The following brief historical account has been assembled from records made available to Federal law enforcement and other agencies over a period of almost 15 years. It catalogs a series of events associated with Shell Oil USAs (alleged) attempt to gain control of a former employees intellectual property. A number of other individuals, including attorneys, also (allegedly) assisted Shell USA in this endeavor.
This former Shell employees intellectual property, in the form of patent applications, had apparently been classified by the U.S. Dept. of Defense. Any (alleged) effort on the part of Shell USA to obtain access to and possession of this material would therefore amount to nothing less than conspiracy to commit espionage on the part of senior Shell USA corporate management.
Unclassified records show that this former Shell employees patent applications were apparently classified under ship, submarine, aircraft stealth and nuclear weapons design authorities. As such, regulation of this technology fell under the provisions of the Atomic Energy Act of 1954 and related legislation, and the authority of the U.S. Departments of Defense and Energy.
These unclassified records also show that the primary concern with regard to nuclear weapons design was apparently one of proliferation. The concern was that the technology would/could be used for the design of fission triggers for modern thermonuclear devices (see attached link),
and for the design of very simple and unsophisticated fission devices of the type that might be sought by rogue states or terrorist organizations.
The activities of Shell and its alleged co-conspirators eventually became the subject of an investigation by the U.S. Dept. of the Navys Naval Criminal Investigative Service (NCIS).
If it was indeed Shell USA managements intention to gain ownership of this technology, and that appears to have been the case, they did not succeed in their efforts. Shell however, did gain access to some of this apparently classified technology because of improper actions by the U.S. Navys Office of Naval Research.
In late 1989, an employee of Shell Oil Company, USA left Shell to pursue his own consulting business in the international oil industry. This engineer had had a number of assignments in Shell domestic and international operating divisions and was assigned to Shells exploration and production research division at the time of his departure.
Once his consulting business was established this former Shell employee took up a research project that he had originally looked into as a possible Ph.D. dissertation project years before. Records show that by 1993, the Office of Naval Research had developed an interest in this work and the engineer was invited to present his findings to a select group of Navy scientists and university academicians in late 1993. In early 1994, this engineer filed for patent protection for his work. The Office of Naval Research (ONR) immediately pulled his patent application for a technical evaluation and national security review.
Almost immediately after the filing of the patent application, there were indications that another party had taken an interest in this engineers work. A university professor, most probably the then-chairman of the Civil and Structural Engineering Dept. at Rice University, approached an ONR scientist at a social function in Houston, Texas and questioned him about the former Shell engineers patent filing. This professor and the former Shell research engineer were acquainted through their employment at Shell Research. The professor was apparently familiar with the subject matter of the patent application. It is unknown how this professor found out about this patent filing or its subject matter. It is known that the professor had retired from Shells research division after about 30 years of service.
Records show that a few months later, in early 1995, Shell unsuccessfully tried to retain the engineer as a consultant. This inquiry came from Mr. Mark Shannon, manager of production engineering research at Shell Research, and a former supervisor of the engineer when he worked for Shell Research. The terms and conditions of the proposed contract were written such that Shell would have obtained ownership rights to all of the engineers proprietary technology and intellectual property.
Records also show that the engineer subsequently approached Shell in writing, through certified U.S. Mail, in late 1996 and again in early 1997. The engineer had sought and received authorization for this action from the head of the Armed Services Patent Advisory Board because of ONRs unusually long and extended technical and security review.
The manager of Shell Researchs material research department, Mr. Mark Matovich, was contacted about a possible disclosure of technology to Shell and licensing agreement. Shell apparently expressed an interest because of the potential applications of the technology to plastics and off-shore deep water tension leg platform design. However, there was a stated written caveat. The Dept. of the Navy was conducting a national security review of this technology. Until that review was terminated and the technology was released for civil commercialization, there could be no agreement or detailed disclosure of the technology to Shell.
Records show that the Office of Naval Research had been informed by the engineer of this action and in early 1997, ONR informed the engineer that it would probably be seeking to place his technology under Federal Secrecy Orders. As a consequence, Shell Research was notified of the development and discussions terminated.
From these initial discussions, and the very generalized written descriptions of the technology sent to Shell, Shell obtained information about the subject matter of the engineers intellectual property and the innovative progress made, but no specific details. Shell clearly must have understood the breadth and depth of applications for the technology. Of particular interest to Shell would have been the applications to plastics.
If Shell truly understood the nature of this engineers research, their scientists could have readily duplicated his work. The key principles of physics underlying that work were in the pubic domain. Shell could have determined what had been done and how it had been done. And could then have attempted to bring a legal suit (alleging theft or conversion of Shells intellectual property by the engineer) at this point in time, if they would have been so inclined, even though such a lawsuit would have had no merit.
However, Shell did not bring legal action against this engineer and it is questionable whether it had a full understanding or knowledge of his work. Indeed, to bring such a fraudulent case before a Federal court while the material was under security review could have led to serious legal problems for Shell and possible criminal prosecution.
Records show that in early 2000, after almost six years of technical and security reviews, this engineers intellectual property (in the form of patent applications) was formally placed under Secrecy Orders by the U.S. Dept. of Commerce at the request of the U.S. Dept. of the Navy. Unclassified records also show that it was apparently classified at the request of the Dept. of the Navy, Office of Naval Research at this time. These unclassified records show that the technology was apparently classified under ship, submarine, aircraft stealth technology, and nuclear weapons design classification authorities. As such, the technology was under dual control of the U.S. Dept. of Defense and the U.S.Dept. of Energy (National Nuclear Security Administration). As a matter of policy, technologies related to nuclear weapons design are considered to be born classified.
In early 2004, the engineer was notified (confidentially) by a former Shell colleague that Shell was surreptitiously engaged in an effort to gain the intellectual property rights to the novel technology that had been developed by this engineer. The engineer had suspected as much for years.
This engineer lived in a townhome complex in Houston, Texas. The local homeowners association was responsible for the exterior building maintenance, landscaping, etc.
At the time this engineers colleague informed him of Shells apparent industrial espionage conspiracy, the engineer was having, and had been having, great difficulties with his homeowners association board of directors (Langham Creek Colony #3, Forrest Colditz, President), their management company (MASC Austin Properties, Angela Austin, Property Manager), and association legal counsel (Roy D. Hailey of the law firm Butler and Hailey) since mid-1997. These difficulties began a few months after discussions with Shell Research had been terminated. Association representatives had demanded and had been repeatedly denied access to his home.
Records show that in early mid-1997, the engineer was contacted by McCrory Engineering and informed that his homeowners association had authorized work to be done on his home. He was further informed that in order to do that work the contractor would need to be granted access to his home. Records show that access for McCrory Engineering was denied due to lack of request for access from the association and any verification that McCrory Engineering had indeed been contracted by the association. These requests by McCrory Engineering continued into the late fall of 1997 without any confirmation from the association or its management company that McCrory Engineering had indeed been retained to perform work on the engineers home.
Records show that in November 1997, the engineers attorney received a written complaint from the associations attorney, Mr. Roy D. Hailey. Mr. Hailey demanded that McCrory Engineering and the associations management company, MASC Austin Properties, be given access to the engineers home to do required maintenance work. That demand was again denied because the proposed work, which was unnecessary, did not fall under the purview of the homeowners agreement. There was no response from the associations management company or the account manager, Ms. Angela Austin.
In early 1999, the two year statute of limitations for Shell to bring legal action against the engineer, based on his written notification to Shell in early 1997, was scheduled to expire. Records show that in early 1999, the associations attorney, Mr. Hailey, again contacted the engineers attorney with a demand for access to the engineers home. Again access was denied.
The Houston, Texas office of DoDs Defense Criminal Investigative Service (DCIS), the law enforcement arm of the Dept. of Defense Inspector Generals office, which had been kept informed of the situation with the homeowners association, was notified of Mr. Haileys demand. A Federal law enforcement officer contacted Mr. Hailey to discuss and explain the legal situation to him directly, and to notify him why access was prohibited.
Records show that in July of 1999, Mr. Hailey sent a letter to this engineers attorney fraudulently claiming that the law enforcement officer from DCIS had stated that they (DoD and DCIS) had no objection to the associations demands. Mr. Hailey again demanded that the engineer grant access to association agents, representatives of Austin Properties and McCrory Engineering. Access was again denied and a demand was made for an explanation for the fraudulent misrepresentation presented to Mr. Hailey. No response from Mr. Hailey was forthcoming.
This action by the associations board and legal counsel was extraordinary. That letter was clearly authorized by the associations board, probably Mr. Forrest Colditz. Obviously, Mr. Hailey was paid for this work and did it willingly. Someone had to sign his check.
Mr. Hailey, acting upon instructions from the board of the engineers homeowners association, had allegedly knowingly, deliberately and fraudulently misrepresented in writing his discussion and instructions he had received from a Federal law enforcement officer. He allegedly did so for the purpose of gaining unauthorized access to privately owned intellectual property that was then under a national security review by a national defense authority. Mr. Haileys conduct was allegedly unethical, if not criminal.
It is clear that if these people had truly needed to gain access to this engineers property to meet their contractual obligations, they could have simply asked the engineer to remove the sensitive material from his property temporarily. Amazingly, such a request was never made to the engineer, his attorney, or to DCIS representatives. These people demanded, in writing, access while the material was on premises. In the process, they were also attempting to assume civil and criminal liabilities for themselves and for the homeowners association that they had absolutely no authority to assume, and for which they and the association were not insured. And they were doing so with the apparent consent and collaboration of association legal counsel, Mr. Hailey. It appeared that the associations board and others had as their motive something other than their stated purpose.
By this point in time, records show that the engineer clearly presumed that the board of directors of the homeowners association, the management company, and association legal counsel were up to no good, and most probably fronting for some interested party who was intensely interested in gaining access to the engineers home and to his intellectual property. The engineers primary suspect was Shell Oil.
Access to the engineers property would have given the interested party (presumably Shell) the opportunity to claim to local law enforcement that the interested partys proprietary material/documents/etc., had been observed on the premises by management company and contractor personnel (if that was indeed their intent, and it appears that it was). The interested party could have then claimed they had long suspected this engineer of the theft of intellectual property, even though there would have been no basis for such an accusation.
Shell had a basic description of the technology from the engineers 1997 letter to Shell. Using this knowledge, Shell would have likely been able to secure a legal search warrant from a local court and gain not only access to the engineers home, but also the legal right to examine his papers, documents, computer files, etc. In this manner, Shell, could well have successfully circumvented Federal access restrictions. Shell could then have claimed that the material was theirs and had been stolen by the engineer. After that, it would have been a simple matter to file civil and criminal complaints in State and Federal courts against the engineer and attempt to gain ownership through legal proceedings.
Whether the interested party (presumably Shell) would have prevailed in such a legal attempt to gain title to the technology through the filing of false theft claims is problematic. It would depend upon whether the engineer had the financial resources to deal with protracted legal battles.
In early 2000, the engineer notified the associations legal counsel, Mr. Hailey, of the formal imposition of Secrecy Orders and the fact that access restrictions were now formalized. The association and its representatives were encouraged to contact the appropriate Federal authorities for confirmation. They did not.
Records also show that the engineer was so concerned about the activities of his homeowners association, and the fact that they may be fronting for another organization, mostly probably Shell, that he contacted ONR legal counsel in early 2000 to discuss the matter. ONR subsequently referred the matter to the FBI. In fact, records show that the engineer was so concerned about these activities, and the possible involvement of Shell USA, that he had brought the matter up in a 1998 letter to his Congressional representative, and that concern, among others, was then relayed to the Secretary of the Navy.
In early 2000, the engineers neighbor, an undercover narcotics police officer for the Houston Police Department, notified the engineer that his house was under surveillance by representatives of the management company.
At the homeowners annual meeting in May of 2000 this police officer apparently queried Ms. Angela Austin about the management companys activities. In later discussions with this police officer, the engineer learned that Ms. Austin had apparently confirmed the surveillance of the engineers home and informed the police officer that the engineer was in very serious legal trouble. To the engineer, these comments confirmed that the management company was fronting for some other organization. Shell was the most likely candidate.
One must wonder why ONR allowed this highly classified material to be stored in the engineers home. Under the provisions of the Atomic Energy Act, the Office of Naval Research (ONR) should have made provisions for secure storage at an appropriate Federal facility. However, records show that there was apparently a difference of opinion between the ONR scientists on the one hand, and Navy war fighters and program managers/engineers on the other, over whether the material should have been classified. ONR scientists apparently opposed classification. As a consequence, ONR management apparently simply refused to take responsibility for the matter and tried to kick the can down the road to the Navys system commands that would make use of the technology.
ONR also denied having classified the material when queried by the engineer, and never notified the engineer that the material had apparently been classified. This again appears to have been an effort by ONR to pass off its administrative responsibilities and financial obligations to the Navy system commands. However, as the original classification authority, ONR was responsible for taking the appropriate required administrative measures. ONR did not take those measures and this apparently resulted in an impasse with no action being taken. Records show that the engineer discussed the issue with DCIS without any resolution. As a consequence, the default storage location was the engineers home, the one facility where he could legally prohibit and prevent all unauthorized access to the material and provide for an armed guard. (Unauthorized access was legally defined as access to the storage facility.)
These actions on the part of ONR caused serious legal and security issues for the engineer, and resulted in the absurd dispute over access with his homeowners association. The engineer did not have the legal authority to grant access to his own home. And the Office of Naval Research, as part of their pretense of never having classified the material, made no effort to arrange a proper security clearance for the engineer.
The Secrecy Orders served on the engineer by the U.S. Patent & Trademark Office specified the requirements for the requesting and granting of permits for access to the engineers patent applications. That authority resided with the Navy and the Patent Office and required the issuance of permits for access.
Because the intellectual property was owned by this engineer, Federal agencies had no legal control over the physical documents. The Federal government could, however, legally control access to the material.
There were established legal requirements for obtaining an access permit to review the material. The organization requesting the permits for access needed to be a defense contractor with a need for access to the material, and the contractor personnel were required to have the appropriate level of security clearance. A request for permits for access to the material had to be filed with the Patent Office by the engineer and subsequently approved by the Navy. The permits for access were then issued through the Patent Office.
Records show that association attorneys were encouraged to contact Federal authorities if they had questions regarding the requirements for obtaining access to the material. They apparently did not. Records show that association legal counsel was also encouraged to challenge Federal authority on the matter of access in State or Federal court if they wished. They did not.
So, the interested party (presumably Shell) would have needed to obtain some form of legal access to the material if they hoped to make any sort of legitimate legal claim of ownership of the material, and that appears to have been the objective. Stealing the material would not have given Shell ownership of it.
Records show that in late 2000, the association and its legal counsel were notified by the engineer in writing via certified U.S. Mail that there was sufficient probable cause to suspect that in his view, the associations board, the management company and account representative, and the associations legal counsel were engaged in activities having a criminal intent and purpose, as defined by Federal national security statutes governing industrial espionage, espionage, etc., so as to warrant the banning of all association representatives from access to the engineers property for any reason at any time.
Association representatives were referred to the Houston DCIS office, the FBI, and senior authorities within the Dept. of the Navy in Washington, D.C. if they had any objections or complaints to file. No such complaints were logged with any Federal authorities by association representatives.
Records show that in December 2000, the associations legal counsel, Mr. Roy Hailey, complained to the engineers attorney about the access ban and the public posting of the access ban by the engineer on his property. He again presented his demand for access, which again was denied. Once more, Mr. Hailey was encouraged to discuss the matter with Federal authorities if he had questions or wanted to confirm the legal situation. Mr. Hailey was also again invited by the engineer to take the matter into State and/or Federal court if he felt he had a legal case that would prevail. Shortly thereafter, Mr. Hailey again made written demands for access to the facility. Again he was denied.
Records show that in mid-2001, the association once again made a bid to gain access to the material. Mr. Hailey presented a written demand for a meeting with the engineer so that association representatives could assess the need for security and so that the engineers needs for security were not compromised when management company and contractor personnel were given access to his home. There was no request or inquiry about moving the material to another location. Mr. Haileys demand was rejected and he was advised by the engineers attorney to contact Department of Defense authorities if he was still unclear about the legalities of the situation. Mr. Hailey was provided with a copy of the Secrecy Orders so that there was no misunderstanding. Mr. Hailey had no comment and did not contact Federal authorities.
In early 2003, the engineer filed a formal ethics complaint against Mr. Hailey with the Texas State Bar Association. The State Bar refused to investigate Mr. Hailey on the grounds that the Bar was not, and would not function as, a criminal investigative arm of the US Attorneys Office. The engineer was informed that if he could get a criminal conviction based upon his allegations, the State Bar would disbar Mr. Hailey.
At some time during 2003, the law firm of Holt and Young began representing the engineers homeowners association. Holt and Young had a long, historical relationship with the management company, MASC Austin Properties.
The associations board of directors had apparently run up a sizable legal bill trying to gain access to the engineers technology and those costs were now assessed to the engineers account, which was not permitted under Texas state law.
Records show that in late 2003, Holt and Young contacted the engineer with a demand for payment. The engineer referred Holt and Young to Mr. Hailey and to Federal law enforcement authorities at DCIS. Holt and Young contacted DCIS , were informed about the legalities involved in attempting to access the engineers home, and were urged to discuss the matter with former association legal counsel, Mr. Roy Hailey.
In late 2003, the association filed a foreclosure action in State court seeking to foreclose on the engineers home for failure to pay the improperly assessed fees. The lawsuit was improper (and allegedly fraudulent) and was eventually dismissed. Russell Holt, principal partner of Holt and Young, filed this suit on behalf of the association. This information is a matter of public record.
It was shortly after the filing of the legal action by the association that the engineer was contacted by a former Shell colleague and informed that the law firm of Vethan and Waldrop may be involved in the case, and may also be representing the association. Vethan and Waldrop specialized in intellectual property law. The engineer contacted Vethan and Waldrop directly in April of 2004 and discussed the matter with Mr. Matt Waldrop, principal partner of the firm.
In that conversation, an account of which was immediately forwarded to Federal law enforcement authorities, Mr. Waldrop confirmed that he was indeed fully aware of the dispute between the engineer and his homeowners association, and that he had been hired to provide legal advice and help prepare litigation for the case. He also indicated that he was fully aware that the engineers patent applications had been placed under Secrecy Orders and classified. When queried as to why the association would retain him in this dispute, Mr. Waldrop indicated to the engineer that he had never discussed the matter with any association representatives and had not been hired by the association. He indicated that he had been hired by one of his major industrial clients, Shell Oil USA, to provide legal advice and to help Shell attorneys prepare a legal complaint against the engineer. When the engineer asked what the nature of the complaint was, and the supposed basis for the complaint, Mr. Waldrop informed the engineer that this particular information was privileged. The discussion was then terminated.
Mr. Waldrop undoubtedly relayed an account of his discussion with the engineer to Shell. The engineer relayed an account of the discussion to Federal authorities, both the FBI and DCIS.
This was an extraordinary conversation. Mr. Waldrop had, in essence, acknowledged that he was an informed and willing accessory to a conspiracy to commit espionage. He confirmed that Shell Oil, USA was the power behind that effort.
Records show that a few months later, in mid-2004, the engineer began to have difficulties with the associations management company. Despite legal notifications of the property access ban, the management company, MASC Austin Properties, began assigning contractors to do work of various sorts on the engineers property. Every time a contractor showed up, the engineer would inform them that they were prohibited from accessing the property without a court order, and that they were to leave immediately or face arrest for criminal trespass.
In September 2004, Ms. Angela Austin of the management company, Austin Properties, and several employees of a contractor were allegedly caught trespassing on the engineers property. The Harris County Sheriffs Dept. was notified by the engineer. When sheriff deputies arrived, Ms. Austin and her contractor associates claimed the engineer had allegedly assaulted them with a firearm. The engineer was taken into custody and arrested for multiple counts of aggravated assault with a deadly weapon, a felony offense. Despite the contentions and allegations on the part of Ms. Austin, et al, and the fact that the engineer had no witnesses to testify on his behalf, the grand jury refused to take any action or bring charges against the engineer as a result of hearings held several weeks later.
After the initial lawsuit against the engineer seeking foreclosure on his property had been dismissed, records show that Holt and Young reworked their complaint and filed another lawsuit seeking foreclosure once again. Records also show that this time, the engineer was not served with papers notifying him that he was being sued. In fact, the engineer had no idea the second lawsuit had been filed. In Texas, such action is legally improper, but it is not criminal. However, being unaware of the outstanding lawsuit, the engineer had no idea of pending court dates, etc., and therefore could not and did not respond to the lawsuit. Consequently, the lawsuit was not contested and a foreclosure judgment was rendered for the association. This stealth foreclosure judgment was awarded at almost the same time that Ms. Austin lodged their (failed) criminal assault complaint.
At virtually the same time the engineer was confronted with false assault charges and the association legal counsel obtained their stealth foreclosure judgment, records also show that ONRs legal counsel serendipitously took sudden, deliberate and unauthorized action that eventually resulted in the public release of some of the engineers still apparently classified proprietary material. ONR had requested the lifting of Secrecy Orders on the engineers patent applications, although the material remained classified. This improper action on the part of ONR, along with their pretense of never having classified the material in the first place, effectively, albeit improperly, removed Federal restrictions to access to the engineers home and to the still-classified material.
In late December 2004, the engineer learned of the foreclosure judgment just days before eviction by local law enforcement officials was to occur and managed to get that action halted. Had the engineer not learned of the impending eviction, local law enforcement representatives would have showed up at his residence and enforced immediate eviction, with no opportunity to remove any classified material from the property. Once the engineer was evicted, association representatives would have had access to the property and all of its contents, including the classified material, if it was indeed stored on the premises.
Had the association succeeded in gaining possession of the property through the improper stealth foreclosure action and surprise eviction, along with the unlawful lifting of Secrecy Orders by ONR, they could have gained supposedly legal access to the still-classified material. Shell would then have been able to obtain access and they too would most likely have brought a complaint of felony theft against the engineer, and most likely would have filed a civil lawsuit as well.
After these events, the engineer continued to have difficulties with the homeowners association and the management company, albeit at a very subdued level. The failure of previous efforts to bring criminal charges against the engineer through direct confrontation, and the failure to gain legal access through improper foreclose actions on the engineers property, appear to have been the final effort to gain unlawful access to the classified material.
In 2008, the engineer left Houston, Texas.
Records show that the engineer and General Dynamics Corporation (Electric Boat Company) had entered into a confidential non-disclosure agreement in 2000 for the purpose of evaluating the engineers technology. Electric Boats primary product is nuclear power submarines, manufactured for the U.S. Navy. In September 2004, a senior General Dynamics Corporation official (Electric Boat Corporation) and former Chief Engineer of the Navy (Admiral, ret.) submitted a request to the commanding Admiral of the Office of Naval Research for an updated peer review of the engineers technology.
This General Dynamics manager also recommended a technical briefing for the Director of Los Alamos National Laboratories (National Nuclear Security Administration, U.S. Dept. of Energy), and for the Navys SSBN (ballistic missile submarine) security program office. Immediately upon being briefed, the Navys SSBN security program office requested that the engineer allow Johns Hopkins University, which manages the Navys nuclear submarine security program, the right to conduct a technical and security review of the engineers technology.
Johns Hopkins completed their review and evaluation of the engineers technology in 2005. Electric Boat Corp. completed their review and evaluation in 2006 and formally submitted a White Paper to the U.S. Navy Dept.s Program Executive Office for submarines (PEOSUBS) requesting acquisition of the engineers technology for use in ship building programs, including the next class of ballistic missile submarines.
Northrop Grumman, another Navy defense contractor that builds nuclear submarines, completed their evaluation in 2007 and likewise submitted a request for acquisition for the same purpose.
In early 2008 the National Reconnaissance Office (NRO) contacted the engineer and suggested that the engineer team with one of their prime contractors and present an implementation proposal for some of his technology to NRO.