Who's Spying on You at Work?


The Maidstone Club sits high on a seaside bluff in East Hampton, New York. The quarter-mile drive from the town’s main road to the parking lot is peppered with signs reading PRIVATE, MEMBERS ONLY, NO TRESPASSING. In August 2006, the CEO of a private-equity firm hired me to ignore those warnings, weasel my way onto Maidstone’s opulent grounds, and stake out a golf tournament. Not just any golf tournament but an intimate, end-of-summer duel hosted by the head of a rival equity firm.

In this case, my client was convinced that his rival was plotting something far bigger than 18 holes of golf; he knew in his gut the man was closing in on a deal. It was up to me to uncover the plan. After phoning a friend for info on Maidstone, I hustled to the library in East Hampton and started researching the Wainwright family. Distant relatives of singer-songwriters Loudon and Rufus Wainwright, the well-to-do clan had ambled about Maidstone’s lawns for three generations. On the day of the tournament, I dressed shabby-Wasp—white polo shirt, rumpled khaki shorts—and shouldered a bag of borrowed clubs. On the way to the course, I composed a dialogue in my head about the fictional match I’d be playing with Mr. Wainwright later that afternoon. I arrived early, I’d explain, to work on my putting.

Once I slipped past the pimply-faced valets, announcing with a little too much gusto that I was a VIP guest, I made my way to the pro shop, and there on a poster board were the tournament pairings. With a little green pencil swiped from a golf cart, I recorded the names on a scorecard, then returned to my car to phone my client. The info I read to him meant nothing to me, but he quickly identified the CEOs of two struggling airlines. Just like that, we’d discovered the blueprint of a prospective multi-billion-dollar merger.

While this little escapade may sound far-fetched, I assure you that it’s not. If you had walked down Lexington Avenue on Manhattan’s Upper East Side in January, beyond the blue police barricades and TV crews stationed outside Bernie Madoff’s apartment building, then turned right onto leafy East 64th Street, you probably would have spotted a number of vans parked outside the four-story townhouses. Inside the vans were computer hackers hired by the private investigators working for Madoff’s victims. Aiming their equipment at the Ponzi-schemer’s penthouse, they tapped into his wireless network, searching for clues to where he might have hidden the cash he’d scammed from his clients.

Because today’s Fortune 500 companies compete in a global market, because the Chinese eagerly pay Cold War spies from Russia to steal America’s trade secrets, because—let’s face it—money is an aphrodisiac, corporate espionage is a growing threat in every corner of the business world. Rex Tillerson, the CEO of Exxon, paid $9,000 last year for secure phones and communications equipment. Wal-Mart reportedly asked the former FBI and CIA operatives in its Threat Research and Analysis Group to sweep executives’ offices for bugs. Hedge-fund managers hire polygraph experts to evaluate the sincerity of the company spokesmen who deliver financial forecasts. By one FBI estimate, U.S. firms lose up to $100 billion annually to the theft of proprietary information. At the same time, according to the Christian Science Monitor, these corporations spent $43 billion on “spy services” in 2007 alone.

That’s how fierce the pressure to produce profits is today. In October, Raj Rajaratnam, the founder of the Galleon Group hedge fund, was arrested for securities fraud and insider trading. According to a witness now cooperating with the Securities and Exchange Commission, Rajaratnam once paid $10,000 for a tip regarding a takeover bid for Hilton Hotels. Armed with that info, Galleon reportedly reaped a $4 million windfall. Rajaratnam’s employees were encouraged to go to ever greater lengths to produce such valuable data. As a former trader told the Wall Street Journal, the firm’s ethos was this: “Get an edge or you’re gone.” Eight days before Rajaratnam’s arrest, German prosecutors launched a criminal investigation into Deutsche Bank, which admitted in May to paying people to spy on a few of its own executives, a union rep, and a tax lawyer who’d been raising uncomfortable questions at shareholder meetings. The lawyer believes that the bank sent a 23-year-old Brazilian girl in a bikini to a café in Ibiza in search of damaging info on him. And in July, restaurateur Michael Chow filed a lawsuit against Philippe Chow (no relation) charging that he’d hired a 65-year-old man to steal the recipes for signature dishes from his kitchen by dressing up as a chef.

I was recruited to the corporate spy business in 2005 by two friends who were convinced my midwestern friendliness would serve me well in a line of work where a senior investigator can easily earn $250,000 a year. As a spy in training, I was told to rent the Leonardo DiCaprio movie Catch Me If You Can and study how simply and boldly his con-artist character shifts from one persona to the next—Pan Am pilot to Georgia doctor to Louisiana prosecutor. Among my colleagues, this is known as pretexting. While the basics of sleuthing are easy to learn, you’ve got to know instinctively how to ease yourself into a crowd—at the Maidstone Club in East Hampton or the Waffle House in Baton Rouge. The people who thrive in this business are the ones who loved to play dress-up and invent make-believe friends as children. “Both my parents worked during the day,” says a colleague whom I will call Sarah. “I used to steam open their mail and read documents like their wills and tax returns.”