By Kathleen Day
Washington Post Staff Writer
Thursday, July 6, 2006; D01
The FBI arrested three people in Atlanta yesterday on charges that they conspired to steal trade secrets from Coca-Cola Co. and sell the information for more than $1.5 million to PepsiCo Inc., federal law enforcement officials said.
The defendants, including one Coca-Cola employee, who worked as an administrative assistant in the company's Atlanta headquarters, contacted PepsiCo officials in May, who tipped off Coca-Cola officials, who then contacted the FBI, according to Atlanta U.S. Attorney David E. Nahmias.
Coca-Cola and PepsiCo, whose fierce rivalry in the soft-drink and food arena has provided case studies for generations of marketing students, worked together to help federal agents set up an undercover sting operation that led to yesterday's arrests.
A company surveillance camera caught Coca-Cola employee Joya Williams at her desk looking through files and "stuffing documents into bags," Nahmias and FBI officials said. Then in June, an undercover FBI agent met at the Atlanta airport with another of the defendants, handing him $30,000 in a yellow Girl Scout Cookie box in exchange for an Armani bag containing confidential Coca-Cola documents and a sample of a product the company was developing, officials said.
The FBI agent promised $45,000 more would be provided later, after the sample product had been tested. On June 27, an FBI agent offered to pay $1.5 million for additional documents and information, the officials said.
The three defendants, who were in jail last night pending an appearance before a judge this morning, were unavailable for comment.
Coca-Cola spokesman Ben Deutsch would not comment on the information the three suspects are alleged to have stolen except to say it did not contain the tightly guarded recipe for Coke. "The secret formula was not and is not at risk," he said.
The company released a memo that was sent by Coca-Cola's chairman and chief executive, E. Neville Isdell, sent to the company's 50,000 employees worldwide, detailing the arrests and saying the case has caused the company to reconsider security of trade secrets from the top down.
"As this is an ongoing criminal matter, we are limited in what we can communicate," Isdell said in the memo. "However, it should be noted that no personal employee information was ever at risk." The involvement in the alleged scheme by a Coca-Cola employee was "difficult for all of us to accept," he said, but it underscored the need to safeguard trade secrets.
"I would also like to express our sincere appreciation to PepsiCo for alerting us to this attack," he said.
Dave DeCecco, spokesman for Pepsi-Cola North America, said: "We only did what any responsible company would do. Competition can sometimes be fierce, but it also must be fair and legal."
Federal prosecutors said the alleged conspirator who made the airport exchange, whom they identified as Ibrahim Dimson of New York, sent an e-mail to an FBI undercover agent saying: "I have information that's all classified and extremely confidential, that only a handful of the top execs at my company have seen. I can even provide actual products and packaging of certain products."
The third alleged conspirator, identified by prosecutors as Edmund Duhaney of Decatur, Ga., opened a bank account with Dimson the day the FBI agent agreed to pay $1.5 million for additional information, the officials said.