White Collar Crime

The Power of Money Economic Trade and Espionage

The image of the international spy conjures up intrigue, danger and adventure, with car chases, secret spy gadgets and well-dressed villains. But today's spy is a new breed. One who shares the secrets of US companies with companies in other countries.

The Economic Espionage Act

In 1996, Congress passed a federal law known as the Economic Espionage Act. This law was designed to prevent sensitive information from being stolen from contractors hired by the US military and space programs.

Since the law's passage 14 years ago, six trials brought under this law resulted in settlement, so no trial has yet been completed. Only one case has ever gone to a jury, and that trial ended in a deadlock. The jury wasn't able to reach a unanimous decision. As a result, the judge declared a mistrial so that another trial may be held.

It's unclear why so few charges have been brought under this Act. Because it's a federal law, the decision of whether to bring charges under this law is up to the US Attorney General, known as the federal prosecutor.

Just as with state prosecutors, federal prosecutors have to decide which cases they will prosecute based on how strong the evidence is. They also need to determine whether witnesses can be found and are willing to testify. And with the same as any other attorney, prosecutors have to guess the odds of winning before seeing a case all the way through to trial.

The International Emergency Economic Powers Act

Another federal law addressing the exchange of secret information impacting the US economy is the International Emergency Economic Powers Act. This Act prohibits intentionally violating US trade sanctions with certain countries. In other words, a person who knows that the US government has broken off trade with a particular country (for example, Cuba) can't do business with that country or its businesses.

Recent Trials under the Two Laws

Charges have been brought against people under the Emergency Economic Powers Act more frequently than the Economic Espionage Act. Recently, a dual citizen of Iran and the US was charged with violating the Economic Powers Act by working with the President of Iran to develop Iran's petrochemical industry.

The man was found guilty of violating the Economic Powers Act, conspiracy, bank fraud and lying to federal officials. He was sentenced to four years in federal prison.

The defendant owned a business specializing in chemical company databases. Prosecutors claimed that for 12 years he conspired to transfer chemical procurement software he developed. And that he also finalized contracts to obtain large quantities of chemicals for use in large manufacturing plants in Iran.

The first trial held under the Economic Espionage Act was decided by a judge rather than by a jury. The defendant, a former engineer, was found guilty of passing secrets about the space shuttle and military weapons to China.

The first-ever jury trial for violations of the Economic Espionage Act occurred recently in federal court in San Jose, California. The two people charged were an American citizen and a Chinese national. They were accused of stealing computer chip blueprints from their employer to get the Chinese government to help launch a start-up business.

At the end of the trial, the jury deliberated but was unable to reach a unanimous decision on the charges of conspiracy, economic espionage and theft of trade secrets. The jury found the two defendants not guilty of two other charges. Federal prosecutors must now decide whether to retry the defendants on the charges on which the jury deadlocked.

You may not be in charge of national secrets, but your employer may make you sign a non-disclosure agreement holding you accountable if you spilled company secrets to a rival business. However, common sense should tell you not to spill your company's trade information to anyone.

Questions for Your Attorney

  • Can my small business enter a contract with a small business in North Korea?
  • My company has worked for the US military. May I do business with a company from another country on similar projects?
  • My partner was charged with violating the International Emergency Economic Powers Act. Am I also liable?
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