Several of HTC's top designers have been arrested in Taipei under the suspicion of fraudulent expense claims and stealing trade secrets, ahead of leaving the company to start a new mobile design firm. Five members of the team were allegedly interrogated by the Taiwanese Investigation Bureau following a complaint filed by HTC, while two members were taken into custody after raids on their homes and offices.

Three of the suspects were notable HTC employees, including VP of Product Design Thomas Chien, R&D director Wu Chien Hung and senior design manager Justin Huang. The highly-praised design of the HTC One was personally sketched out by Huang, making his departure a significant loss for the company.

Chien was reportedly caught by HTC secretly downloading files related to an early version of the upcoming Sense 6.0 UI, and then sharing them with external contacts. Huang, Wu and Chien were also accused of using an "external design firm" to invoice HTC for $334,000 in fees surrounding the HTC One's aluminium chassis - which was designed in-house - before splitting these fees amongst themselves.

The trio were planning to start a new company under the name of "Xiaoyu", aimed at assisting Chinese smartphone vendors in designing new devices. It is alleged that the company was going to use the trade secrets stolen from HTC to assist them with new contracts. All the designers connected to the crimes were planning on leaving HTC after collecting their mid-year bonuses, with an aim to set up the new company.

HTC released a statement to Engadget stating:

The company expects employees to observe and practice the highest levels of integrity and ethics. Protecting the company's proprietary and intellectual properties, privacy and security is a core fundamental responsibility of every employee. The company does not condone any violation. As this matter is currently under investigation by the relevant authorities, we therefore refrain from further comments.