Then Lowery showed up again. Police linked him to the fencing of 11,000 Synertek Inc. memory circuits valued at $100,000 to $150,000. And when the Santa Clara County Sheriff's Office got search warrants and seized Lowery's business records, handwriting experts determined that all records pertaining to the stolen Synertek parts had been written by David Roberts.
This time even Lowery was arrested, but the night before the preliminary hearings, a witness for the prosecution was beaten so badly he was unable to testify. And then, just before Lowery's trial was to begin, Roberts, who had been subpoenaed by the prosecution, was discovered near Skyline Boulevard in nearby San Mateo County with a fractured skull and seven stab wounds in his back.
Except for the murder of Roberts, it might have been just another story of a young man trying to go too far, too fast. It certainly wasn't the industry's fault that a quarter of a million dollars' worth of chips can be carried out of a stockroom in a briefcase or that circuit designs that cost $500,000 to develop can be slipped into a coat pocket. But for a long time, law enforcement people say, the industry didn't seem to take the problem seriously. More than $20 million a year in electronics technology and products were being stolen in Santa Clara County alone, estimates Douglas Southard, the county's deputy district attorney, and companies were leaving components in storerooms with locks less sophisticated than what they had on bathroom doors.
Companies didn't report thefts, sometimes out of concern about security implications to customers and sometimes because they didn't even know the thefts had happened. Inventory control at some companies was casual, says Southard -- stolen chips have been recovered and confessions extracted from thieves in cases where the company couldn't prove anything was missing. One large manufacturer, warned that a theft was planned for a specific date in the near future, prevented the theft but didn't fire the potential thief, who reportedly still works at the company and carries on a cocaine business.
There was, Southard and other observers say, an almost arrogant faith that a company's technological capabilities could overcome any other problems, that prosecuting thieves and tightening up security took time and resources away from the primary efforts -- coming up with newer and better products and making money. This attitude, says Southard, made stealing a lot easier. Employees -- technicians, inventory clerks, draftsmen, and engineers -- walked out with circuit designs, process information, precious metals, and market-ready chips. They stole chips that failed quality-control tests, mislabeled them top quality, and sold them in the legitimate marketplace. They even stole such finished goods, he says, as disk drives and personal computers.
Most thieves wouldn't get far without what has come to be called the "gray market," a system of distributors and middlemen, both legal and illegal, that picks up the slack between semiconductor manufacturers like National Semiconductor, Fairchild, and Signetics Corp., and the electronics equipment manufacturers that build the chips into their products. Large computer manufacturers usually deal directly with the semiconductor plants, but distributors sell to smaller customers, find markets for surpluses, and sometimes stock parts against shortages. Many of these distributors are reputable, but here, in the middle market, changing demand and the intense competition for parts, prices, and quick delivery support the companies and the people that are not. David Roberts couldn't have sold the stolen parts he obtained without this market.
The parts are hard to track, points out Southard.There is a lot of money to be made, or lost. If a manufacturer needs parts in a hurry, he doesn't ask the supplier where they came from. Industry executives tend to call this "business," but Southard has another word for it -- greed. "I was raised in southern California," he says, "with what I'll call Middle Western values. People were expected to better themselves gradually. Here, people have made so much money so fast. There's a kind of tension in the air. Everyone wants to become an overnight millionaire."
But it isn't the corporate victims of the thieves that concern the U.S. Senate and federal prosecutors. Some of the stolen components and technology have made their way to the Soviets, in violation of federal export regulations that restrict high-technology exports. They are worried that the stuff will show up not in toasters or microwave ovens, but in sophisticated "smart" bombs.
How much American technology is making its way illegally to other countries is difficult to estimate, but investigators seem to agree that seizures of illegal shipments and convictions for export violations obtained so far just scratch the surface. Last fall, the U.S. Customs Service formed special teams of customs agents, inspectors, patrol officers, and accountants to crack down on illegal exports of high technology.
As Assistant U.S. attorney, Theodore Wai Wu prosecuted three of the leading cases tried under the Export Administration Act and Arms Export Control Act in the last four years. The latest case involved a U.S.-West German-Soviet Union network that smuggled at least $1.5 million worth of high-technology hardware, including computers and electronic surveillance systems, from the United States to the Soviet bloc. Anatoli Maluta, the Soviet-born U.S. connection in the ring, was convicted of conspiracy and 14 other felony counts last October, sentenced to five years in prison, and fined $60,000. However, the alleged West German leader of the scheme, Werner Bruchhausen, is overseas somewhere and may never be brought to trial.
