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Spies in Philly

Economic espionage targets trade secrets

Image | Courtesy of the FBI

When one thinks of spy stories, one usually thinks of foreign cites such as Hong Kong or Berlin, but espionage is being committed right here in Philadelphia. 

Economic espionage occurs in Philadelphia as the city and surrounding suburbs are home to major corporations, major universities, and major defense contractors. Technologically advanced firms, small innovative companies, as well as chemical, critical manufacturing, energy, and public health organizations, are also targeted. 

Our adversaries, such as China, Russia, Iran, North Korea and other foreign powers and entities, are actively stealing trade secrets, intellectual property, and research data from the Philadelphia region.

Having performed security work as a young sailor aboard an aircraft carrier during the Vietnam War, and later as a Defense Department civilian employee at the South Philly Quartermaster and the naval base in Northeast Philadelphia, I’m trained and experienced in protecting military classified information. I learned from the many FBI, CIA, DIA and NSA briefings and seminars I attended over the years that our adversaries are relentless and ruthless in their quest to obtain not only military secrets, but also business secrets such as the plans to build the proverbial better mousetrap.    

The FBI defines economic espionage as a foreign power-sponsored or coordinated intelligence activity directed at the U.S. government or U.S. corporations, establishments, or persons, designed to unlawfully or clandestinely influence sensitive economic policy decisions or to unlawfully obtain sensitive financial, trade, or economic policy information; proprietary economic information; or critical technologies. This theft, through open and clandestine methods, can provide foreign entities with vital proprietary economic information at a fraction of the true cost of its research and development.

“Spies might seem like a throwback to earlier days of world wars and cold wars, but they are more prolific than ever – and they are targeting our nation’s most valuable secrets,” the FBI stated in an advisory. “The threat is not just the more traditional spies passing U.S. secrets to foreign governments, either to make money or advance their ideological agendas. It is also students and scientists and plenty of others stealing the valuable trade secrets of American universities and businesses – the ingenuity that drives our economy – and providing them to other countries. It is nefarious actors sending controlled technologies overseas that help build bombs and weapons of mass destruction designed to hurt and kill Americans and others. And because much of today’s spying is accomplished by data theft from computer networks, espionage is quickly becoming cyber-based.”

The FBI defines trade secrets, commonly referred to as proprietary information, as all forms and types of financial, business, scientific, technical, economic or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, complied, or memorialized physically, electronically, graphically, photographically or in writing, which the owner has taken reasonable measures to protect, and which have an independent economic value from not being generally known to the public. 

The FBI warns academia that foreign adversaries are increasingly taking advantage of them by secretly misdirecting funding and research for their own gains. The FBI encourages universities to take steps to protect their students from intimidation or control by foreign governments and to give them ways to report such incidents. 

I recall interviewing FBI Special Agent Barbara Verica on “Inside Government,” a public affairs Sunday morning radio program that aired on WMGK 102 FM and WPEN 950 AM some years back. I asked her if the Philadelphia area was subject to hostile intelligence operations. 

“Absolutely. Anywhere you have this amount of research and development going on, you will always have a foreign intelligence entity out there trying to get that information,” Verica said. “Pure R&D is intellectual property, and it is absolutely a target here.

“R&D eventually becomes our manufacturing and production base. It’s an idea, generally, and sometimes you can’t place a dollar amount on it until you actually put it into production and find out its market value. But if you look at how much we invest in R&D in this country, it’s 10 times more than any other nation, but we are not 10 times richer than other nations.”  

According to the FBI, the cost of stealing U.S. intellectual property is enormous and has an impact on everyday people. It has an impact on American businesses, American jobs, and American consumers. Intellectual property theft results in estimated losses between $550 billion to $1 trillion per year. Economic espionage is a threat to our economic security and our national security. 

As Verica noted, government, academia, and businesses in the Philadelphia area and across the nation need to guard against economic espionage.   

Paul Davis’ Crime Beat column appears here each week. You can contact him via pauldavisoncrime.com.

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  • Paul Davis

    Having worked as a crime reporter and columnist in Philadelphia for many years, Paul Davis has covered organized crime, cybercrime, street crime, white collar crime, crime prevention, espionage and terrorism. He can be reached at pauldavisoncrime.com

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