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Former Insitu Worker Charged With IP Theft

A former contract worker for a Boeing Co. subsidiary pleaded not guilty to stealing a maintenance manual for top-secret technology.

YAKIMA, Wash. (AP) — A former contract worker for a Boeing Co. subsidiary that designs and builds aerial drones for the U.S. government and other clients pleaded not guilty in federal court this week to stealing a maintenance manual for the top-secret technology.

Stephen Marty Ward of Palmyra, Ind., is accused of duplicating or downloading the manual for an Insitu Inc. drone while working as a technical writer, then offering to sell the information back for $400,000 after he was terminated.

He pleaded not guilty to theft of trade secrets Wednesday in U.S. District Court in Yakima, Wash. and was ordered to be held in custody pending trial.

Ward was employed by Corsair Engineering Inc. of Kirkland, Wash., and became a contract worker for Insitu on Aug. 8, according to an affidavit filed with the indictment. He was terminated Oct. 3.

According to the affidavit, two Corsair employees reported that Ward called one day after he was terminated, saying he had a substantial amount of data in his possession and that he "wanted a healthy settlement to go away and not make a fuss."

Ward also said he was scheduling a trip abroad and that "other people were interested in the technology," the affidavit said.

Insitu has a contract with the U.S. Navy to design and test a specific drone system that is larger and more technologically advanced than the company's ScanEagle drone, which has flown more than 500,000 combat flight hours for the U.S. Department of Defense and other international customers.

Ward allegedly downloaded or copied a maintenance manual for the larger drone.

However, that manual contains information that is the culmination of years of research and development into both unmanned vehicles, and the incorporation of advanced technologies makes the manual significantly more valuable to Insitu, the affidavit said.

In a subsequent call, a Corsair executive offered Ward $300,000 in exchange for all Insitu documents in his possession. Ward countered with $400,000, and went to a restaurant in Floyds Knobs, Indiana for a $10,000 down payment on Nov. 10, according to the affidavit. Authorities arrested him that day.

An FBI spokeswoman declined comment. The U.S. Attorney's Office and a federal defender assigned to Ward did not return telephone calls seeking comment.

"Insitu has safeguards in place to protect its people, proprietary data and property," Insitu spokeswoman Jill Vacek said in a statement Friday. "We continue to cooperate fully with the FBI and federal prosecutors until the matter is resolved."

The case comes amid increasing scrutiny of the U.S. drone program following the capture of a surveillance drone by Iranian armed forces. Iran has called the operation an "invasion and hostile act" and rejected a U.S. demand to return it.

The RQ-170 Sentinel drone is produced by Lockheed Martin.

Insitu was founded as an entrepreneurial startup in 1994. Chicago-based Boeing has partnered with the company since 2002 on the ScanEagle drone, which can fly above 16,000 feet and loiter nearly invisibly and inaudibly for more than 24 hours. The drones carry cameras that allow operators on the ground to track stationary and moving targets.

Boeing acquired the company in 2008. A year later, Insitu was awarded a five-year government contract valued at as much as $250 million to operate and maintain drones for U.S. intelligence, surveillance and reconnaissance.

Insitu announced plans earlier this week to expand and centralize its operations in Bingen, Wash., a small town located in the picturesque Columbia River Gorge. The company employs about 800 people in the area straddling Washington and Oregon.

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