Exclusive: U.S. in criminal probe of eBay employees

SAN FRANCISCO Wed Sep 14, 2011 12:08am BST

A sign is shown at the headquarters of eBay in San Jose, California February 2, 2010. Picture taken February 2, 2010. REUTERS/Robert Galbraith

A sign is shown at the headquarters of eBay in San Jose, California February 2, 2010. Picture taken February 2, 2010.

Credit: Reuters/Robert Galbraith

Related Topics

Quotes

   

SAN FRANCISCO (Reuters) - U.S. prosecutors have launched a criminal probe into whether eBay Inc employees took confidential information from classified ad website Craigslist as eBay sought to build a rival service, a copy of a grand jury subpoena obtained by Reuters shows.

The two companies have been feuding for years in civil court over allegations that online giant eBay took a stake in Craigslist and then misappropriated confidential information while it secretly planned its own classifieds site.

The subpoena seeks information regarding several eBay personalities, including founder and Chairman Pierre Omidyar and Joshua Silverman, the former Skype chief executive who served as eBay's representative on Craigslist's board.

An eBay spokeswoman, Amanda Miller, said the company would cooperate in any inquiry related to the disputes with Craigslist.

"EBay believes that Craigslist's allegations against eBay are without merit," Miller said in an email on Tuesday. "We will continue to vigorously defend ourselves, and we will aggressively pursue our claims against Craigslist."

EBay shares traded at $29 on Tuesday in after-hours trading, down from their $29.40 close.

Last year, a Delaware's Chancery Court judge ruled that Craigslist properly removed an eBay representative from its board. The judge also ruled that Craigslist could not dilute eBay's 28.4 percent stake in the company.

Miller said allegations of misconduct were leveled by Craigslist as a defense in the Delaware case, and the court did not rule in Craigslist's favor on the defense.

Craigslist representatives did not respond to an email seeking comment.

RJ Hottovy, an equity analyst at Morningstar, said there could be implications for VP-level executives.

"While these are serious allegations, I don't think it's too big of a concern for investors," Hottovy said. "Classifieds are a smaller part of eBay's business."

The subpoena -- issued by a federal grand jury in San Jose, Calif., last week on behalf of the U.S. Justice Department -- seeks an array of information and documents.

Many of the requests in the subpoena match word for word language in another civil lawsuit filed by Craigslist against eBay. That litigation in a San Francisco court is ongoing.

EBay launched classified ad service Kijiji in the United States in 2007.

In 2005, "Omidyar requested information about Craigslist's approach to adding new cities as well as advance notice of plans to launch in new cities," the subpoena says, seeking documents about the allegation.

Omidyar could not immediately be reached on Tuesday.

The subpoena also seeks documents about allegations that Silverman provided an eBay employee "with insider information about Craigslist management and provided recommendations to the eBay team responsible for the launch of Kijiji."

Silverman is currently president of the US Consumer Services business at American Express. He declined to comment through an American Express representative.

It was not clear on Tuesday how many companies or individuals have received subpoenas, and no one has been charged with any criminal wrongdoing. Northern California U.S. Attorney Melinda Haag declined to comment.

The civil case in San Francisco Superior Court is Craigslist Inc. v. eBay Inc. et al., 08-475276.

(Reporting by Dan Levine and Alistair Barr in San Francisco, and Paris bureau correspondent Alexandria Sage; editing by Peter Henderson, Andre Grenon, Gary Hill)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.