Tie

Fraud examiners who work for global corporations need to protect their employers by being savvy with the latest "under/over-invoicing" schemes used by money launderers and terrorist fundraisers. If they don't, the courts might find their businesses criminally liable.

A business risk need not be extraordinary to be potentially devastating. Some of the greatest hazards arise from sources both familiar and apparently harmless. Case in point: A seemingly honest employee's 1997 theft of top-secret design plans for The Gillette Company's then revolutionary Mach 3 triple-blade razor. Gillette had spent $750 million developing it. If the company didn't get the anticipated return on this massive investment, it wouldn't have survived.

But Steven L. Davis, a process controls engineer for Wright Industries Inc., a subcontractor for Boston-based Gillette, would've been happy to see the razor maker go under. Angry at both Wright and Gillette about being demoted to a lower role in the project, Davis resolved to get even by illegally disclosing extensive Mach 3 trade secrets to Gillette's primary competitors - American Safety Razor Co.; Bic; and Warner-Lambert Co., owner of Schick-Wilkinson Sword - and, thereby, violating provisions of the Economic Espionage Act of 1996. Davis didn't seek money; he just wanted to ruin Gillette's future because he felt it had ruined his.

"Unfortunately for him," said Rick Deslauriers, deputy assistant director of the FBI's Counterintelligence Division in Washington, D.C., "Schick immediately reported it to Gillette, which called the local FBI office." A few months later, Deslauriers - then based in Boston - became supervisor of the squad assigned to the case. "We were able to identify the culprit," he said. "But obviously it was key that Schick did the right thing. That doesn't always happen."

What did happen is that Davis was caught, convicted, and sentenced to 27 months in prison. He received a relatively light sentence (he could have gotten 10 years on each of five charges) in part because his motive wasn't mercenary and none of Gillette's trade secrets was actually lost to its competitors. 

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