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Men Sentenced for Attempting to Sell Intel Trade Secrets
December 4, 1998
(Sherman, Texas) - Two California men were sentenced to prison terms today in federal court in Sherman, Texas, for attempting to sell trade secrets that belonged to the Intel Corporation. STEVEN CRAIG HALLSTEAD, 29, and BRIAN RUSSELL PRINGLE, 34, were sentenced to prison terms of months and months, respectively. The two plead guilty to attempting to sell several prototype computer central processing units which belonged to the Intel Corporation, to the Cyrix Corporation, a competitor of Intel. The men were convicted under a relatively new federal statute, known as the "Economic Espionage Act". According to federal prosecutors in Plano, this case was only the ninth prosecution in the nation under the new statute.
According to prosecutors, approximately five of the prototype central processing units, known at Intel as "Slot II" CPUs, were stolen in a burglary in California in April of this year. The Slot II CPUs, which contained various trade secrets, were in the prototype stage and were not scheduled to be released on the public market until June. In May, Hallstead, identifying himself on the telephone only as "Steve" contacted a representative of the Cyrix Corporation in Richardson, Texas, offering to sell the Slot II CPUs to Cyrix. Hallstead told the Officials at Cyrix that the CPUs were being developed by Intel and that they would be valuable to Cyrix. Cyrix immediately contacted law enforcement officials to report the incident. At the request of the FBI, Cyrix officials cooperated with the FBI in carrying out a sting operation to identify the individual who was attempting to sell the sell the Slot II CPUs to Cyrix. Cyrix officials permitted an FBI agent, to pose as a Cyrix employee, and, through a series of telephone conversations, Hallstead offered to sell five of the Slot II CPUs to Cyrix for a total of $75,000. FBI agents in Dallas, working with FBI agents in California, were able to identify and locate Hallstead, and his business partner, Pringle, in California. Hallstead arranged for Pringle to travel from California to Richardson to deliver two of the Slot II CPU’s to the Cyrix offices in Richardson on May 15, 1998. Pringle was arrested on that date when he arrived at the Cyrix offices and delivered the CPUs to FBI agents who were posing as Cyrix employees. Hallstead was arrested later that day in California.
"Protection of trade secrets is essential to our system of commerce, and we will vigorously investigate and prosecute those who violate federal law," said U.S. Attorney Mike Bradford. Bradford also added that, "The successful prosecution of the persons responsible for this crime would not have been possible without the assistance and cooperation of the Cyrix Corporation.###
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