Man Charged in $1B Intel Trade Secrets Case

Ex-Intel engineer allegedly stole documents on next-generation microprocessor.

November 6, 2008, 3:32 PM

Nov. 6, 2008— -- A former Intel Corp. design engineer has been charged with allegedly stealing $1 billion worth of trade secrets relating to the semiconductor company's next-generation Itanium microprocessor.

A federal grand jury in Massachusetts on Wednesday indicted Biswamohan Pani on five counts of stealing trade secrets and wire fraud for violating Intel's confidentiality agreements.

While working at Intel's Hudson, Mass., office, Pani obtained employment with Advanced Micro Devices Inc., an Intel competitor, and stole top-secret documents from Intel, according to the FBI affidavit in the case. AMD has not been implicated in the case, and there's no evidence that Pani shared the information with that company or any other.

Pani's attorney, Bradford Bailey, denied the charges, telling ABC News, "Mr. Pani will be pleading not guilty at his upcoming arraignment. He denies the charges and will vigorously defend them."

The indictment alleges that Pani, 33, began looking for employment outside of Intel in February of this year, and was offered a job with AMD the following month. Pani kept delaying his start with AMD and did not leave Intel until June.

Pani was on both payrolls at the same time and, in his final days with Intel, took some of the company's most sensitive documents for his own use, according to an affidavit filed by FBI Special Agent Timothy Russell of the Boston FBI cyber crimes squad.

"Pani had remotely accessed and downloaded top secret Intel documents from the [Intel] system between June 8 and June 10, 2008, when he was not working on projects for Intel and was purportedly on vacation," Russell wrote.

Pani allegedly downloaded Intel documents that contained sensitive data relating to the company's chip designs. Many of the documents were found in Pani's home in July, when the FBI executed a search warrant at his home. Pani was initially charged in a criminal complaint in August and is now out on bond awaiting arraignment.

Pani had already been charged in August with one count of trade-secrets theft in a criminal complaint filed in U.S. District Court in Boston.

"The downloaded documents included mission-critical documents describing in detail the process Intel uses for designing its newest generation of microprocessors," the August FBI affidavit alleged. "They included confidential and proprietary business information that also constitutes trade secrets."

The indictment noted, "This information was worth more than $1 billion in research and development costs."

As for possible motives, the indictment asserts that "Pani planned to use this information to advance his career at AMD or elsewhere by drawing on it when the opportunity arose, whether with his employer's knowledge or not."

According to the indictment and affidavit, Pani received a job review at Intel in April, noting that his work was "Below Expectations," which he attributed to his being distracted because he was living apart from his wife, who worked for Intel in California, where the company is based.

Intel arranged for his wife to transfer jobs to Massachusetts in May and, according to the FBI affidavit in the case, within hours of her acceptance of Intel's employment offer, Pani resigned from his post at Intel, claiming he had a job offer from hedge fund.

Pani had told his managers that he intended to use his vacation time to close out the remainder of his time with Intel.

An Intel spokesman told ABC News that the company alerted authorities to the alleged theft of the documents by Pani and that the company has cooperated in the investigation.

The FBI affidavit noted, "Although to date there has been no evidence that Pani has distributed Intel's trade secrets to AMD or any other competitor to Intel, or that he planned to do so with the recipients knowledge, there is still probable cause to believe that Pani planned to use Intel's information to help AMD compete against Intel, even without AMD's comprehension or complicity."