Electrical Engineer Found Guilty For Intending To Convert Trade Secrets From Defense Contractor

The U.S. Justice Department released the below information:

A federal jury in Hartford, Connecticut yesterday returned guilty verdicts against a man for his conduct related to a scheme to convert trade secrets belonging to a defense contractor based in Groton, Connecticut, related to, among others, an innovative naval prototype being developed for the U.S. Navy, Office of Naval Research, announced Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and U.S. Attorney John H. Durham of the District of Connecticut.

According to evidence admitted at trial, Jared Dylan Sparks, 35, of Ardmore, Oklahoma, an electrical engineer, worked at LBI Inc., a defense contractor that has designed and built unmanned underwater vehicles for the U.S. Navy’s Office of Naval Research and deployable ice buoys used to gather weather data for the National Oceanic and Atmospheric Administration (NOAA).  

During the course of his employment with LBI, Sparks collaborated with Charles River Analytics (CRA), a Massachusetts-based software company that developed software to be integrated into LBI’s unmanned underwater vehicles.  

In late 2011, CRA sought to expand into the hardware business and eventually agreed with the Office of Naval Research that it would complete the testing for a number of the unmanned vehicles designed and developed by LBI.  Sometime after April 2011, Sparks began exploring employment with CRA, and was eventually hired by that company in January 2012.  Before he left LBI, however, Sparks surreptitiously uploaded thousands of LBI files to his personal account with Dropbox, a cloud-based file-storage application.  Those files included LBI’s accounting and engineering files as well as photographs related to designs and renderings used to fabricate and manufacture LBI’s unmanned underwater vehicles and buoys.

On Nov. 3, 2016, a grand jury returned a 29-count indictment charging Sparks and Jay Williams of Griswold, Connecticut, with various offenses stemming from this alleged scheme.

The jury found Sparks guilty of six counts of theft of trade secrets, six counts of upload of trade secrets, and one count of transmission of trade secrets.  Each of these offenses carry a maximum term of imprisonment of 10 years. The jury found Sparks not guilty of multiple counts of the indictment, and Williams not guilty of all the counts in which he was charged. Sparks’ sentencing has not yet been scheduled.

“Jared Sparks stole thousands of documents—including proprietary designs and renderings—from his former employer when he left to work for a competitor,” said Acting Assistant Attorney General John P. Cronan.  “Yesterday’s verdict sends a clear message that the Department of Justice is committed to protecting American intellectual property and will aggressively prosecute those who steal it.”

“In order to protect both our country’s national security and the intellectual property of Connecticut’s defense contractors, our office is committed to prosecuting those who steal trade secrets and hope to profit from the theft,” said U.S. Attorney Durham.

“Theft of trade secrets from a Defense contractor harms the U.S. taxpayer and threatens the integrity of the Defense Department's procurement system,” said Special Agent-in-Charge Leigh-Alistair Barzey, Defense Criminal Investigative Service (DCIS) Northeast Field Office.  “DCIS is committed to working with the DOJ, FBI and other law enforcement partners, to investigate and prosecute those individuals who seek to profit at the expense of our national security.”

"Intellectual property theft cost U.S. businesses billions in revenue annually and robs the nation of jobs and taxes," said FBI Acting Special Agent in Charge Robert Fuller. "Preventing intellectual property theft is a priority of the FBI's criminal investigative program. The key to this successful prosecution was due to linking considerable resources and collaboration of the private sector, federal law enforcement partners, the U.S. Attorney's office and the Criminal Division's Computer Crime and Intellectual Property Section."

This matter was investigated by DCIS and the FBI with assistance from the Department of Defense’s Computer Forensic Laboratory.  The case was prosecuted by Assistant U.S. Attorney Jacabed Rodriguez-Coss of the District of Connecticut and Trial Attorneys Kebharu Smith and Joss Nichols of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS), with assistance from the CCIPS Cybercrime Lab. 

FBI: National Cyber Security Awareness Month - Cyber Security is Everyone's Responsibility

The FBI released the below information:

Data breaches resulting in the compromise of personally identifiable information of thousands of Americans. Intrusions into financial, corporate, and government networks. Complex financial schemes committed by sophisticated cyber criminals against businesses and the public in general.

These are just a few examples of crimes perpetrated online over the past year or so, and part of the reason why Director James Comey, testifying before Congress last week, said that “the pervasiveness of the cyber threat is such that the FBI and other intelligence, military, homeland security, and law enforcement agencies across the government view cyber security and cyber attacks as a top priority.” The FBI, according to Comey, targets the most dangerous malicious cyber activity—high-level intrusions by state-sponsored hackers and global cyber syndicates, and the most prolific botnets. And in doing so, we work collaboratively with our domestic and international partners and the private sector.

But it’s important for individuals, businesses, and others to be involved in their own cyber security. And National Cyber Security Awareness Month—a Department of Homeland Security-administered campaign held every October—is perhaps the most appropriate time to reflect on the universe of cyber threats and on doing your part to secure your own devices, networks, and data.

What are some of the more prolific cyber threats we’re currently facing?

Ransomware is type of malware that infects computers and restricts users’ access to their files or threatens the permanent destruction of their information unless a ransom is paid. In addition to individual users, ransomware has infected entities such as schools, hospitals, and police departments. The actors behind these sophisticated schemes advise the users that if they pay the ransom, they will receive the private key needed to decrypt the files. Most recently, these cyber criminals—demonstrating some business savvy—give victims the option of decrypting one file for free to prove that they have the ability to restore the locked files. More on ransomware.

Business e-mail compromise, or BEC, scams continue to impact many businesses across the U.S. and abroad. BEC is a type of payment fraud that involves the compromise of legitimate business e-mail accounts—often belonging to either the chief executive officer or the chief financial officer—for the purpose of conducting unauthorized wire transfers. After compromising a company’s e-mail account—usually through social engineering or malware—the criminals are then able to send wire transfer instructions using the victim’s e-mail or a spoofed e-mail account. BEC scams have been reported in all 50 states and in 100 countries and have caused estimated losses of more than $3 billion worldwide. More on BEC scams.

Intellectual property theft involves robbing individuals or companies of their ideas, inventions, and creative expressions—often stolen when computers and networks are accessed by unscrupulous competitors, hackers, and other criminals. Intellectual property can include everything from trade secrets and proprietary products and parts to movies, music, and software. And the enforcement of laws protecting intellectual property rights (IPR)—which are critical to protecting the U.S. economy, our national security, and the health and safety of the American public—is an FBI criminal priority. The Bureau’s IPR focus is the theft of trade secrets and infringements on products that can impact consumers’ health and safety, including counterfeit aircraft, automotive, and electronic parts. More on intellectual property theft.

“The FBI is doing everything we possibly can, at every level, to make it harder for cyber criminals to operate,” says Associate Executive Assistant Director David Johnson, “and I believe many of them are now starting to think twice before they put fingers to keyboard. But we also ask that the public do its part by taking precautions and implementing safeguards to protect their own data.”

Check back on our website during the month of October for information on protecting your data and devices and on FBI efforts to combat the most egregious cyber criminals.

Justice Department Announces New Strategy To Combat Intellectual Property Crimes And $3.2 Million In Grant Funding To State And Local Law Enforcement Agencies

The U.S. Justice Department released the below information:

WASHINGTON—Attorney General Loretta E. Lynch announced today that the Justice Department will launch a new collaborative strategy to more closely partner with businesses in intellectual property enforcement efforts and will award over $3.2 million to 10 jurisdictions to support state and local task forces in the training, prevention, enforcement and prosecution of intellectual property theft and infringement crimes.

“The digital age has revolutionized how we share information, store data, make purchases and develop products, requiring law enforcement to strengthen our defenses against cyber crime—one of my top priorities as Attorney General,” said Attorney General Lynch. “High-profile instances of hacking—even against large companies like Sony and Target—have demonstrated the seriousness of the threat all business face and have underscored the potential for sophisticated adversaries to inflict real and lasting harm.”

The new FBI collaborative strategy builds upon the work previously done by the department while also working with industry partners to make enforcement efforts more effective. As part of the strategy, the FBI will partner with third-party marketplaces to ensure they have the right analytical tools and techniques to combat intellectual property concerns on their websites. The bureau also will serve as a bridge between brand owners and third-party marketplaces in an effort to mitigate instances of the manufacture, distribution, advertising and sale of counterfeit products.

This new strategy will help law enforcement and companies better identify, prioritize and disrupt the manufacturing, distribution, advertising and sale of counterfeit products. Crimes will then be investigated by the FBI and other partners of the National Intellectual Property Rights Coordination Center and finally prosecuted by the Department of Justice.

Additionally, the Office of Justice Program’s Intellectual Property Enforcement Program (IPEP) will award $3.2 million in grants to aid state and local law enforcement in addressing intellectual property crimes.

Local award recipients announced today include the following:

• City of Austin Police Department - $400,000
• City of Hartford Police Department - $399,545
• Cook County State Attorney’s Office - $400,000
• Baltimore County Police Department - $120,174
• North Carolina Department of Secretary of State - $367,076
• New Jersey State Police - $269,619
• City of Phoenix Police Department - $253,129
• City of Portland Police Department - $373,569
• Virginia State Police - $253,128
• City of San Antonio Police Department - $400,000

Since IPEP’s establishment in 2009, the department has invested nearly $14.8 million for 41 task forces across the country. These grants have supported the arrest of 3,522 individuals, the dismantling of 1,882 piracy or counterfeiting organizations and the seizure of $266,164,989 in counterfeit property, other property and currency in conjunction with IP enforcement operations.

The department also launched a new intellectual property website, http://www.justice.gov/iptf, to serve as a both a resource to companies facing intellectual property challenges as well as a mechanism to educate the public on how intellectual property theft is a growing threat to the country’s public safety and economic well-being.

Intellectual property theft refers to the violation of criminal laws that protect copyrights, patents, trademarks and other forms of intellectual property and trade secrets both in the United State and abroad. Faulty and counterfeit products are often sold to unsuspecting consumers and pose a severe threat to their health and safety. In a few circumstances, these activities are used to fund dangerous or violent criminal enterprises or organized crime networks.