Rich Burns, who oversaw the FBI’s high-tech crimes unit, on Wednesday, March 27, 1996. (Patrick Tehan/Bay Area News Group Archives)
Recently, thieves have raided Apple stores, snatching iPhones and then running off with them. In Silicon Valley’s early days, criminals, sometimes with guns, went after the tiny but valuable computer chips that are the foundation of the tech industry.
They robbed offices and cargo trucks, and stole boxes of semiconductor chips from corporate shipping docks. Shady brokers befriended tech workers in bars and bribed them to steal semiconductors and memory chips from their employers.
Many have encountered a parallel in former San Jose FBI agent Richard Burns, who launched the bureau’s “High Tech Crimes Unit” in the mid-1990s and died July 5 at age 78. Burns demonstrated the value of computer components by hiding dozens of semiconductor chips in pizza boxes that, when opened, contained enough chips to fill half the price of a new home in a space the size of a dinner.
Semiconductors, computer processors built on wafers of silicon made from sand, powered an explosion of change and gave Heart’s Delight Valley a new, tech-focused nickname: Silicon Valley was turning sand into gold.The rise of computer chips spawned a criminal feast.
“I don’t know why anyone robs a 7-Eleven these days,” Burns, whose fellow agents nicknamed him “Big Bird” because of his muscular build, told businessmen at a seminar in 1996. “You’re only going to make a few hundred dollars robbing a convenience store. The average computer chip thief makes six figures, seven figures at most.”
Burns arrived in San Jose in 1978. “Together we arrested a lot of fugitives and helped with a lot of bank robberies,” said Ernie Tibaldi, a former Bay Area FBI colleague and longtime friend.
But Mr. Burns quickly saw a growing threat to Silicon Valley companies that were cementing their position as global leaders in computer technology, and he took it upon himself to hunt down the thieves who were beginning to prey on the tech industry.
“He was a one-man saboteur,” Tibaldi recalled. “He was just amazing.”
In 1979, eight years after Intel released its first programmable semiconductor, 10,000 tiny memory chips were stolen from the company’s Santa Clara warehouse. Two years later, in the same city, someone broke into an Advanced Micro Devices storage area and stole chips worth more than $200,000 today.
The illicit fruits of Silicon Valley innovation were sold to companies in the U.S. and abroad, and even to America’s main rivals during the Cold War. In a 1981 interview with The Wall Street Journal, a federal prosecutor said “Silicon Valley” was a hotbed for shipping stolen computer chips and other technology to the Soviet Union.
Barnes grew up in Chicago and began his adult life as a pharmacist. One day, a police officer overheard Barnes arguing with his boss and getting fired. The officer spoke with Barnes, and he returned to the store and convinced his boss to rehire Barnes. With the officer’s help, Barnes learned that the FBI was looking for an agent with a science background, so he applied and was hired. He was 23 years old.
“He always just enjoyed helping out,” said Cindy Barnes, his wife of 53 years.
After stints with the FBI in Connecticut and Pennsylvania, Barnes was transferred to the Bay Area, first to San Francisco and then to Cindy’s hometown of San Jose, before settling in the Almaden Valley for the next 50 years.
“If there was a big company in Silicon Valley in the ’80s, he was in touch or he was reaching out to them,” said Felipe Frocht, a former FBI colleague and close friend of Mr. Burns. “He wouldn’t accept rejection. He would insist on meeting with those people.”
Burns set up an undercover unit to investigate the theft of chips and other technology and arrested Flocht. He and other agents worked out of a fake distribution company’s office near the San Jose airport, posing as buyers and sellers.
By the mid-90s, tech thieves were committing dozens of armed robberies a year in Silicon Valley. In today’s terms, that would have cost companies $2 million a week in lost chip theft, with the devices often ending up in Vietnam, Taiwan, China, Eastern Europe, and South America. Major computer hardware manufacturers Sun Microsystems, Intel, Silicon Graphics, and Acer America were among the victims, along with many smaller businesses.
After the San Jose memory-chip maker Pion was robbed twice by armed men and Vice President Jeff Anhorn was held at gunpoint and pistol-whipped, Mr. Anhorn and CEO Art Fonda began wearing panic buttons around their necks in 1996 to immediately call police if they were targeted.
“We realize we’re in the diamond business,” Fonda told the Mercury News at the time. “That’s how precious what we’re dealing with.”
While local police investigated the tech thefts separately, Mr. Burns began working with law enforcement to investigate the connections and identify the loose criminal network behind the crimes, said George Grotz, a former FBI colleague and longtime friend.
That effort culminated in Barnes working with San Jose police, the Internal Revenue Service and the federal Bureau of Alcohol, Tobacco and Firearms to launch “Operation West Chips,” a campaign to target a costly and sometimes violent wave of tech crime that federal prosecutors described as a “terror operation.”
The undercover agents spent 18 months infiltrating a crime network run largely by Vietnamese gangsters, with Vietnamese-speaking San Jose police detectives playing a key role, recalled Daniel Ortega, then the department’s chief of detectives.
After weeks of planning, more than 500 agents and police officers converged on the San Jose Convention Center on February 28, 1996, then spread out into 60 teams in the cities of San Jose, Milpitas, Santa Clara, Sunnyvale, Sacramento, and San Francisco. The dramatic operation led to the arrest of 43 suspects.
Grotz recalled that Burns was the “orchestral leader” of the operation.
“His leadership and relationships with other agencies, especially the San Jose Police Department, were the foundation of the success of this operation.”
Grotz said the operation, and Burns’ efforts to pressure chipmakers to tighten security, dealt a major blow to the rampant technology theft.
Mr. Burns retired from the FBI in 1997 and founded the Burns Group, a Los Gatos security consulting firm that frequently works with technology companies.
Cindy and Barnes’ former coworkers recalled that he loved skiing, swimming, mountain biking, barbecuing and collecting wine. He and Cindy owned season tickets to the San Francisco 49ers and San Jose Sharks and traveled to 59 countries together.
“We had fun everywhere we went,” Cindy recalls. “We really liked each other.”
