Email forwarding, flash drives, and ignored red flags: A $50M lesson for HR
Three departing executives stole 25,000 files and launched a competitor, resulting in over $50 million in damages for their former employer.
Michael Harvey spent 30 years building Enviro Tech Chemical Services into a successful California-based chemical manufacturer. When he sold it to Arxada Holdings for $450 million in December 2021, he walked away with $327.5 million personally. As part of the deal, he agreed to stay on as an employee and signed restrictive covenants barring him from competing, soliciting employees, or poaching customers for five years.
The relationship soured almost immediately. Harvey clashed with his new corporate owners over pricing and operations. Instead of adapting, he went rogue. In March 2022, he used his company email to coach the firm's largest customer on how to negotiate against his own employer, telling them to "play hardball" for better pricing. He drafted emails for the customer to send, then added: "PLEASE DELETE THIS EMAIL AND DENY YOU EVER SAW IT."
By summer 2022, when the company discovered regulatory violations with products Harvey's team had been selling, the relationship collapsed. On August 6, 2022, Harvey learned he was being terminated. Twenty minutes later, he told his nephew Phil, a vice president at the company.
What followed was a coordinated scheme to steal company secrets. Harvey asked to delay his last day until August 17, claiming he needed time...
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