Wasi Ismail Syed had endured a draining day of travel by the time he picked up his rental van at the Pensacola, Florida, airport. He’d left his West Coast home that morning in February 2009, then weathered a lengthy layover in Houston. But rather than pining for a comfy hotel bed, Syed was excited to conduct a bit of late-night business: He was meeting two strangers who called themselves Butch Cassidy and William Smith outside a nearby Walmart.
As he pulled into the store’s parking lot around midnight, the 32-year-old Syed worried that he might be robbed of the $28,000 he was carrying. Cassidy and Smith were already there, waiting for him in a pickup; Syed jotted down its license plate number in case the meeting went sideways. But his worries eased when he shook hands with the two men, who struck him as harmless blue-collar sorts: Both were in their mid-fifties with bushy mustaches and receding hairlines, and they spoke in a honeyed southern drawl. Syed sensed they were every bit as nervous as he was.
In a well-lit corner of the parking lot, Cassidy and Smith unloaded the 5-gallon painter’s buckets that filled their truck. Syed pried open one of the buckets’ lids and peered inside. He was pleased by what he saw: a pile of rock-like chunks of a silvery metallic substance. These were fragments of polycrystalline silicon, a highly purified form of silicon that is the bedrock for semiconductor devices and solar cells. Nearly every microchip on earth is forged from the material. And at that moment, due to a global shortage, the average price for freshly manufactured polycrystalline silicon, commonly known as polysilicon, had climbed to $64 a pound.
Syed operated on the periphery of the polysilicon industry as a trader in scrap. He had built a $1.5 million–a-year company by paying cash for any kind of processed silicon he could get his hands on: debris from chip fabricators, broken solar cells, cast-off shavings from the plants where polysilicon is made. He would flip these materials to customers who typically shipped them to China, where scrap silicon is refurbished in noxious chemical baths and recycled into new products. Syed was accustomed to cutting deals with odd characters who’d lucked into their silicon and were eager for money; he never asked many questions about the provenance of their goods.
Cassidy and Smith’s buckets contained 882 pounds of polysilicon, all of which looked to be of relatively good quality. But Syed knew he couldn’t just trust his eyes—it’s easy to get ripped off in the scrap trade. He spent 30 minutes sweeping a handheld resistivity tester over the chunks, to make sure there weren’t any duds mixed into the merchandise. All of the pieces scored above 1 ohm, meaning they were plenty pure enough to be sold to the Chinese for solar panels.
Convinced that he wasn’t being conned, Syed handed over his cash-stuffed envelope and lifted the buckets into his van; he planned to FedEx the product to his customer the next day before flying home. Just before driving away, he asked Cassidy and Smith whether they could get him any more polysilicon at a similarly attractive price. The two older men said they would be in touch.
The moment they got back in their truck, Cassidy and Smith divvied up the cash they’d just earned from their first-ever polysilicon sale—a deal in which almost every dollar was profit. The pair could see they’d stumbled into a potential fortune. And despite the risks they were taking, this was an opportunity they couldn’t pass up.
The 3-mile-long Theodore Industrial Canal is not quite as charmless as its name suggests. Created by an epic dredging operation that began in the late 1970s, the sun-dappled waterway on the outskirts of Mobile, Alabama, attracts small fishing boats and brown pelicans that compete for speckled trout. But the sights and smells of less salubrious activity are impossible to avoid. The canal is ringed by a cement factory, a dock where grimy ships are scrubbed, and a phenol plant that caught fire in 2002. A mile farther west, outside a plant that uses hydrogen cyanide to produce a chicken feed additive, the water sometimes has a sickly green-brown hue, and the air can smell vaguely of ammonia. At the end of the canal, behind a rusting benzene barge and a copse of pines, loom the slender distillation towers of Mitsubishi Polycrystalline Silicon America Corporation.
The Mitsubishi plant is arguably the most high tech member of South Alabama’s “chemical corridor,” a 60-mile stretch that teems with manufacturers of everything from protective coatings to artificial sweeteners to insecticides. After the closure of a massive Air Force base ravaged Mobile’s economy in the early 1970s, state and local governments decided to reinvent the region as a hub for chemical companies, which often situate their plants by rivers, lakes, and bays. (Water is crucial to chemical production as an ingredient, a coolant, and a receptacle for waste.) Today, Mobile’s sales pitch to the likes of DuPont and Evonik touts the area’s weak unions, abundant rail lines, and—crucially—openness to projects that might run into opposition in more green-minded locales.
The Japanese-owned Mitsubishi polysilicon plant, which opened in the late 1990s, hasn’t committed any major environmental sins, but it does burn through vast amounts of energy. The plant’s feedstock is metallurgical-grade silicon, which can be extracted from pulverized chunks of quartzite. In this raw form, silicon exhibits the properties that make the element so essential to the tech industry: It can both conduct and resist electricity—hence the term semiconductor—even at high temperatures. But metallurgical-grade silicon is far too tainted with flecks of iron, aluminum, and calcium to be usable in high tech products that are expected to perform flawlessly for years on end. The material must thus be chemically refined, a process that begins by mixing it with hydrogen chloride at more than 570 degrees Fahrenheit.
After having its impurities removed through multiple rounds of distillation, the resulting hazardous compound, called trichlorosilane, is pumped into a cylindrical furnace containing 7-foot-tall silicon rods shaped like tuning forks. Hydrogen is then added and the temperature is turned up to more than 1,830 degrees Fahrenheit. This causes hyper-pure crystals of silicon to leech out of the trichlorosilane and glom onto the rods. After several days the rods are thick with grayish polysilicon, which is then cut into foot-long cylinders, cleansed with acids until glittery, and packaged in thermally sealed bags for shipment.
When the vast majority of manufacturers reach the end of this process, their polysilicon is as much as 99.999999 percent pure, or “8n” in industry parlance. This means that for every 100 million silicon atoms, there is but a single atom’s worth of impurity. While that may sound impressive, such polysilicon is only pure enough for use in solar cells—relatively simple devices that don’t need to perform complex calculations, but rather just create electrical current by letting sunlight agitate the electrons in silicon atoms. (About 90 percent of all polysilicon ends up in solar cells.)
What the Mitsubishi plant in Alabama produces, by contrast, is 11n polysilicon, marred by just one impure atom per every 100 billion silicon atoms. This polysilicon, known as electronic-grade, is destined to be made into the wafers that serve as the canvases for microchips. Wafer makers melt down 11n polysilicon, spike it with ions like phosphorus or boron to amplify its conductivity, and reshape it into ingots of monocrystalline silicon. These ingots are then sliced into circular pieces about a millimeter thick, at which point they’re ready to be festooned with tiny circuits inside the clean rooms of Micron or Intel.
Mitsubishi’s facility on the Theodore Industrial Canal is one of fewer than a dozen plants worldwide that produce 11n polysilicon. “The barriers to getting to that sort of purity level are extremely high,” says Johannes Bernreuter, founder of a German research firm that covers the polysilicon market. “You have to imagine how many atoms there are in a cubic centimeter of polysilicon, and how only a few atoms of impurity in there can ruin everything.”
There has been no single key to Mitsubishi’s technical success with 11n polysilicon. Insiders credit not only the precision of the engineers who oversee the daily minutiae of the manufacturing process but also the attention that was paid to building the plant and its components to exacting specifications. Yet Mitsubishi’s meticulousness does not seem to have extended to the more elementary task of security.
George Welford and Willie Richard Short both joined Mitsubishi when the company’s Alabama venture was still fairly new. Welford, a Mississippi native with a passion for woodworking and a taste for used Harleys, started at the plant in 1999; Short, a former Ford worker who’d migrated south from Kentucky, came on board two years later. The two men, neither of whom possessed a college degree, wound up working together in the plant’s finishing department, where they chopped up the U-shaped polysilicon rods and bathed them in nitric and hydrofluoric acids.
Though they often worked different shifts, Welford and Short became close friends over the years. The two had much in common: Both were working-class products of the early 1950s, the parents of grown children, and, as one mutual acquaintance puts it, “good ol’ country boys” who love football and fishing. With their wives, they went out for dinners, even went on vacations together. Retirement was on the horizon for Short and Welford when the financial crisis of 2008 torpedoed 401(k) plans across the country.
The global meltdown came right as the polysilicon market was breaking records. The price per pound had risen by more than 700 percent in just four years, from around $20 to $180, largely due to increased demand from the solar industry. Manufacturers scrambled to build or expand plants, but they couldn’t move fast enough to satisfy customers. The supply crunch was so bad that solar-panel manufacturers often paid steep premiums for the top-quality polysilicon made by Mitsubishi and its competitors. Welford and Short spent their days surrounded by a product that was becoming ever-more valuable even as the economy teetered toward depression. Roiled by a potent mix of anxiety and the allure of easy money, the two men began to make plans to carry out an idea they’d previously only talked about: taking a little polysilicon for themselves.
Such a caper should have been impossible to pull off, but Welford and Short knew that Mitsubishi had overlooked a major security flaw within its finishing department: No one seemed to keep careful track of the number of polysilicon rods that made their way from the crystallization furnace to the cardboard shipping cartons. (Mitsubishi declined to comment for this story.)
So Short and Welford, whose combined criminal history consisted of just two speeding tickets, devised a simple plan. Once or twice per shift, the men would swipe a couple of cylindrical pieces of polysilicon, each about 10 inches long. They would stash the pieces in small nylon coolers—ubiquitous lunch boxes in today’s workplaces—and place rags between the rods to prevent them from clinking together. On their lunch break, they’d head to the employee parking lot so they could stash the contraband-laden coolers in their vehicles; they would then retrieve identical-looking coolers that were either empty or held a sandwich or snack. When they returned to work with what looked like the same coolers they’d left with, no one had reason to suspect that a theft had just occurred. And if anyone happened to look inside their vehicles, all they would see was an innocuous nylon cooler perched on the backseat.
This strategy required patience; each man could only pilfer a few rods a day. But as 2009 drew near, Short and Welford began to amass a significant amount of polysilicon. At first they kept the stash at Short’s home in Loxley, a sedate town of 1,700 on the eastern side of Mobile Bay. But they quickly ran out of space in the garage and had to lease a storage unit up the road from Mitsubishi. As they collected more and more painter’s buckets—each containing 44 pounds of polysilicon—Short and Welford still faced a challenge that savvier crooks would have already sorted out: How were they supposed to convert their haul to cash? Polysilicon, after all, wasn’t something they could fence to a shady pawnshop. The partners’ solution to their quandary was to scour the internet.
For decades, Silicon Valley thought of polysilicon in much the same way that bakers think of flour: an essential yet unglamorous ingredient that can be wasted without regret. Wafer makers were spoiled by a steady and affordable supply of electronic-grade polysilicon from the industry’s so-called Seven Sisters, the only companies to master the 11n manufacturing process: Mitsubishi, Hemlock Semiconductor, Wacker Chemie, MEMC Electronic Materials (now SunEdison), Osaka Titanium Technologies, REC Silicon, and Tokuyama.
When virgin polysilicon became scarce during the mid-2000s, demand soared for used or surplus silicon that could be recycled. Items such as irregular wafers or leftover polysilicon crumbs, which tech companies were accustomed to either selling for peanuts or tossing into the trash, became sought-after commodities. The scrap dealers who specialize in locating and reselling this cast-off silicon jockeyed to profit from the boom. “It created this absolute feeding frenzy,” says Rick Matheson, a veteran silicon dealer based in Boise, Idaho. “You could go down to the Bay Area and polysilicon was being sold on the street—you could buy and sell it almost like it was a drug. The market was totally unregulated.” Along with the prosperity, however, came plenty of malfeasance: Matheson, for example, once lost millions when a supplier pulled a bait and switch and sold him polysilicon of lower quality than promised.
One newcomer who prospered in the silicon scrap trade was Wasi Ismail Syed, a Chicago native who’d studied business administration at California State University in Hayward. After losing his Bay Area telecommunications job in 2007, Syed moved to Hyderabad, India, where his wife’s family lives. He found a job at a plant that refurbished old silicon wafers for the Chinese solar industry—a gig that taught him the fundamentals of the used silicon business. Syed spent a year at the plant before he and his wife decided that they didn’t want to raise their young children in India.
He moved back to Northern California and started placing Craigslist ads offering to pay cash for almost anything that contained silicon. He soon got a call from a testing company in Los Angeles with 220 pounds of surplus silicon rods. “They wanted a person to just pick them up so they wouldn’t go into a landfill,” Syed says. “I remember thinking, ‘How is everyone not already doing this?’” He flipped that load to a Chinese broker for $30,000, a sum he used to help establish his own company, Horizon Silicon.
Syed encountered some sketchy suppliers in his quest for silicon. He bought from scavengers who sifted through Silicon Valley dumpsters, for example, or warehouse workers who’d commandeered loads of remaindered solar cells or tainted wafers that had been marked for disposal. Syed had a bit in common with such hustlers. Once, when he was still operating out of a warehouse, Syed was seeking funding from a venture capitalist who required his beneficiaries to have an office. He hastily secured a six-month lease for a vacant office in a strip mall and furnished it with $125 worth of furniture and other materials from Craigslist and a local thrift store.
Despite his appetite for risk, Syed was initially skeptical when, in January 2009, his company began receiving emails from a man named William Smith who said he had 882 pounds of polysilicon for sale. Smith explained that he and his partner, who went by the name of Butch Cassidy, were responding to a Horizon ad on eBay (which featured a stock image of $100 bills). He was also cagey about revealing his true identity, to the consternation of Syed’s assistant, Darlene Row. “Why are you being so secretive about who you are?” she wrote in an email to Smith on January 27, 2009. “Should we question the origin of the material?”
Willie Richard Short, who had briefly toyed with using “the Sundance Kid” as his alias before opting for something less suspicious, provided no satisfactory answers to such questions. But Syed flew east to make the deal anyway. His decision was welcome news to Short and George Welford, who had already failed to sell their polysilicon to several other companies they’d found online; those negotiations had all ended the moment the potential buyers asked for the polysilicon’s specification documents, which only Mitsubishi possessed. Syed was not so exacting when it came to paperwork.
The Walmart parking-lot deal went smoothly, and Syed’s buyer was impressed by the quality of the merchandise. So Syed kept doing business with “Cassidy” and “Smith”: He bought another 441 pounds of polysilicon two weeks after the initial purchase, then 1,323 pounds more in July 2009, then 2.2 tons that November, shortly after he’d moved his family and company to McKinney, Texas. As the scale of the transactions grew, Syed enlisted a freight company to pick up the polysilicon in Alabama and truck it across state lines to his customers; then he, his assistant, or his brother-in-law, Shahab Mir, would travel to Mobile, Pensacola, or Shreveport, Louisiana, to hand over the cash. (At first they flew to these meetings but started driving after an incident in which Transportation Security Administration agents hassled Syed for carrying $30,000.)
By mid-2010, Horizon was buying at least 1.1 tons of polysilicon from Short and Welford every two to three months. Buzzing from their entrepreneurial success, the thieves began to act as if their operation was a legitimate startup, which they named Southeastern Two. They purchased an aluminum-sided, one-story commercial building in the town of Robertsdale, 26 miles southeast of Mobile, to serve as their company’s headquarters. There, in a unit next to a consignment shop, they sawed and hammered apart the stolen rods and packed them into 55-gallon drums. They also quibbled with Syed over expenses such as stretch wrap and shipping pallets, coordinated logistics with freight companies, and fielded business inquiries at firstname.lastname@example.org.
As Southeastern Two raked in hundreds of thousands of dollars in revenue, its founders spent with abandon. Welford treated himself to an enclosed utility trailer and a Sundance boat with a 115-horsepower Yamaha motor; Short scooped up a Ford F-150 truck for himself and a Cadillac SRX for his wife. He also used part of his newfound wealth to care for his troubled teenage grandson, whom he and his wife were raising.
The shortage of solar-grade polysilicon had evaporated by 2011 as Chinese manufacturers cranked up production. Prices collapsed, dipping to $25 a pound in June of that year, and kept plummeting. With so much cheap virgin polysilicon sloshing about, lean times set in for scrap traders and their fly-by-night suppliers.
In the wake of the downturn, Syed had to make lower offers to Short and Welford. According to him, the two men were miffed by the falling prices and briefly threatened to take their business to a Bulgarian company that had contacted them. Ultimately, though, they stuck with Horizon—their only customer—and settled for reduced prices: In a July 2013 deal, for example, they sold Syed 13.2 tons and earned less than $4 a pound.
With the risk-to-reward ratio having shifted so much in favor of the former, Short and Welford would have been well advised to shutter Southeastern Two that summer. But even the best thieves seldom have the perspective necessary to realize when it’s time to walk away.
Around 2:45 am on January 31, 2014, Short arrived at the Mitsubishi plant for a 12-hour shift. Before clocking in, he snagged some product and headed back out to his truck. As he exited the building, his nylon cooler in hand, he was stopped by two men who said they were from a company called Baldwin Legal Investigations and that they were conducting a routine audit of plant security. They beckoned Short to join them in a conference room for a chat.
The investigators, Max Hansen and Eric Winberg, were telling a half-truth: They had been hired by Mitsubishi after an anonymous employee accused Short and Welford of theft. The informant had not, however, mentioned what he thought the men were taking. To solve that mystery, Hansen and Winberg had spent several days monitoring the pair’s parking-lot trips on surveillance cameras. They guessed that the men were pilfering tools.
As the investigators peppered him with questions, Short tried to use his foot to nudge his cooler beneath the conference-room table. Winberg spotted the ruse and grabbed the cooler off the floor. “Damn that’s heavy—what’re you eating, bricks?” Hansen asked as his partner placed it on the table with a thud. Short meekly implored the investigators to leave his personal property alone, but they ignored him and opened the cooler. Inside were two thick rods of polysilicon.
Short tried, rather lamely, to claim that he planned to use the rods to build a showcase. But Hansen and Winberg were former homicide detectives, well versed in the art of interrogation. They chipped away at Short’s resolve with a combination of threats and flattery. “This is not who you are,” Winberg told him at one point. “I guarantee your wife does not know this person. You’ve got a lot of pressure on you; you’re worried about your grandson. I think what happened is you saw an opportunity to supplement your income a little bit and you took it. People do that all the time.”
Short was so overcome with remorse and fear that he asked the investigators for an anti-nausea pill. Then he started blabbing about the conspiracy: the regular thefts, the office in Robertsdale, the ongoing sales to “Wossie.” He did try to minimize the extent of Southeastern Two’s business, insisting that he and Welford had stolen only about 12 tons of polysilicon over a year and a half.
The investigators offered Short a deal: After resigning from Mitsubishi, Short could pay the company back $125,000 within a couple months. If he did that, there wouldn’t be any criminal charges. “I don’t know how, but I’ll pay,” Short vowed. As he left the conference room, he passed a glum-looking Welford waiting in the hallway, about to receive the same treatment.
Having spent too liberally during Southeastern Two’s heyday, Short and Welford were forced to raid their retirement plans and take out a home-equity loan to raise the combined quarter-million dollars they’d promised Mitsubishi. A month after the interrogation, they handed over checks at Baldwin Legal Investigations’ office and, for a brief moment, thought they’d wriggled free of more dire consequences.
But they had erred by not consulting with attorneys, who would have told them that the investigators’ promise was empty. Even if Mitsubishi didn’t pursue criminal charges, there was nothing to prevent prosecutors from taking up the case. As Short and Welford were scrambling to gather $250,000, Hansen had flown to Texas to watch and follow Wasi Syed. Hansen and Winberg also contacted a friend who was a special agent at the Department of Homeland Security. After hearing Hansen describe the stolen polysilicon’s circuitous journey from Alabama to Hong Kong, and the material’s importance to the American tech industry, the agent agreed to open a federal case.
When Short and Welford walked into a conference room at Baldwin Legal Investigations to present their checks, payable to Mitsubishi, the Homeland Security agent was waiting silently at the table. As soon as they handed over the money, he told them who he was and informed them that they were under criminal investigation. The color drained from the men’s weathered faces; from that point on, the founders of Southeastern Two would do whatever it took to avoid getting locked up.
Short and Welford soon confessed to the true and astonishing scope of their enterprise: They had stolen some 43 tons of electronic-grade polysilicon over five-plus years, earning more than $625,000 in the process. That sum, of course, was just a fraction of the 11n polysilicon’s actual worth had it been packaged and sold by Mitsubishi. What Short and Welford had done was akin to swiping some of the world’s finest 18-year-old Scotch from a distillery and then selling it to a liquor store as off-brand rye.
Determined to cooperate fully, Short volunteered to wear a wire as he negotiated one last sale with Horizon, and Mitsubishi provided 1.5 tons of polysilicon for the sting. The transaction took place in March 2014, with the money exchanged at a rest stop along the I-10 highway. A month later, federal agents swooped in and indicted Syed; his assistant, Darlene Row; and his brother-in-law, Shahab Mir. Syed was facing up to 85 years in prison for conspiracy and money laundering. Though he had by then figured out that Short and Welford—whom he still knew as Smith and Cassidy—were Mitsubishi employees, he couldn’t fathom that they’d spent years strolling out of the plant with tons of prime polysilicon. “I thought they were somehow buying it from the scrapper who took [Mitsubishi’s] off-spec material, or grabbing it from the bin where their trash was being thrown,” Syed says. He adds that Short frequently mentioned Southeastern Two’s alleged need to pay an unnamed source. (Neither Short nor Welford responded to numerous requests to comment for this article.)
At first Syed vowed to fight the charges all the way to trial rather than take a plea, but the legal odds kept tilting against him. Row struck a deal to become a government witness, and Syed’s lawyer thought Mir would get a lighter sentence if Syed pled guilty. During the jury selection process, Syed also began to worry about the people who would decide his fate. “My lawyer said that these people will see a Middle Eastern man with a lot of money talking about material they will have no clue about,” he says. “I said, ‘But my parents are from India.’ He said down here you’re either white or black—they don’t understand anything else. Once the prosecution brings out that you’re Muslim, it’s pretty much downhill from there.” On the eve of the trial, Syed accepted a deal in which he pled guilty to one count of conspiracy and another count of money laundering. He was eventually sentenced to two years in prison. (He was released to a halfway house in Texas in June.)
Short and Welford, though, were fortunate to face prosecution on their home turf in Mobile. Their lawyers described to the court the intense shame that both men felt. “The defendant is a 63-year-old man who had led an exemplary life until the instant offenses,” Short’s attorney wrote in his May 2016 request for a minimal sentence. “He has acknowledged his wrongdoing and has attempted in every way to right his wrongs.” The judge was apparently convinced by such arguments, which included Short’s contention that he was needed at home to help care for his grandson. She gave the men just six months each. (Row received two months, and Mir got three months in prison.)
Short and Welford served their time and are free men today. But the consequences of their time at the helm of Southeastern Two still haunt them: Every month, Welford is responsible for writing a $300 check, and Short must write a $500 check, to compensate Mitsubishi for the polysilicon they stole. Even if they don’t miss any payments, they won’t be free of this burden until well past their 130th birthdays.
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