Hilton Worldwide and several of its employees could face criminal charges of corporate espionage in addition to the civil case currently being brought by Starwood.
A federal grand jury is investigating the group and several of its former executives over claims that they engaged in the “wholesale looting” of confidential documents in order to help it to launch a rival brand to Starwood’s W Hotels.
According to the Wall Street Journal, the federal grand jury is considering “an aggressive approach” to the case. The investigation is expected to conclude in about two months, and is being conducted as part of a Department of Justice inquiry into the allegations made by Starwood in a civil case in April.
The WSJ also reveals that since the espionage story broke, Hilton has fired or put on leave about 30 people who belonged to its luxury brand unit Denizen, including many ex-Starwood employees.
Starwood’s civil lawsuit alleges that two executives - Ross Klein and Amar Lalvani - who had defected from Starwood to run Hilton’s luxury and lifestyle brands division, “stole massive amounts of proprietary and highly confidential Starwood information”.
It alleges that this information “was used to expedite Hilton’s entry into the lifestyle hotel market, reposition its luxury brands and substantially reduce its costs and risks of doing so”.
The suit claims that Mr Klein and Mr Lalvani “directly and through other Starwood luxury brands employees they recruited to Hilton, stole more than 100,000 electronic files before and after they joined Hilton”. It adds that confidential information on Starwood’s successful W brand was used in the development of Hilton’s Denizen brand.
Both Klein and Lalvani are understood to be among the subjects of the criminal investigation, together with Steve Goldman, Hilton’s head of global development and real estate and another former Starwood executive.