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A North Logan man is charged in U.S. District Court with emailing trade secrets from a Utah drug company to his brother-in-law in India, who worked for a competing company.
The charge against 42-year-old Prabhu Mohapatra marks the first time an industrial espionage filing has been made against a defendant in Utah, the FBI announced Tuesday.
And the problem of spies snagging secret material from Utah businesses may be more extensive than what authorities have uncovered so far.
"Have we seen it? Not solidly, but we wouldn't be surprised if it's happening. It is definitely under-reported," said FBI Special Agent Mike Koss, referring to trade secret theft in Utah. "In tough economic times, it's a lot cheaper for a company to have someone else do their R&D [research and development]."
Koss as well as Special Agent Karl Schmae, used the case against Mohapatra — a senior scientist at Logan's Frontier Scientific Inc. — to highlight their concerns about what may be a growing problem. They say the allegations should serve as a warning to businesses that people who may seem like trusted employees could be out to harm the company.
"The FBI does think this is a broader issue, both in Utah and nationally. What we're seeing is that there are a number of cases where U.S. companies have had their trade secrets stolen," Schmae said. "A lot of U.S. companies, they've got more value in their intellectual property than they do in [other assets]. Employees need to be educated that trade secrets need to be protected."
Schmae and other FBI agents routinely visit Utah companies to educate employees about vulnerabilities when it comes to trade secret theft. Many organizations aren't aware of how at-risk they are — envisioning the crime as a James Bond-esque scenario where a thief parachutes into a window and steals company secrets.
The schemes are usually more mundane than a Hollywood plot, Schmae said. Companies may catch an employee keeping unusual hours or downloading information not pertinent to their specific job duties, Schmae said.
In the case of Mohapatra — who worked at Frontier Scientific Inc. from Oct. 2009 to Nov. 1 — a co-worker noticed suspicious behavior and reported Mohapatra to management.
The co-worker watched him create Microsoft word documents that contained the recipe for processing a chemical called "2,2'-Dipyrromethane," according to the complaint. The co-worker also saw Mohapatra convert the file into a PDF, which was sent from his personal email account.
Additional red flags were raised when the co-worker observed Mohapatra using his work computer to create a logo for a company called Medchemblox, as well as when Mohapatra brought a personal laptop to work each day.
Alerted by the co-worker, IT managers placed software on Mohapatra's computer to monitor his computer activity at work. They discovered Mohapatra had sent emails containing the drug recipe to India.
Company officials placed Mohapatra on administrative leave on Oct. 26. He agreed to meet with company officials and provided a handwritten note, which stated, "I admit my mistake and I am truly sorry," according to the complaint.
Mohapatra signed a nondisclosure agreement agreeing that he wouldn't disclose company information — a step that the FBI recommends companies take to protect themselves from trade secret theft. But signing the nondisclosure agreement didn't stop Mohapatra from sending information to his brother-in-law.
Mohapatra now faces one count of felony theft of trade secrets, according to a complaint unsealed late Monday. Mohapatra sent the emails to his brother-in-law for the "apparent purpose that the recipe be used by a chemical company for the benefit of that [overseas] company and its owners and employees, and to the economic detriment of [Frontier Scientific Inc.]," the complaint states.
Mohapatra made an initial appearance before U.S. Magistrate David Nuffer on Nov.14. He is awaiting further court proceedings out of custody and will next appear in court on Dec. 8 before U.S. Magistrate Brooke C. Wells.
The FBI and prosecutors have been more vigilant about cracking down on trade secret theft after Congress signed the Economic Espionage Act of 1996, which was an effort to recognize the millions of dollars companies have lost.
"Companies have spent lots of time and lots of money to develop their trade secrets. Be aware that [trade secret theft] happens," Schmae said. "Companies have a responsibility to take some reasonable measures to protect their secrets."
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