Former Employees of Dallas-based Car Parts Distributorship Charged with Repeatedly Intruding into Competitor’s Computer Database for Commercial Advantage and Illegally Trafficking in Computer Passwords

The United States Attorney's Office for the Northern District of California announced that the former CEO of a Dallas-based car parts distributorship made his initial appearance in federal court in San Francisco today on charges that he and two others in the company, including its Chief Technology Officer and a computer consultant, repeatedly intruded into a competitor's computer database for commercial advantage and illegally trafficked in computer passwords.

Mehdi Rowghani, 59, of Coppell, Texas, Geoffrey Michael Glaze, 26, now of London, England, and Kevin Harold Smith, 38, of Coppell, Texas, were charged in a sealed indictment last month on one count of conspiracy in violation of 18 U.S.C. § 371; five counts of computer password trafficking in violation of 18 U.S.C. § 1030(a)(6)(A); and ten counts of unauthorized access to a protected computer in violation of 18 U.S.C. §§ 1030(a)(2)(C) & (c)(2)(B)(i).

Mr. Rowghani pled not guilty to the charges in a proceeding this morning before United States Magistrate Judge Maria-Elena James. Mr. Rowghani, who was released on a $50,000 appearance bond, is next scheduled to appear before United States District Court Judge Vaughn R. Walker on March 24, 2004 at 10:30 a.m. Defendants Glaze and Smith are expected to make their initial appearances before Judge James on February 19, 2004 at 9:30 a.m.

The indictment, which was unsealed today, alleges that Mr. Rowghani was the President and CEO, defendant Smith the Chief Technology Officer, and defendant Glaze was a computer consultant of Dallas European Parts Distributors, a wholesale distributor of replacement parts for German and Swedish automobiles based in Texas. Dallas European was a competitor of SSF Auto Imports, Inc., a wholesale parts distributor for imported cars based in South San Francisco, California. In 2000, SSF had established a Web site that allowed authorized users to access a catalog database of more than 20,000 replacement automotive parts, which contained detailed descriptions and photographs created by SSF. The SSF database allowed its customers to enter part numbers to search for cost, availability, manufacture, price and application, then order the part online. SSF restricted access to its online database by usernames and passwords.

Beginning in 2001, defendants conspired to gain unauthorized access to SSF's computer database by acquiring the usernames and passwords of legitimate SSF customers, such as car dealers and repair shops. Using those illegally acquired usernames and passwords, defendants took information from SSF for purposes of commercial advantage.

The maximum statutory penalty for the conspiracy count and for each of the computer intrusion counts is five years' imprisonment and a fine of $250,000, plus restitution if appropriate. The maximum statutory penalty for each of the password trafficking counts is one year imprisonment and a fine of $100,000, plus restitution if appropriate. However, any sentence following conviction would be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and would be imposed in the discretion of the Court. An indictment simply contains allegations against an individual and, as with all defendants, Mr. Rowghani, Mr. Glaze and Mr. Smith must be presumed not guilty unless and until convicted.

The prosecution was overseen by the Computer Hacking and Intellectual Property (CHIP) Unit of the United States Attorney's Office, and is the result of a two-year investigation by special agents of the Federal Bureau of Investigation. Kyle F. Waldinger is the Assistant U.S. Attorney in the CHIP unit who is prosecuting the case.