2 former Korn/Ferry workers indicted
A former top manager and an employee at the world's largest executive search firm have been indicted by a federal grand jury in San Francisco on charges that they stole the company's proprietary information to start a competing firm.
David Nosal and Becky Christian, formerly of Korn/Ferry International, were indicted Thursday by a federal grand jury in San Francisco on charges that they illegally used the company's trade secrets and clients to help launch Nosal's competing executive search firm.
Their indictment brings to four the number of former Korn/Ferry employees who have been charged in federal court as a result of an FBI investigation.
The two other defendants, Jacqueline Froehlich-L'Heureaux, Nosal's former executive assistant at Korn/Ferry's Redwood City office, and Mark Jacobson have each pleaded guilty to a conspiracy charge and are to be sentenced in May.
In a statement Friday, Nosal said he plans to "vigorously fight" the charges. "I was in no way involved in any criminal activity and expect the evidence to show that. I also challenge the assertion by the federal government that any trade secrets, as defined by the law, are involved in this case."
Federal prosecutors are being pressured and misled by Korn/Ferry, which is "jealous of Mr. Nosal's success," said Sam Singer, a spokesman for Nosal.
Christian's attorney, Steven Bauer, said Friday, "We are confident that when the real story comes out at trial, the jury will find Becky Christian innocent."
In a statement Friday, Korn/Ferry spokesman Michael Distefano confirmed that the company in 2005 found "significant misappropriation of proprietary data by ex-employees." Distefano said the indictment is a matter that "rests between Mr. Nosal, Ms. Christian and the governing authorities."
The company filed a civil suit in San Mateo County Superior Court in 2005, but the complaint was dismissed a year later.
Nosal worked for Korn/Ferry from 1996 to 2004 and rose to a managerial position. He agreed to serve as an independent contractor through 2005 before starting his own company, Nosal Partners in San Francisco. Christian had been a client partner at Korn/Ferry.
Nosal and Christian were indicted on charges of conspiracy to misappropriate, receive, possess and transmit trade secrets, gaining unauthorized access to a protected computer, theft of trade secrets, mail fraud and conspiracy to commit mail fraud.
The indictment lists Brian Stretch as acting U.S. attorney, as U.S. Attorney Joseph Russoniello recused himself from the case, having previously served as Nosal's lawyer.
Federal prosecutors said that in the three months before Froehlich-L'Heureaux left the company in 2005, she helped Nosal, Christian and then-employee Jacobson run searches on at least 1,500 individuals.
Nosal proposed to both Christian and Jacobson that they each would receive 20 percent of revenues for the business they generated, while he would receive 80 percent, prosecutors said.
As part of a conspiracy, Jacobson and others misappropriated Korn/Ferry's trade secrets to "retain clients and place candidates as part of their executive search activities," prosecutors have said in court records.
Froehlich-L'Heureaux performed searches for her former colleagues and copied the files onto CDs titled "ChocChip Cookies" and "Book2 Genesis," authorities said. She also logged on to the company's network using Jacobson's laptop computer and allowed him to search the database and download information, authorities said.
Henry K. Lee, Chronicle Staff Writer
E-mail Henry K. Lee at email@example.com
San Francisco Chronicle
2 former Korn/Ferry workers indicted