Pepsi Alerted Coca-Cola of Stolen-Coke-Secrets Offer

ATLANTA – Coca-Cola (KO) and Pepsi (PEP) are usually bitter enemies, but when PepsiCo Inc. got a letter offering Coke trade secrets, it went straight to its corporate rival.

Six weeks later, three people were scheduled to appear in federal court Thursday to face charges of stealing confidential information, including a sample of a new drink, from The Coca-Cola Co., and trying to sell it to PepsiCo.

"Competition can sometimes be fierce, but also must be fair and legal," Pepsi spokesman Dave DeCecco said. "We're pleased the authorities and the FBI have identified the people responsible for this."

The suspects arrested Wednesday — the day a $1.5 million transaction was to occur — include a Coke executive's administrative assistant, Joya Williams, who is accused of rifling through corporate files and stuffing documents and a new Coca-Cola product into a personal bag.

Williams, 41, of Norcross, Ga., Ibrahim Dimson, 30, of New York and Edmund Duhaney, 43, of Decatur, Ga., were charged with wire fraud and unlawfully stealing and selling Coke trade secrets, federal prosecutors said

Atlanta-based Coke thanked Pepsi for its assistance.

Chief executive Neville Isdell said in a memo to employees Wednesday that the company is cooperating with federal authorities.

"Sadly, today's arrests include an individual within our company," Isdell wrote. "While this breach of trust is difficult for all of us to accept, it underscores the responsibility we each have to be vigilant in protecting our trade secrets. Information is the lifeblood of the company."

He said Coke will review its information protection policies, procedures and practices to make sure it safeguards intellectual property. Coke spokesman Ben Deutsch said the formula for trademark Coca-Cola was not stolen in the theft.

According to prosecutors, on May 19, Purchase, N.Y.-based PepsiCo provided Coke with a copy of a letter mailed to PepsiCo in an official Coca-Cola business envelope. The letter, postmarked from the Bronx in New York, was from an individual identifying himself as "Dirk," who claimed to be employed at a high level with Coca-Cola and offered "very detailed and confidential information." "Dirk" was later identified as Dimson, the FBI says.

Coca-Cola immediately contacted the FBI and an undercover FBI investigation began.

Prosecutors say Williams was the source of the information Dimson offered to provide to Pepsi. They say that "Dirk" provided an FBI undercover agent 14 pages of Coca-Cola documents marked classified and confidential. The company confirmed that the documents were valid and highly confidential and were considered trade secrets. Williams works for a senior Coke manager, Javier Sanchez Lamelas, who is a global brand director for the beverage giant, the company said. A spokesman would not say if Williams has been fired.

Prosecutors say "Dirk" requested $10,000 for the documents.

Later "Dirk" produced other documents that Coca-Cola confirmed were valid trade secrets of Coca-Cola and highly confidential. He also agreed to be paid $75,000 for the purchase of a highly confidential product sample from a new Coca Cola project, prosecutors said.

An undercover agent later paid "Dirk" part of that money, placing the cash inside a yellow Girl Scout cookie box. "Dirk" handed the agent some documents in an Armani bag and the Coke product sample, an FBI affidavit says.

Then on June 27, an undercover FBI agent offered to buy other trade secret items for $1.5 million from "Dirk." The same day a bank account was opened under the names of Duhaney and Dimson, and the address used on the account was that of Duhaney's residence, prosecutors said.