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HTC designers arrested for allegedly lifting trade secrets

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Amidst major telecom news from Verizon(s vz) and Microsoft(s msft) this weekend, HTC was almost able to scuttle away a big scandal involving some of its star designers. Almost.

Five HTC employees, including Vice President of Product Design Thomas Chien, design team senior manager Justin Huang, and R&D director Wu Chien Hung, were arrested as the result of an internal probe on employee activities, according to Engadget. Chien and Wu continue to be in custody at the request of the prosecutor, who has deemed both to be a high flight risk. Their offices at HTC were raided by the police as well, to collect evidence of any shady activity.

Taiwan’s Investigation Bureau says it found evidence, in part due to a report filed by HTC chairwoman Cher Wang, that the employees had lifted trade secrets relating to upcoming HTC technologies and using fake commissions claims and receipts to skim about $344,000 from the company. All of this was allegedly going to a new design company, already registered in China as “Xiaoyu,” that the group was planning to build after leaving HTC.

The company has remained tight-lipped on what trade secrets were on the line, but the upcoming HTC Sense 6.0 UI design has been named as a technology at risk.

In a statement to investors, HTC expressed that it expected employees “to observe and practice the highest levels of integrity and ethics”:

“The company does not compromise nor condone any violation at any level of our organization and the company shall act in accordance to the law. As this matter is currently under investigation by the relevant authorities, we therefore refrain from further comments.”

HTC CEO Peter Chou also wrote to the company’s employees on Monday, indicating the incident as only a pain point that won’t hold up any phone operations:

“We will learn from this incident and take it as an opportunity to improve our organizational practices, processes and leadership,”

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