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[ISN] TX Corporate Hackers Allegedly Steal $150 Million
By Robert Riggs
Sept 27, 2006
(CBS 11 News) ADDISON Jim Damman thought somebody was looking over his
shoulder for months. Little did he know that his office had been
routinely broken into and more than 150-million dollars worth of trade
secrets were stolen without a visible trace, according to a federal
The President of Exel Transportation Services says his suspicion grew so
strong that he took the unusual step of sweeping the companys Addison
offices for electronic bugs.
Exel is not a business typically considered a target of corporate spying
its a shipping broker. Inside its offices, logistic agents sit in front
of computer terminals with telephones cradled to their ears. Hundreds of
times a day, they match-up shippers to freight carriers and move loads
of everything from potatoes to computer chips around the world.
The sweep for bugs yielded nothing. But Damman says a new start-up
competitor in Plano named Total Transportation Services (TTS) seemed to
have an uncanny knack of taking away Exels customers.
The competitor was like one step ahead of us but they could not have
known we were going to see a certain person, Damman says. They could not
have known what we were going to talk about when we were going to see
that person, unless they were getting information somewhere. We knew
something was wrong.
Exel alleges what was wrong in a federal lawsuit filed against Total
Transportation Services (TTS) and four former Exel executives who went
to work there.
The lawsuit alleges that a computer forensics investigation discovered a
conspiracy in which disloyal insiders and former employees hacked into
Exels computer network to steal trade secrets and that the stolen
information helped TTS quickly launch its new business.
Matt Yarbrough, a former federal cyber crimes prosecutor, now with the
Fish & Richardson law firm, represents Exel, This is no different than
your child cheating off the paper of the child sitting next to them. You
wouldn't put up with that conduct for your kid. You certainly wouldnt
want corporate CEO's and executives in American industry doing the same
The lawsuit accuses two of the former Exel executives, Mike Musacchio
and Roy Brown, are accused of installing a backdoor into Exels computer
An exhibit in the lawsuit features a series of email messages titled You
will enjoy this that were exchanged between Musacchio and Brown last
October. Musacchio, who had left Exel a month earlier to set-up TTS,
asked Brown, who was still working at Exel, ?how are we going to get
into email after you leave?
Brown left Exel three days later for TTS after replying, Not a problem.
I have the back door password that only I know and no one else can
change. Musaccho replied, Beauty!
Yarbrough says the beauty of the alleged scheme was that the backdoor
was the equivalent of having a secret entrance into the vault for the
companys crown jewels. Whenever you have super user backdoor into any
corporate network or enterprise you can do whatever damage you want to
commit, as much ransacking or taking of that corporate information that
you want to, Yarbrough said.
The lawsuit alleges that Exels computer network was hacked into almost
1200 times and that the defendants accessed the email accounts of 65 of
Exels top ranking employees.
Damman says he feels betrayed, It's a very strange feeling to think that
somebody has seen everything that you have seen. Everything that you
have sent. Everything you have received from business people, my boss,
from customers, from my wife. It's a strange feeling.
A written statement from Thompson & Knight, the Dallas law firm
defending TTS, says that Musacchio and Brown, Were told in April of this
year to resign or be fired. They have not been with the company since
that time. They are not receiving legal assistance from the company.
This company (TTS) is built on high ethics and excellent service to the
TTS admits, in a court filing, that it currently has Exels documents on
its computer system but doesnt know how those documents were obtained.
TTS denied all allegations that the company participated in hacking or
stealing trade secrets.
The attorneys for Musacchio and Brown declined to comment. Brown took
the 5th Amendment privilege against self incrimination 45-times in
response to questions in the lawsuit about hacking and stealing Exels
trade secrets. Musacchio took the 5th Amendment in the lawsuit when
asked if after leaving he accessed the email accounts of five Exel
employees, including its president Jim Damman.
The lawsuit alleges that the hackers brazenly created exact replicas of
Exels documents, such as contracts, budget templates, and spreadsheets,
for use in connection with TTSs business.
Damman says the looted information included a $300,000 marketing study.
Its scary its something we all have to watch out for in this electronic
day and age that we are in. People talk about identity theft all the
time. This is just a big example.
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