Houston hacking case shows how unfair competition can turn criminal

Businessman's hands using laptopA website founder sold the business for millions and then hacked into it, looking to sell the new owner its own proprietary in-formation. Read on to find out why that wasn’t such a great business model.

No gusher for Oilpro

In 2010, David Kent sold his oil and gas networking site, Rigzone, for $51 mil-lion. In 2013, he created Oilpro, a competing website, which he tried to sell to Rig-zone’s new owners.

The problem with Oilpro? Turns out, Kent had built the site based on information stolen from Rigzone, including hundreds of thousands of resumes and memberships. The stolen information boosted Oilpro’s value.

To accomplish the feat, Kent used his knowledge of Rigzone’s website to exploit its code, access files, and gather the information that now belonged to the new owners. He even hired former Rigzone employees who had knowledge of the company’s computer systems. Kent admitted he wasn’t authorized to harvest the data but pointed out he didn’t need to get past any log-in features to obtain the valuable information.

New venture as ‘Prisonpro’

For criminally attempting to gain an unfair business advantage, Kent was sentenced to prison in October 2017 and forced to pay more than $3 million in restitution. He pleaded guilty to intentionally accessing a protected computer without authorization, which is a federal crime.

Kent’s legal troubles, however, are not over. In June 2016, Rigzone’s owners sued him in federal court in Houston for computer law violations, fraud, unfair competition, and misappropriation of confidential information, among other claims. The civil case is still ongoing.

Lessons for employers

Kent’s case shows that betrayals of trust, breaches of loyalty, and unfair competition can turn into criminal matters resulting in prison time and hefty fines for the perpetrators. It also underscores the importance of “changing the locks” when your organization goes through transitions, such as a merger or an acquisition, or replaces personnel with login credentials to important information. When substantial sums of money are on the line, it’s best not to leave the backdoor to your business unlocked.

This article was originally published on Texas Employment Law Letter by Jacob M. Monty, Monty & Ramirez LLP Managing Partner. For more information, please contact us online.


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