Microsoft, Watergate and Industrial Espionage

["B.K. DeLong" <bkdelong () POBOX COM>]

Hey-

Crazy stuff:

http://interactive.wsj.com/articles/SB961105810825579561.htm

June 16, 2000


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Police Probe Attempt to Buy
Garbage Linked to Microsoft
By TED BRIDIS
Staff Reporter of THE WALL STREET JOURNAL


WASHINGTON -- On the evening of June 1, Jose Lopez and Erminia Morales of
P&R Enterprises were going about their normal office-cleaning duties when,
they say, a woman approached them and offered in Spanish to pay between $50
and $60 to each of them for the trash of the Association for Competitive
Technology here. The trade group is heavily funded by Microsoft Corp. and
has been relentlessly pro-Microsoft in its work.

The cleaners said the woman identified herself as Blanca Lopez and asked
them to bring the bags of trash to Upstream Technologies, on the same floor
of the building. The cleaners declined.

Less than one week later -- exactly one day before U.S. District Judge
Thomas Penfield Jackson ordered the breakup of the software giant -- the
value of Microsoft-related trash rose dramatically.

Lou DeLeon, the general manager for the cleaning service, said Ms. Lopez
returned the evening of June 6 and repeated her request for the trash. This
time she offered $500 each to the two cleaners and $200 more to their
supervisor. When they again declined, Ms. Lopez handed over a copy of her
business card and asked that Mr. DeLeon call her, saying she was
"investigating a criminal case and wanted the trash from these suites,"
according to the cleaning crew. Mr. DeLeon got the business card but never
called her.

The cash-for-trash offers came just days before a mysterious break-in at
Microsoft's offices here in Dupont Circle. So far, no one has been charged
with anything. Microsoft officials say it doesn't look like any valuables
were stolen in the weekend break-in. And police say the bizarre
trash-buying attempt -- which may have been totally unrelated to the
break-in -- probably wasn't even against the law.

When contacted by The Wall Street Journal, Blanca Lopez said, "I know
nothing of this," and referred questions to Martin Lobel, a Washington
antitrust attorney. Mr. Lobel said Monday that he was paid "a nice
retainer" by an executive at Upstream Technologies, whose name he declined
to reveal, to investigate the trash-buying incident. But he said Blanca
Lopez was not his client. The next day, Blanca Lopez hired attorney Pamela
Bethel, a former assistant U.S. prosecutor, and stopped talking to Mr.
Lobel, he said. Ms. Bethel declined to comment.

Upstream Technologies is itself shrouded in mystery, with no evidence that
it exists as a corporation. Its three-month lease next to the Association
for Competitive Technology was arranged to begin May 1 by a Robert Walters,
according to a copy of the credit application he made for the property.

An Upstream lawyer identified Mr. Walters as a former investigative
reporter. A New York Times article in August 1998 identified a Robert
Walters as a former newspaper reporter who had links to Investigative Group
International Inc., a high-powered research firm led by Terry Lenzner that
has been employed by lawyers for President Clinton. Larry Potts, former
deputy director at the Federal Bureau of Investigation, is IGI's chief
operating officer.

Sitting on a special board of advisers created by IGI is George Vradenburg,
senior vice president for global and strategic policy at America Online
Inc., a fierce Microsoft rival. An AOL spokesman, Andrew Weinstein, said
Mr. Vradenburg agreed to sit on the board at the request of Mr. Lenzner, a
personal friend. But Mr. Vradenburg hasn't attended any board meetings and
isn't involved with the work of the company, Mr. Weinstein said.

In a statement, Edward Federico, corporate vice president and director of
operations for IGI in Washington, said, "It is IGI's longstanding policy
not to respond to media inquiries relating to client, personnel or other
business issues. However, at the specific request of Mr. George Vradenburg
of America Online, a member of IGI's advisory board, I can confirm that
neither AOL nor Mr. Vradenburg is a client of IGI."

In correspondence with the building's management, Mr. Walters named three
others from Upstream authorized to use the office, including one person
identified as Grant Stockdale. Mr. Stockdale was listed as the IGI
spokesman on a May 1 news release. But a woman answering the telephone at
the number provided for Mr. Stockdale on the release said that no one with
that name worked at IGI.

Mr. Walters didn't return repeated messages left at his home and office and
with business colleagues. By Friday, a woman answering the office telephone
number that had been accepting messages for Mr. Walters said she did not
know anyone by that name.

Aside from the hiring of Mr. Lobel and the opening of the office, there is
no evidence that Upstream Technologies exists as a corporation. On a credit
application for the office suite, Mr. Walters said the company was involved
in "technology development," and listed an address on Main Street in
Laurel, Md. That address is of a telephone answering service, where the
owner and employees say they have never heard of Upstream. Maryland state
records show no firm incorporated there.

Mr. Walters wrote that Upstream wanted to rent the office for "selected
company employees" to make telephone calls and catch up on work while they
were downtown. Telephone logs for the Upstream office for the entire month
of May show only five outgoing phone calls, none lasting longer than 48
seconds and almost all of them made late in the evening. Three were made to
the home of Mr. Walters in Washington or to his wife at work. The other two
were to voice-messaging systems.

The new Upstream lawyer, Mr. Lobel, says he doesn't know any details about
the company either. "They tend to be very low-profile," Mr. Lobel said. He
complained that "so far nobody has returned my calls."

The head of the pro-Microsoft trade association, Jonathan Zuck, and some
Microsoft insiders believe industry rivals may be behind the break-in and
the two attempts to buy the unshredded trash at Mr. Zuck's offices. They
note the plethora of leaks of confidential Microsoft e-mails to the press
during the antitrust investigation to bolster their case.

Police are continuing to investigate the break-in at Microsoft's offices here.

The cleaning crew who turned down $1,200 for the trash at Mr. Zuck's
building, meanwhile, were rewarded this week by their boss. "We appreciate
the honesty of our employees," Mr. DeLeon said. He gave them checks for
modest amounts -- far less than $500 each, he admitted -- and a pizza party.

Write to Ted Bridis at ted.bridis () wsj com

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