Ex-Insitu contractor sentenced for theft of trade secrets

A former Insitu contractor was sentenced to jail time last week nearly three years after he was arrested for trying to sell proprietary information related to one of Insitu’s unmanned aerial vehicles (UAV), or drones.

Stephen Martin Ward, age 49, of Owensboro, Ky., was sentenced on July 31 in the U.S. Eastern District Court of Washington in Yakima to three months’ prison after being convicted of Theft of Trade Secrets under the Economic Espionage Act, according to a news release from the Federal Bureau of Investigation.

Ward was arrested back in November 2011, in Floyds Knobs, Ind., following his transfer of a digital copy of a UAV maintenance manual to an undercover agent for $10,000. The manual pertained to a proprietary product of Insitu, Inc., located in Bingen.

During 2010, Insitu contracted with the United States Navy to develop a UAV, now known as the RQ-21A Blackjack, or Integrator, the larger of Insitu’s two drones listed on the company’s website. Ward was originally hired as a technical publications writer in August 2011 to develop an aircraft maintenance manual for the UAV.

After termination of employment approximately two months later, Ward disclosed to a former supervisor that he had taken substantial amounts of proprietary data while working at the company.

A one month undercover operation resulted in Ward’s agreeing to exchange the data for $400,000 in currency and benefits. The transaction preceding Ward’s arrest was a down payment for the return of additional proprietary data.

During the operation, Ward also e-mailed the cover page of the manual to foreign entities in Kuwait to gauge their interest in the information. On April 25, 2014, following a two week trial, a jury found Ward guilty of Theft of Trade Secrets, in violation of 18 U.S.C. § 1832(a)(2).

On July 31, Chief United States District Judge Rosanna Malouf Peterson sentenced Ward to three months’ imprisonment, to be followed by three years of court supervision.

The court further ordered Ward to have no contact with Boeing, Insitu, or Corsair Engineering, in addition to any of their offices and employees.

Michael C. Ormsby, U.S. Attorney for the Eastern District of Washington, said, “Businesses and our government expend considerable resources in protecting intellectual property to ensure our national security and the well-being of our economy. The Office of the National Counterintelligence Executive has estimated losses from economic espionage to be in the tens or even hundreds of billions of dollars annually to the American economy. The potential consequences of Ward’s unlawful conduct cannot be understated.”

“Unfortunately, Stephen Ward is emblematic of a growing counterintelligence problem: the insider threat,” said FBI Special Agent in Charge Frank Montoya, Jr. “Whether motivated by twisted ideology or pure greed, these thieves disregard the safety of their fellow citizens. If a protected technology ends up in the hands of our adversaries, it could be used to undermine our national security. Fighting theft of trade secrets is a top priority for the FBI’s counterintelligence program and will remain so.”

The investigation was conducted by the FBI, Homeland Security Investigations, and the Naval Criminal Investigative Service. The case was prosecuted by Shawn N. Anderson, an Assistant United States Attorney for the Eastern District of Washington.

Insitu had little to say about the matter, issuing a brief statement that listed general information about the case.

“Stephen Ward was sentenced last Thursday to three months in prison (time served) and three years supervised release for selling trade secrets involving Insitu’s commercial Integrator UAV,” Insitu Communications Manager Jill Vacek reported in a written statement. “Ward worked as a contractor for Insitu for a short duration in 2011.”

When asked for further comment, Vacek declined.

“That is all Insitu has to say at this time,” she replied via email.

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