Danville resident convicted of computer intrusion and trade secret offenses

David Nosal could serve up to 10 years for trade secret offenses

A San Francisco-based executive recruiter and Danville resident was convicted of all charges in a six-count indictment by a federal jury last week, United States Attorney Melinda Haag announced.

David Nosal, 55, had conspired to gain unauthorized access to the computer system of his former employer, executive search firm Korn/Ferry International, to illegally obtain trade secrets belonging to the company. The jury also found Nosal guilty of three substantive computer intrusions in April and July 2005 and two substantives trade secret offenses that occurred in April 2005.

Evidence at trial showed that Nosal entered into an agreement with other Korn/Ferry employees in 2004 to take confidential and proprietary materials from the company's computer system. Nosal intended to use said information in a new business he wanted to establish with those individuals after he left Korn/Ferry in late 2004.

Two of those employees downloaded large numbers of source lists -- targeted lists of candidates developed by Korn/Ferry for the purpose of filling particular positions -- prior to leaving Korn/Ferry. Thereafter, those two employees used the Korn/Ferry login credentials of another conspirator who was still employed at Korn/Ferry to download additional source lists and other information from the company's computer system in April and July 2005 for use in Nosal's new business.

Nosal was indicted by a federal grand jury on April 10, 2008 and the government obtained superseding indictments on June 26, 2008 and Feb. 28, 2013. In the most recent superseding indictment, Nosal was charged with one count of conspiracy, three counts of unauthorized access to a computer used in interstate or foreign commerce or communication, one count of unauthorized downloading and copying of trade secrets and one count of unauthorized receipt and possession of stolen trade secrets.

The guilty verdict followed a two-week jury trial before U.S. District Court Judge Edward M. Chen. The trial in this case occurred after remand from the Ninth Circuit Court of Appeals, which had affirmed then-District Court Judge Marilyn H. Patel's pre-trial dismissal of several computer intrusion counts.

The sentencing of Nosal is scheduled for sentencing on Sept. 4. The maximum statutory penalty for the conspiracy charge is five years' imprisonment and a fine of $250,000, plus restitution if appropriate. The maximum penalty for the trade secret charges is 10 years' imprisonment and a fine of $250,000, plus restitution if appropriate.


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Posted by word 2t wise
a resident of Danville
on May 1, 2013 at 7:41 am

Trade secrets are important intellectual property. They leak all the time, but usually in ways that are difficult to detect.

So when the authorities get a case they can actually win, it's hammer-and-tongs, to try to deter others. The Recorder (legal newspaper) reported that Korn-Ferry was heavily involved in this prosecution of their former employee.

Be careful out there...

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Posted by diablodave
a resident of Diablo
on May 1, 2013 at 8:25 am

diablodave is a registered user.

If you conduct business with integrity, you don't need to worry about problems like this...

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Posted by Diogenes
a resident of another community
on May 1, 2013 at 10:51 am

Not to be cynical, but there are a lot of people with a lot to worry about. Web Link

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Posted by Derek
a resident of Danville
on May 1, 2013 at 4:44 pm

Too bad we can't prosecute the hackers in China that do it by the hour, every single day of the year.
If we asked the Cato Institute (for the criminally insane) though, they would probably reply that Mr. Nosal was just engaging in good ol' free enterprise.

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