The Journal Inside the Hilton Grand Jury

The Journal has some very good reporting today on a scandal in the normally-staid chain-hotel business (part of which I wrote about there for a few years).

Starwood, which owns Sheraton, W, Westin, and the like, has been accusing rival Hilton, owned by private-equity giant Blackstone Group, of a huge case of corporate espionage. It says two execs who left Starwood for Hilton took 100,000 pages of documents related to Starwood’s W luxury boutique brand, which has been sort of revolutionary for chain hotels, in order to help build Hilton’s ripoff Denizen.

The Journal gets the scoop that a federal grand jury is considering whether to charge Hilton as a corporation, along with the executives, with criminal charges. That would be huge since, as the Journal points out, similar charges brought down accounting crooks Arthur Andersen LLP before it was even convicted. In other words, the U.S. Attorney is dead serious here.

The interesting thing here is it looks, from the WSJ’s reporting, as if Hilton is pretty much conceding that the theft took place, suspending work on its boutique brand, and:

Since the imbroglio began Hilton has fired, or placed on leave, about 30 members of its luxury-brands group, many of them former Starwood employees, according to people familiar with the situation.

How does that jibe with its legal boilerplate?

Hilton has said the lawsuit is without merit.

This one should be fun! Nice work by the Journal.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.