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Friday, August 1, 2008

Former H-P Executive Pleads Guilty

Malhotra Could Get Jail Time for Stealing IBM Trade Secrets

A former Hewlett-Packard Co. vice president pleaded guilty Friday to stealing trade secrets by passing a confidential email from his previous employer, International Business Machines Corp., to senior H-P executives, the Justice Department said.

Atul Malhotra, 42 years old, faces a maximum of 10 years in prison, a $250,000 fine and three years of supervised release. A spokesman for the U.S. Attorney's office in San Francisco declined to say what penalties prosecutors would seek. A sentencing hearing is set for Oct. 29.

John Vandevelde, Mr. Malhotra's attorney, called his client "an honorable man with an impeccable record" who "made one mistake in transitioning from one high-tech job to another." Mr. Malhotra "has admitted that error and entered into an agreement that will resolve this matter," the attorney said in an email. Mr. Vandevelde said that "the court will be able to consider probation in this matter," rather than jail time.

Mr. Malhotra was a director of sales and business development at IBM in March 2006 when he requested pricing information about IBM services, prosecutors say. Two months later, he became a vice president of H-P's printing division.

That July, prosecutors allege, Mr. Malhotra sent an email to an H-P senior vice president with the subject "for your eyes only." A file with the confidential information was attached. Two days later, Mr. Malhotra sent a similar email to another H-P vice president.

An H-P spokeswoman said that in response to the emails, the company "conducted an internal investigation, terminated Malhotra's employment from H-P and reported the activity to appropriate enforcement agencies and to IBM."

By: Justin Scheck and Lauren Polluck
Wall Street Journal; July 14, 2008