Ethical Conduct. Richard and Suzanne Weinstein owned Elm City Cheese Co Elm City sold its products to three major customers that used the cheese as a filler to blend into their cheeses. In 1982, Mark Federico, a certified public accountant, became Elm City's accountant and the Weinsteins' personal accountant. The Weinsteins had known Federico since he was seven years old, and even before he became their accountant, he knew the details of Elm City's business. Federico's duties went beyond typical accounting work, and when the Weinsteins were absent, he was put in charge of operations. In 1992, Federico was made a vice president of the company, and a year later he was placed in charge of day to day operations. He also continued to serve as Elm City's accountant. The relationship between Federico and the Weinsteins deteriorated, and in 1995, he resigned as Elm City's employee and as its accountant. Less than two years later, Federico opened Lomar Foods, Inc, to make the same products as Elm City by the same process and to sell the products to the same customers. Federico located Lomar close to Elm City's suppliers. Elm City filed a suit in a Connecticut state court against Federico and Lomar, alleging, among other things, misappropriation of trade secrets. Elm City argued that it was entitled to punitive damages because Federico's conduct was willful and malicious. Federico responded in part that he did not act willfully and maliciously because he did not know that Elm City's business details were trade secrets. Were Federico's actions willful and malicious? Were they ethical? Explain.
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