High-Tech Intruders

When Iftikhar Ahmed, CEO of IST Inc. in Santa Clara, Calif., returned from a meeting around closing time May 23, he suddenly found himself looking at gun barrels. Two thieves were holding his two employees at gunpoint. The robbers tied the three with computer cord and stole more than $250,000 in modems, processors and memory chips.

While debate in the Capitol over international high-tech piracy focuses on the bottom line, the facilities where computer components are built or stocked face a more fundamental issue: Survival, both physical and economic. Ahmed's three full-time employees gave notice after the assault, leaving him to ponder moving his business. Since the incident, he learned that the company next door was hit twice, and that the prior tenant in his building had been robbed or burglarized five times.

When Iftikhar Ahmed, CEO of IST Inc. in Santa Clara, Calif., returned from a meeting around closing time May 23, he suddenly found himself looking at gun barrels. Two thieves were holding his two employees at gunpoint. The robbers tied the three with computer cord and stole more than $250,000 in modems, processors and memory chips.

As microprocessors and other items approach the value of gold, ounce for ounce, there has been an alarming increase in employees being robbed at gunpoint or shot by intruders as ruthless as pirates of old. A prized "treasure" is Intel Corp.'s highly touted Pentium chip, with a price tag upward of $1,000. Armed robberies of high-tech facilities have increased since January, costing Silicon Valley firms alone an estimated $200,000 to $300,000 a week. That's not including burglaries of unoccupied facilities, which law enforcement officials speculate often are carried out by the same criminals. It also doesn't include employee theft where workers smuggle items out at the end of a work day, incurring possibly greater losses, but no threat to safety. Some authorities estimate these theft losses at $1 million per week. But entry at gunpoint is spreading throughout the country wherever high-tech components are warehoused. The largest heist to date is a $10 million robbery in May from Centon Electronics in Irvine, Calif., 500 miles south of San Francisco. The issue has become one of serious concern," said Tom Cornwell of Chubb Group of Insurance Companies, which insures about one-third of high-tech firms. "Not just for losses of property but because of their increasingly violent nature."

"We've had occasions where people were slow to respond to [intruders'] demands, and they were slapped, punched, threatened with guns and dragged around by the hair while handcuffed," said Jim McMahon, San Jose policeman and head of the High Technology Crime Investigation Association, who jets around the world advising companies about security. "This is not just a U.S. problem. We see it in Singapore, Malaysia, Scotland and parts of England."

The American Electronics Association puts the cost nationally at $8 billion per year. It could grow to $200 billion by the year 2000, said AEA Director of Preferred Business Services Paula Silva, citing an American Insurance Service Group projection. While agencies are playing catch-up, evidence now points to an Asian connection that has led local police departments to call in the FBI, Customs Office, Internal Revenue Service and even law enforcement agencies in other countries. "We as an agency are trying to coordinate with other [local police] agencies, the FBI and insurance agencies," said Sgt. Mike Evans, head of the high-tech unit of the San Jose Police Department. The area has an organized semiconductor armed robbery a week, he said, as well as burglaries that would be robberies if the well-armed intruders found people on site. The task force approach worked in a nine-month undercover operation by Santa Clara police working with the FBI and Intel Corp. The sting arrested 15 persons, including Santa Clara computer company owner Lawrence Wong and four employees. Wong faces federal charges including interstate robbery, conspiracy to commit robbery, and transportation of stolen property.

Stolen components probably found their way out of the country in small packages in luggage. But federal agents suspect goods stolen here also find their way to China. "We are trying to determine the extent to which they're shipped there, pirated there and shipped back to the U.S. as a new product," FBI agent George Grotz said. Customs is in on the task force to look for money laundering and illegal exports, said Robert Keck, head of the San Jose office. Meanwhile, the harrowing prospect of employees facing gunmen drove AEA members to demand help, so they founded the Technology Theft Prevention Foundation with $300,000.


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