Just after obtaining the information—and right before an earnings release—Oleksandr Dorozhko purchased 630 put options on IMS’ common stock, according to Reuters. The next day IMS’ stock dropped by 28 percent and Dorozhko earned $287,346 after selling the options.

The SEC filed a complaint against Dorozhko in late 2007, but on January 7, 2008, the District Court denied the SEC’s motion for a preliminary injunction, according to a statement by the SEC. The Court concluded that “Dorozhko’s alleged ’stealing and trading’ or ‘hacking and trading’ does not amount to a violation … because Dorozhko did not breach any fiduciary or similar duty ‘in connection with’ the purchase or sale of a security.”

Upon appeal, the U.S. Court of Appeals for the Second Circuit thought otherwise, saying “that nothing in the U.S. Supreme Court’s jurisprudence or prior decisions of our Court expressly imposes a fiduciary-duty requirement on the ordinary meaning of ‘deceptive’ where the alleged fraud is an affirmative misrepresentation rather than a nondisclosure.”

After the case was sent back to the District Court, the judge ordered the $580,000 penalty.

According to the online note, the hacker claimed to have stolen 8.3 million patients’ personal information in Virginia, deleted any back up files of the information and demanded $10 million for the information to be returned safely.

According to local Virginia news reports, as well as Wikileaks.org, an online site dedicated to publishing leaked documents, the hacker said, “I made an encrypted backup and deleted the original. Unfortunately for Virginia, their backups seem to have gone missing, too. Uhoh :( “ and said officials could reach him within seven days by emailing hackingforprofit@yahoo.com.

Now Mr. Vitale faces 30 months in prison and $180,000 restitution to be paid to AOL. As noted by U.S. District Judge Denny Chin, “Spamming is serious criminal conduct; this is not a teenager engaging in child’s play.”

While that is true, Mr. Vitale also had 22 prior convictions, including running an online prostitution ring through the website Craig’s List, which couldn’t have helped his odds in this case.

His partner in crime, Todd Moeller, was sentenced to 27 months back in November.

DISH did win the case, but didn’t get the 10 figure outcome that company lawyers hoped for. Instead, after one day’s deliberation by the jury, NDS was ordered to pay $46.69 for reverse engineering one of DISH’s smart cards and $1,000 in punitive damages.

Both sides are calling this a victory. DISH says they won the case, which they did, but their legal fees clearly outweigh what they earned. And, let’s be honest, this is going to do zero damage to NDS’ credibility. NDS claims a victory because they don’t have to pay one billion dollars to DISH. As NDS attorney Richard Stone said after the jury’s verdict came in, “We’ve been completely vindicated on this whole lawsuit.”

NDS says that Christopher Tarnovsky, the hacker in question, was only employed to reverse engineer rival companies’ products. Tarnosvsky admitted he helped develop pirating software, but testified that he didn’t use it to hack into DISH’s security system. Tarnokvsky did say, however, that his first payment came in the form of $20,000 cash “hidden in electronic devices mailed from Canada,” such as CD and DVD players. Doesn’t sound like the most transparent way of doing business. He also said that he was paid by Harper Collins, another News Corp subsidiary, on a regular basis for 10 years.

While Tarnovsky says he “never got money for reprogramming Echostar cards,” he did admit that he created something called “the stinger,” a tool capable of electronically communicating with any smart card in the world. To further complicate NDS’s position, another hacker testified that a third hacker and an NDS employee used the stinger to reprogram a number of EchoStar smart cards.

A good breakdown of EchoStar’s allegations can be found by heading over to Wired Magazine’s report on the story.

Authorities discovered Jin was carrying about $30,000 in cash as well as over 1,000 confidential electronic and paper proprietary documents, all belonging to her former employer, known only in federal documents as “Company A.” According to the indictment against her, Jin was storing the information on a laptop, various hard drives, a thumb drive and a number of data CDs when her luggage was searched.

“We have to be vigilant in preserving the integrity of trade secrets to provide an honest playing field among business competitors, whether foreign or domestic. Trade secrets often are a business’s most valuable assets, and protecting them from theft and betrayal is a high priority for law enforcement,” Patrick J. Fitzgerald, the U.S. Attorney for the Northern District of Illinois, said in a statement released on Wednesday.

While an official release from the Department of Justice claims that Company A spent “hundreds of millions of dollars on research and development for the proprietary information” that Jin had in her possession, reports by the Chicago Tribune and Information Week both put that price tag at $600 million. If convicted, Jin faces a maximum penalty of 10 years in prison and a $250,000 fine for each charge.

“Alpha has suffered and continues to suffer irreparable damage as a result of defendant’s misappropriation of Alpha’s confidential, proprietary and trade secret information.”

Vance hasn’t shown up to any of his eight scheduled court appearances, maybe because he was so busy acquiring jobs at rival companies. In 2005, according to the Herald Tribune, he worked for Florida-based Alpha Mining Systems, Alpha’s China-based competitor Guizhou Tire Co. and United Arab Emirates-based Al Dobowi Group. His job description? Hand over secret Alpha documents to its rival firms, including design blueprints, and advise rivals’ clients that they now can get Alpha designed tires directly from Guizhou.

There’s no word on whether Vance can afford to pay the $19.7 million fine or not (as the Herald Tribune puts it, he may not have the “wherewithal”). It’s also unclear how Vance got the idea to work for Alpha’s overseas rivals in the first place – whether he was disgruntled and reached out to them, or the other way around. Whatever the case, he’s been barred “from working in mining worldwide or contacting his current employers or any current or former customers of Alpha.”

There is one minor fault in the story worth noting: The Herald Tribune states, “Del-Nat Tire Corp. and American Tire Corp. were buying a combined average of $1.9 million per month from Alpha until April 2005, when they stopped buying anything.” American Tire Corporation fervently denies having ever heard of Alpha, yet alone conducting business with the company. So, for all of you conducting business with ATC, don’t worry they’re in the clear.

According to the Centre for the Protection of National Infrastructure, “The contents of [Evans'] letter highlight the following: the Director-General’s concerns about the possible damage to UK business resulting from electronic attack sponsored by Chinese state organisations, and the fact that the attacks are designed to defeat best-practice IT security systems.”

The People’s Liberation Army (PLA) has allegedly been supporting computer hackers for some time now, and it’s thought that they have already used limited cyber-warfare as a response to recent public U.S. missteps – such as the bombing of the Beijing Embassy in Belgrade in 1999 and after a U.S. spy plane collided with a Chinese fighter in 2001.

Although Beijing denies any connection to the recent attacks, China is undeniably building up what Time Magazine appropriately labels a “cybermilitia” (see the linked story above). One example is a recent cash contest sponsored by the PLA to recruit the most talented local hackers across the country.

The letter from Evans shows the growing concern that western nations have over electronic security threats but, according to Graham Cluley, senior technology consultant for Sophos, it is “unusual for a country to so openly accuse another of engaging in this activity – especially when it can be extraordinarily difficult to prove an attack is being sponsored by a government or is a lone hacker acting independently.”

Over a 16-hour period in September, the company discovered 1,100 emails from a supposed employment agency containing files allegedly offering information on potential job candidates. The emails included personal details of the targeted executives, such as full names and position titles, in order to seem more reputable.

What MessageLabs discovered is that the files, most of which were in Microsoft Word format, included Trojan horses designed to steal corporate secrets.

Trojan horses, or Trojans, have been around for quite some time in the computing world. They become installed when a user unwittingly opens a program containing malicious code. The program then infects the computer, allowing hackers remote access. More recently, hackers have been able to develop Trojans that install themselves after a user opens an image or PDF file containing the rogue program.

In the past, similar attempts at data mining included “phishing” schemes, where scammers who posed as reputable sources sent out emails asking for personal information such as bank accounts or social security numbers.

The danger with the new methods, as experts point out, is hackers are becoming increasingly adept at making infected email attachments appear legitimate and increasing the chances that those files get opened by the recipient.

Commentary: Trojans can come from more than just emails, it’s also possible to acquire them through downloads, websites, peer to peer programs and, on rare occasions, physically being installed on a computer. Although they have been around for awhile (at least since the early 80’s), many people are still oblivious towards the harm they can cause.

The quick fix: keep business computing use for business purposes. Don’t put yourself at risk by viewing less than reputable websites or downloading unnecessary programs. And, most importantly, if you get an email attachment from a sender you don’t recognize: don’t open it!

The information was presented at an evidentiary hearing after Hawaiian Airlines sued Mesa Air Group for allegedly starting a low-fare Hawaiian airline, Go!, based on illegally obtained information. Hawaiian Airlines accused Mesa of obtaining the information from one of its employees that posed as a potential investor during Hawaiian’s bankruptcy.

Sidney Levinson, attorney for Hawaiian Airlines, raised an eyebrow at the claim. He called the news “a transparent effort to distract the court’s attention and undermine the credibility of one of Mesa’s most senior officers.”

“You have to wonder why Mesa thinks that smearing their own star witness with allegations of pornography benefits them,” he said.

Christopher Pappaioanou, Vice President for Legal Affairs at Mesa, defended Mesa’s allegations. Pappaioanou testified that he discovered Murnane looking at pornographic websites when he came into work one Saturday morning.

Hawaiian Airlines is hoping for an injunction against Mesa Airlines, prohibiting the company from selling tickets for a year, as well as monetary compensation.

A San Jose U.S. District Court grand jury indicted Lan Lee, 42, of Palo Alto and business partner Yuefei Ge, 34, of San Jose for allegedly developing microchips through their company, SICO Microsystems Inc., based on stolen designs. They are accused of reaching out to Chinese government agencies for funding, including a branch of the Chinese military.

Mountain View-based NetLogic Microsystems Inc. and the San Jose office of Taiwan Semiconductor Manufacturing Co. are two of the companies from which Lee and Ge allegedly stole classified documents.

Only three people have ever been found guilty of economic espionage in the United States – all were from Silicon Valley.

Now the emails are posted on various sites around the web.

One key strategy that MediaDefender employs to combat illegal downloads is flooding various BitTorrent applications with phony material. However, the stolen emails also exposed some of MediaDefender’s less-scrupulous endeavors.

One such strategy was a fake pirate site called WiiVii.com that offered copyrighted files ready to download. As someone downloaded from that site, their IP address was saved in MediaDefender’s databases. Additionally, software was unknowingly installed on the user’s computer effectively turning it into a “zombie machine” helping to send fake files across file-sharing networks.

Commentary: There’s no real “good guy” in this situation. Yes, the emails were stolen, but they showed off some of the dirtier tactics employed by MediaDefender. Companies have started using progressive methods of fighting piracy and it’s inevitable that they’re going to have to do the same thing with online file sharing. All that money and effort fighting Napster early this century didn’t put a dent in peer-to-peer networks, or the new and improved methods of downloading files through BitTorrent.

The company reported on July 3rd that the administrator illegally downloaded the information and sold it to a third party data broker, who in turn sold the data to various marketing companies.

Fidelity National confirmed that the unnamed employee had been fired.

Commentary: Over 3.5 million credit card accounts were taken along with over 1.4 million credit card numbers. This is a prime example of how one employee can cause significant damage to a large corporation, their reputation, and their clients.

A jury determined that Robert Yarbrough broke his contract with the company after he violated non-competition obligations and leaked company secrets. He was charged with $1.1 million in damages.

Westport Big & Tall, a competitor of Casual Male, was charged $400,000 for interference with contractual relations.

At issue was that in trying to protect competitive secrets, court officials didn’t sufficiently “black out” redacted portions of the court filings – and thereby the information could still be read.

Among the inadvertent disclosures was that Whole Foods prohibits its suppliers from doing business directly with Wal-Mart as Whole Foods “wants Wal-Mart to have to go through distributors because that raises Wal-Mart’s costs.”

The Rocky Mountain News has the best piece on what was supposed to be secret.

Commentary: Someone needs to get a better black magic marker.

Schetty, concerned that Rohm and Haas would steal Technic’s bid with Intel, convinced unnamed Technic and Amkor employees to sabotage Rohm and Haas’ test at an Amkor facility in the Philippines. Schetty is looking at a possible maximum sentence of 10 years in prison, 3 years probation and a $250,000 fine. He agreed to pay $15,536 in restitution to Rohm and Haas.

Read the full article.

Commentary: Talk about going to extremes to stop the competition. Schetty actually convinced Technic employees that it was ‘good business’ to destroy a rival’s product. Another example of how one employee can ruin an entire company (even their own).

To help protect its reputation, IBM announced this week that it was establishing a code of conduct to govern its more than 5,000 employees who have a presence (or “avatar”) on “Second Life” and other online universes.

IBM appears to be the first corporation to create rules governing virtual worlds- its guidelines address such things as protection of intellectual property, export controls (!), proper attire, and even sexual harassment and discrimination:

IBM strives to create a workplace that is free from discrimination or harassment and takes steps to remedy any such problems. External virtual worlds, however, are outside of IBM’s control. If you are in a virtual environment in conjunction with your work at IBM and you encounter behavior there that would not be acceptable inside IBM, the recommended approach is to ignore such behavior and to “walk away” or even sign out of the virtual world.

Commentary:Check out the full IBM net-world guidelines here.

Back in the Q2 edition of Ethisphere, we reviewed IBM’s “real world” code of conduct and were impressed – while this online code is not quite as good, they are the first corporation to have established one of its kind, which is impressive in its own right.

See the avatar in the picture up above? That’s the avatar of Sam Palmisano, the CEO of IBM. Other than dressing himself in the IBM blue, it looks like he grew about a foot and hit the gym… sure beats having to work out for real.

According to media reports and court filings

Lenowitz was among 13 people charged March 1st in separate insider trading indictments against employees at UBS, Morgan Stanley and Bear Stearns. As part of the

Lenowitz traded on information such as when he was tipped that UBS would lower its stock rating on Tenet Healthcare in Oct. 2002.

Commentary: According to the SEC, which sued 14 defendants in March, the alleged scheme stretched over five years, included hundreds of tips and produced more than $15 million in illegal profits.

Bringing reference to shades of the 80’s, Linda Thomsen, the SEC’s enforcement chief, described the trading scandal as “one of the most pervasive Wall Street insider trading cases since the days of Ivan Boesky and Dennis Levine.”

The suit is asking for Pfizer to provide long-term identity theft insurance as well as compensation for damages the 17,000 employees may have incurred. Currently the company is providing a one year, $25,000 identity theft insurance policy as well as one year of free access to a national credit reporting company.

Read the story as posted by Forbes.

Commentary: Adding insult to injury, it took over nine weeks for Pfizer to inform the violated employees of the infraction after it became known to the company. This seems like an unfortunate amount of time for such important information to be known to the victims.