Cybercrime Review 2013: 62 year old Hacker Michael Musacchio Sentenced to 63 Months in a 150-Million Dollars Worth of Trade Secrets Case

In March 2013 A civil trade secret theft case initiated by Dallas attorney Matthew Yarbrough has resulted in a five-year federal prison term for a former North Texas CEO following his conviction for computer hacking.

Matthew Yarbrough

A civil trade secret theft case initiated by Dallas attorney
Matthew Yarbrough has resulted in a five-year federal prison term for a former North Texas CEO following his conviction for computer hacking.

Michael Musacchio, 62, was sentenced to 63 months in federal prison on September 5th 2013 by U.S. District Court Judge
Jorge A. Solis of Dallas. Mr. Musacchio was convicted of hacking the computer system maintained by his former employer,
Exel Transportation Services, and using related trade secrets at a new company, Total Transportation Services LLC of Frisco.

Judge Jorge A. Solis

The criminal case was based on a trade secret theft lawsuit filed in 2006 by Mr. Yarbrough. That case yielded a 10 million USD settlement against Total Transportation Services.

“If we hadn’t filed the civil case, there probably wouldn’t have been a criminal case,” says Mr. Yarbrough. “It took more than seven years for Mr. Musacchio to be brought to justice in criminal court. That’s why companies need to move as quickly as possible to take civil legal action against those who steal company trade secrets and intellectual property.”

Mr. Yarbrough says Mr. Musacchio’s prison sentence is part of a federal initiative to protect U.S. businesses’ trade secrets and innovations, which President Barack Obama recently declared to be “essential to our prosperity.”

“A company’s greatest asset isn’t the tangible widgets in its warehouse, but the data in its network,” says Mr. Yarbrough, a former Assistant U.S. Attorney and former head of the Department of Justice’s Cybercrimes and Criminal Intellectual Property Rights Task Force (IPR).

“I’m encouraging business leaders to be on the front end of this issue,” Yarbrough told the Dallas Business Journal. “Doing that up front helps you put together a strategic response plan, and that will help them prevent the theft of valuable trade secrets.”

According to the evidence submitted at trial, from 2002 to 2004, Musacchio was the president of Exel Transportation Services, a third party logistics or intermodal transportation company that facilitated links between shippers and common carriers in the manufacturing, retail, and consumer industries.

In 2004, Musacchio left Exel to form a competing company, Total Transportation Services, where he was the original president and CEO. Two other former Exel employees, Joseph Roy Brown and John Michael Kelly, also went to work at Musacchio’s new company.

Trial testimony and exhibits established that between 2004 and 2006, Musacchio, Brown, and Kelly engaged in a scheme to hack into Exel’s computer system for the purpose of conducting corporate espionage.

Through their repeated unauthorized accesses into Exel’s e-mail accounts, the co-conspirators were able to obtain Exel’s confidential and proprietary business information and use it to benefit themselves and their new employer.