High-Tech Heists : Crime: Police, computer industry battle organized robbers looting O.C. firms of expensive memory chips.

Hundreds of high-tech manufacturing companies call Orange County home. But so do organized gangs that prey on the valuable memory chips and other computer components used by the manufacturers.

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In late May, armed men broke into Centon Electronics, held several employees at gunpoint and made off with memory chips valued at $9.9 million, making it the largest chip heist in U.S. history, according to the FBI.

Armed men using similar methods also hit an Anaheim factory last Sunday but misjudged their target and escaped with parts worth much less, police said.

Police say the gangs--often organized to move the parts to Asia, where they can be resold more easily--are looking to Orange County as Silicon Valley companies have taken more security measures.

Irvine police have assigned several economic-crimes detectives to coordinate investigations with other agencies in Los Angeles and in Northern California. Although they are starting to organize a high-tech crimes investigation unit, the group receives no special funding, and there is little prospect of a similar effort by the financially strapped Sheriff’s Department.

Phil Povey, an Irvine police sergeant who is heading the high-tech crimes group, said the police began to notice cases of high-tech theft in 1988.

“You’re not dealing with very complex stuff here. The crimes themselves tend to be pretty straightforward robberies,” Povey said. “But the organizations that are doing them are complex, and they’re pretty good at making sure no one person knows too much about the whole group.”

Some of the most effective local efforts are led by companies and industry groups.

The American Electronics Assn. and the Chubb Group of Insurance Companies have sponsored several seminars to teach executives ways to make their companies more secure. Examples include running tighter background checks on employees and making better use of security cameras and guards at plants, particularly during weekend shifts.

A recent court case shows how company vigilance can prompt legal action. On July 10, a Westminster man pleaded guilty to the possession of 40 hard disk drives that had been stolen from an Irvine company, Storage Concepts Inc., last December.

The disk drives were found by investigators for Seagate Technology Inc., the Scotts Valley disk drive maker, who spotted them at a Northridge swap meet and compared the serial numbers to a list of those which had been taken. The drives, with a retail price of $2,000, were on sale for $650 each.

The investigators and Irvine police traced the drives to Dung Minh Vu, 25, who pleaded guilty on July 10 and was sentenced to six months of home confinement. Vu was suspected of obtaining the drives from an employee of the firm.

Vu’s attorney, Jacqueline Goodman of Fullerton, said Vu was the only one of a chain of equipment brokers who had bought and sold the disk drives, and that he had believed he was buying them legitimately. Goodman said she thought Vu was targeted by authorities because he was the only one of the group who was unable to produce receipts for the equipment.

Bruce Moore, a deputy district attorney who handled the case, said it resembled others in that the stolen parts were distributed through standard channels.

“These parts are small. You can carry out a box of them and wind up with a lot of money, and people respond to that,” Moore said.

In response to such threats, Storage Concepts and other companies are increasing their security.

Express Manufacturing Inc., for example, a large electronics assembler in Santa Ana, was robbed of $250,000 worth of computer products last year after bandits hijacked a company truck.

Since then, Express President C.P. Chin has tripled the number of security guards at the company’s two plants, which employ more than 800 people. Chin is also installing some 20 additional cameras inside and outside the plants.

And, following the advice of his insurance agent, Chin says he has erased his company’s name on his trucks, so they are not easily identifiable.

“The perception we are trying to get across is that we have tighter security controls,” said Chin, whose younger brother was held at gunpoint in a robbery five years ago. “I just hope it will solve the problems.”

The largest insurer for technology companies in the county is the Chubb Group, headquartered in Warren, N.J. Chubb does not break down figures for losses in the county but said that it paid $5 million in claims related to high-tech parts for the first three months of the year--a pace that would exceed last year’s total of $15 million in such claims.

The year before, claims totaled about $4 million, said Mary Lou Korkuch, a Chubb manager who is now heading up an effort called the Technology Theft Prevention Foundation.

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Times staff writer Don Lee contributed to this story.

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Foiling Chip Theft

Some recommended practices that firms are implementing to prevent heists of chips and other components:

Employees * Conduct thorough background checks * Instruct employees not to confront or resist thieves. Surrender goods, make mental note of appearances and license plate numbers. Write down observations and telephone police as soon as possible * Inform employees of economic and legal consequences of internal theft * Limit access of temporary workers and outside contractors

Security * Use alarms, physical barriers to create layered protection * Hire additional guards * Install cameras * Change passwords and locks frequently

Inventory * Keep chips in locked vault * Give each a serial number * Intersperse planned and surprise checks * Require two-person accountability

General * Assume vulnerability; don’t wait to implement preventive measures * Establish emergency plan to protect against fire, power outages, earthquake * Report and investigate all thefts no matter how small * Keep only necessary inventory on hand * Always know where inventory is (including defective items) * Use armored-car services or request police escort for large shipments

Source: Technology Theft Prevention Foundation; Researched by JANICE L. JONES / Los Angeles Times

Chips Heist Chronology

Orange County computer firms have proven attractive targets over the years. Some chip thefts that have occurred since 1989:

1989 * Jan. 3: $105,000 in DRAM chips stolen from Western Digital in Irvine by two armed men who force guard to open locked storage area. * March 3: Four men armed with machine guns and assault rifles demand entry into Advanced Logic Research in Irvine. Security guard forced to open door, but cleaning staff barricades themselves in office, calls police. Thieves leave empty-handed. * March 31: $100,000 in microchips stolen from Telecomputer Inc. in Westminster. * July 3: $176,000 in computer equipment--mostly microchips--stolen from Unitex Inc. in Tustin. * Aug. 3: Man posing as United Parcel Service driver attempts to take electronic components from loading dock at Toshiba America Electronic Components in Irvine. Suspicious employees call police, who find chips stolen a day earlier from another Irvine firm inside suspect’s rented truck. * Aug. 3: Western Digital files charges against three former employees and two others who allegedly intercepted 500,000 defective chips headed for the scrap yard and sold them as good products. * Aug. 16: $500,000 in microchips stolen from Express Manufacturing in Santa Ana by a gang of armed youths. * Nov. 24: Chips worth $150,000 stolen from W.G. Holt in Irvine.

1990 * Jan. 25: $100,000 in chips and computer hardware stolen from P.H. Computers in Fountain Valley. * March 12: Federal and local law enforcement authorities indict two Orange County men for stealing $3.7 million in computer chips from an AT&T; plant in Oklahoma. Chips transported to Orange County and fenced through at least 30 computer stores. * March 13: Centon Electronics in Irvine robbed of an undisclosed amount of computer chips by armed thieves.

1991 * May 7: $30,000 in chips and other components stolen from warehouse at B.C.M. Advanced Research in Irvine. * July 19: $300,500 in computer chips stolen from Stracon Inc. in Huntington Beach

1992 * March 3: 6,000 computer chips stolen from Progen Technology in Costa Mesa.

1993 * Feb. 1: PCC Group, a computer manufacturer in Brea, robbed of 80 boxes of chips, other computer parts worth up to $2.5 million * Nov. 23: Armed intruders steal $100,000 in chips from Aten Research Inc. in Brea. * Dec. 9: Technicad, an Irvine computer repair shop, robbed near closing time of $15,000 in chips

1994 * March 23: Undisclosed number of computer chips stolen from Shecom Computers in Yorba Linda.

1995 * May 16: More than a dozen armed thieves confront employees at Centon Electronics in Irvine, take chips and other memory boards worth $9.9 million--largest chip heist in U.S. history. * July 16: Three gunmen burst into Dovatron Manufacturing in Anaheim, assault several employees, ransack plant and leave with small amount of goods. Police suspect they were looking for chips.

Source: Times reports; Researched by JANICE L. JONES / Los Angeles Times