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Bureau storms HTC's offices over possible fraud, espionage

TAIPEI, Taiwan -- Investigators stormed into HTC yesterday to investigate some of the company's design staff, who are suspected of stealing trade secrets and defrauding HTC of nearly NT$10 million.

HTC accused three of its senior design professionals of fraud. The suspects were alleged to have set up new businesses on their own. Investigators started interrogating the suspects and searching their homes and offices yesterday afternoon.

The Bureau of Investigations said that it had received a complaint from HTC saying that three senior employees in the design development department were suspected of designing cellphone cases and lying about it being contract work. The suspects allegedly conspired with a manufacturer to issue fake invoices amounting to nearly NT$10 million for performing design work. Upon receiving the money from HTC, the manufacturer allegedly transferred it to the suspects.

HTC's complaint said the suspects have set up design companies in both Taiwan and mainland China, and the offices are currently being decorated. HTC indicated that the suspects might have stolen the trade secret of a crucial new interface, which is due to be released later this year. The company accused the three of breach of trust and fraud.

Investigators caught many HTC employees by surprise yesterday when they arrived. Most HTC staff were unaware of the alleged fraud and trade secrets issue. Investigators conducted the search after the stock market closed yesterday so that HTC's shares would not be affected, sources said.

The suspects' phones and laptops were obtained by investigators, who believe that the suspects might have transferred business secrets via emails or stored them in electronic devices. The investigators will examine the devices to discover whether trade secrets have been stolen.

One suspect lashed out against investigators and HTC's legal staff at the scene, saying even the “boss” knew about setting up the new business and questioned the reason for the search.

HTC's public relations department said it would not comment on the incident as the investigation is not open to the public.

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