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Trade Secret/Economic Espionage Cases - U.S. v. Rector (M.D. Fla.)



Department of Justice



Cybercrime
Cybercrime


Trade Secret/Economic Espionage Cases


January 28, 2002



U.S. Department of Justice
United States Attorney
Middle District of Florida
Post Office Box 600
400 North Tampa Street, Suite 3200
Tampa, Florida 33602
813/274-6000
813/274-6200 (Fax)
200 West Forsyth Street, Room 700
Jacksonville, Florida 32201
904/232-2682
904/232-2620 (Fax)

Two Sentenced in First Theft of Trade Secrets Case

Prosecuted in Middle District of Florida

TAMPA -- The United States Attorney announced today that JOLENE HILDA

NEAT RECTOR and STEVEN MICHAEL SNYDER were both sentenced Friday afternoon

by District Court Judge James S. Moody, Jr., after having entered guilty

pleas to a two count indictment charging them with conspiracy to convey

trade secrets and the substantive offense of conveying trade secrets,

a case of first impression in the Middle District of Florida. RECTOR was

sentenced to 14 months confinement (seven months to be served in a community

correctional center), two years supervised release, and a special assessment

of $200. A fine was waived in her case. She had entered her guilty pleas

before Magistrate Judge Jenkins on March 13, 200l. SNYDER was sentenced

to 10 months confinement (five months to be served in a community correctional

center), two years supervised release, and a special assessment of $200.

A fine was also waived in his case. He had entered his guilty pleas before

Magistrate Judge Jenkins on March 2, 2001.

RECTOR, age 45, and SNYDER, age 36, each were convicted of conspiring

to convey trade secrets, in violation of 18 U.S.C. § 1832(a)(5),

and conveying trade secrets, in violation of 18 U.S.C. §§ 1832(a)(2)

and 2. Both offenses are crimes under the Economic Espionage Act of 1996

(EEA) and the prosecution of these offenses constitute the first ever

prosecution under this statute in the Middle District of Florida, one

of a growing number of prosecutions under this statute nation-wide since

the statute was enacted in October of 1996. This case has national significance

because it reenforces the impact Congress desired to make in limiting

the damage industrial espionage causes United States companies, both here

and abroad.

The facts, as agreed to by both defendants in their plea agreements with

the United States, establish that at some time prior to August 20, 1999,

the defendant, JOLENE HILDA NEAT RECTOR, obtained numerous pieces of proprietary

information owned by R.P.Scherer, Inc. (RPS) from a friend(s) in Florida.

This information included gel formulas, fill formulas, shell weights,

and experimental production order (EPO) data. This information was known

by the defendant to be proprietary information and trade secrets of RPS.

RPS is a leading international developer and manufacturer of drug, supplement,

cosmetic and recreational product delivery systems. RPS’s proprietary

advanced drug delivery systems improve the efficacy of drugs by regulating

their dosage, rate of absorption and place of release. RPS customers include

global and regional manufacturers of prescription and over-the-counter

pharmaceutical products, nutritional supplements, cosmetics and recreational

products such as paint balls. RPS products are produced for and placed

in interstate and foreign commerce.

Both RECTOR and SNYDER admitted that the gel formulas, fill formulas,

and EPOs were proprietary trade secrets of RPS, developed by them and

used by them in the production of drug, nutrient supplement and paint

ball delivery systems (capsules) as well as the fill material inside the

capsules.

The investigation of this case was accomplished through the collaborative

efforts of Special Agents of the Federal Bureau of Investigation in Michigan,

Nevada, and here in the Middle District of Florida. This case also demonstrates

a situation where a competitor corporation (NPB) actively cooperated with

federal authorities and the victim corporation (RPS). Without the assistance

of this competitor corporation, the successful prosecution of this case

would not have been possible.

The case was prosecuted by Assistant United States Attorney Donald L.

Hansen, Computer Technology Crimes Coordinator for the Tampa Division

of the United States Attorney’s Office.


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