Former Wireless Zone Exec Pleads Guilty to Selling Secrets

Wireless Zone's Plaistow, N.H. store.

The former chief operating officer for a chain of cell phone stores, including one in Plaistow, N.H., pled guilty Thursday in U.S. District Court in Boston to charges he sold confidential business information regarding the wireless industry to an analyst at a Boston-based financial services firm.

James Dunham, 59, of Glastonbury, Conn. pleaded guilty to one count of wire fraud after being arrested and charged this past February.  U.S. District Court Judge Douglas P. Woodlock scheduled sentencing for Sept. 3.

“Today’s guilty plea confirms that the sale of confidential business information by corporate insiders – in violation of their duties to employers, business partners, customers, or shareholders – is a crime.  And that is true whether the information is used to cheat the stock markets via insider trading, or for some other purpose,” said United States Attorney Carmen M. Ortiz.

Dunham, former chief operating officer of Wireless Zone—a Verizon reseller, had access to confidential information regarding sales, compensation and product launches at the retailer’s 400 locations. For more than two years, officials said, Dunham had a secret consulting agreement to provide confidential information in return for which he was paid $2,000 per month. The Boston Business Journal identified the financial services firm as Detwiler Fenton of Boston.

“Mr. Dunham abused his position and violated his duty to his employer, customers, and shareholders by stealing business secrets for personal gain,” said Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Office.  “The FBI hopes this case sends a clear signal to business insiders that breaching a duty of confidentiality by misusing information will not be tolerated.”

The charging document identifies seven research notes prepared and distributed by the financial services firm that include information supplied by Dunham, including information regarding the status of certain product launches, the number of new subscribers to a specific wireless provider and sales and return information for specific smartphones. In particular, Dunham was the source for an April 11, 2013, research note in which the firm reported that returns were exceeding sales for a Blackberry smartphone. Following distribution of that note, Blackberry’s stock price dropped seven percent in a single day.