Recruiter Convicted of Hacking In Trade Secrets Case

Editor’s note: Executive recruiter David Nosal was convicted last week of hacking and stealing trade secrets from Korn/Ferry even though he personally never broke into a computer.

David Nosal
David Nosal

According to the FBI, in 2004 Nosal convinced two of his former Korn/Ferry colleagues to download sources lists from the search firm’s computers, which he and they would then use in a search business Nosal was launching.

Wired called Nosal’s prosecution “a novel application of the Computer Fraud and Abuse Act,” detailed the case’s lengthy history, which includes an appeal upholding the dismissal of several of the initial charges against him.

In his commentary, Jeff Allen provides some additional detail and offers advice on protecting a firm’s proprietary information. Firm owner and CPA Bill Gibbens provides an even deeper look at the internal accounting controls all firm owners should have in place. His post discusses both protection of your intellectual property, as well as your financial assets. His post is here.

 

Recruiters across the country are all abuzz at the stunning jury verdict just handed down from the U.S. District Court in San Francisco in the criminal trial of David Nosal, the former Korn/Ferry International recruiter (United States v. Nosal, 2013 U.S. Dist. LEXIS 28582).

Nosal was unanimously convicted after only two days of deliberation.  On all counts — conspiracy, stealing trade secrets, and violating the Computer Fraud and Abuse Act (18  USC 1030, et seq.).

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In 2004, Nosal resigned from Korn/Ferry.  As part of his separation agreement, he agreed not to compete with Korn/Ferry for one year.  Within a few months, his former coworkers still employed by Korn/Ferry downloaded Korn/Ferry’s client and candidate data.  Then they joined Nosal at Nosal Partners, by then a Korn/Ferry competitor.

In 2005, FBI agents raided Nosal Partners, and they found the evidence of the criminal activity used to nail Nosal.

Jeffrey G. Allen, J.D., C.P.C. has been TFL’s trusted legal advisor for 32 years , and wrote the “The Allen Law” (the only industry trade secrets statute ever written).  If you want to learn more from Jeff’s offices about this vital protection for your files,

  1. Go to www.placementlaw.com.
  2. Click the Placement Trade Secrets Quiz button on the bottom row.
  3. Take the PTSQ.
  4. Click the Answers to Placement Law Quizzes button at the end of the bottom row. Grade yourself.
  5. Click the Placements and The Law button on the row above the Placement Law Quizzes.
  6. Read the “Rockin’ The Placement Planet!” article.

Korn/Ferry’s civil case against Nosal is still proceeding in Northern California.  His troubles are just beginning after this incredibly important verdict: Guilty as charged.

More than thirty-five years ago, Jeffrey G. Allen, J.D., C.P.C. turned a decade of recruiting and human resources management into the legal specialty of placement law. Since 1975, Jeff has collected more placement fees, litigated more trade secrets cases, and assisted more placement practitioners than anyone else. From individuals to multinational corporations in every phase of staffing, his name is synonymous with competent legal representation. Jeff holds four certifications in placement and is the author of 24 popular books in the career field, including bestsellers How to Turn an Interview into a Job, The Complete Q&A Job Interview Book and the revolutionary Instant Interviews. As the world?s leading placement lawyer, Jeff?s experience includes: Thirty-five years of law practice specializing in representation of staffing businesses and practitioners; Author of ?The Allen Law?--the only placement information trade secrets law in the United States; Expert witness on employment and placement matters; Recruiter and staffing service office manager; Human resources manager for major employers; Certified Personnel Consultant, Certified Placement Counselor, Certified Employment Specialist and Certified Search Specialist designations; Cofounder of the national Certified Search Specialist program; Special Advisor to the American Employment Association; General Counsel to the California Association of Personnel Consultants (honorary lifetime membership conferred); Founder and Director of the National Placement Law Center; Recipient of the Staffing Industry Lifetime Achievement Award; Advisor to national, regional and state trade associations on legal, ethics and legislative matters; Author of The Placement Strategy Handbook, Placement Management, The National Placement Law Center Fee Collection Guide and The Best of Jeff Allen, published by Search Research Institute exclusively for the staffing industry; and Producer of the EMPLAW Audio Series on employment law matters. Email him at jeff@placementlaw.com.

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2 Comments on “Recruiter Convicted of Hacking In Trade Secrets Case

  1. I have a great deal of respect for you, Mr. Allen, and the contribution you have made to advancing third-party search with legal knowledge. This post was disappointing though. I am intrigued by the Korn/Ferry case and was excited when I read “In his commentary, Jeff Allen provides some additional detail and offers advice on protecting a firm’s proprietary information.”

    What I actually read was devoid of commentary and I didn’t see any advice on protecting IP for the search firm owner. This may be an editor error because your writing has previously been heavy on value and light on self-promotion. Still interested in getting the goods.

  2. @ Brian: In his post, Jeff directs owners and other interested recruiters to his Trade Secrets Quiz and to a lengthy article he authored specifically dealing with the Computer Fraud and Abuse Act, which is the primary law involved in the Nosal case. Here’s a link to Jeff’s article: http://www.placementlaw.com./placements.html

    You might also take a look at Bill Gibbens’ excellent overview of internal accounting controls, which discusses protecting both intellectual property and financial assets. His article is at http://www.fordyceletter.com/2013/05/01/some-simple-steps-to-help-you-protect-your-business-and-your-assets/

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