PLANO, Tex. — Two former employees of J.C. Penney Co. have been involved in separate embezzling cases totaling more than $20 million, with one charged and another found guilty.
This story first appeared in the November 1, 2002 issue of WWD. Subscribe Today.
One of the retailer’s former store clerks here has been charged with allegedly stealing nearly $700,000 over three years. In a separate case, a former in-house software developer has been found guilty of stealing proprietary Internet-related software worth $20 million.
On Wednesday, Henry Wang was sentenced to six months confinement and ordered to pay Penney’s, Microsoft and WebGain $41,042 in restitution, following his June 2002 guilty plea to a one-count charge of computer fraud. U.S. District Judge Jerry Buchmeyer in Dallas delivered the sentence.
Penney’s estimated that Wang stole $20 million in Web-related computer files pertaining to its popular e-commerce site, jcpenney.com. Penney’s valuation of the stolen software was based upon the money the retailer spent in research and development costs. Wang’s lawyers argued that the stolen information was worthless.
U.S. Department of Justice prosecutors, led by Erin Nealy Cox, reasoned that the federal laws protecting intellectual property rights, including statutes dealing with copyright infringement, theft of trade secrets and computer fraud, were enacted to provide a meaningful deterrent to theft of proprietary ideas or creations.
According to a statement from the Justice Department, “Wang removed source code files, applications, data and other computer files and software that ran the J.C. Penney e-commerce store.” The statement also said, “The source code created by Penney’s was essentially a blueprint for an innovative and superior e-commerce site that would be valuable to any company wanting to increase their Internet business.’’
Penney’s Web site is among the most-visited and profitable e-commerce sites among the rapidly dwindling cadre of online retailers, with at least $400 million a year in sales.
Wang took the computer files by e-mailing them to his home computer and downloading them onto disks. Wang maintained that he didn’t give the software to Penney’s competitors, though he admitted e-mailing it to a friend in California, according to a spokeswoman for the U.S. Attorney in Dallas.
Wang also admitted that he had stolen software from previous employers, including Eastman Kodak, MCI, Fidelity Investors and NetWorth for “souvenirs” of his jobs, she added.
Penney’s discovered Wang’s theft after he left the company, when a supervisor accessed Wang’s computer to delete sensitive information and discovered the e-mail transfers.
In the second case, Lauren Elaine Richardson, 24, turned herself in Oct. 22 to Collin County police officers on a charge of misapplication of fiduciary funds, a first-degree felony that carries a maximum sentence of 99 years in prison and a fine not to exceed $10,000. She was released on $50,000 bail.
Richardson, a resident of nearby Anna, Tex., was an office clerk who handled various financial transactions at the J.C. Penney store at Collin Creek Mall here. Her job included collecting daily cash receipts from the store’s registers and filling out bank deposit slips.
According to police records, a J.C. Penney district loss prevention manager uncovered Richardson’s misapplication of funds totaling $677,630. Richardson gave a written statement to detectives earlier this month admitting that she had taken the funds by falsifying gift certificate redemptions.
“I entered into the office till gift certificates and took the money from the till,’’ Richardson told detectives, according to a police affidavit.
Richardson tried to cover up the thefts by recording the missing cash as redeemed gift certificates, according to court records, balancing Penney’s books to reflect no losses.
Suspicions were aroused when a Penney’s loss-prevention manager tried to retrieve the gift certificates and was unable to find them.
J.C. Penney declined to comment on the case. Richardson didn’t return phone calls seeking comment Thursday.