The latest alleged instance in a string of scams involving stolen and/or fake Cisco equipment may also be one of the largest, as authorities contend this reseller netted $37 million in ill-gotten gains that were then poured into real estate and luxury cars.
But at least the suspect - Network Genesis owner Cuong Cao Dang (a.k.a. Calvin Dang) -- put some of that booty aside for his children's college educations, investigators say.
From a story in the San Jose Mercury News:
Dang, 43, is charged with buying purloined or fake Cisco items such as processors costing thousands of dollars, then "altering the external serial numbers to make the items more difficult to trace," according to the U.S. Department of Justice. It states that he purchased the goods from employees at Cisco.
The indictment holds that Network Genesis had more than $37 million in sales revenue between 2006 and 2012, when the fraud was believed to be happening. It says the money was used to buy 11 commercial and residential properties in San Jose, luxury automobiles including a $100,000 Mercedes-Benz and a Lotus, as well as fund college savings accounts for Dang's four children. If convicted, Dang faces forfeiture of all those assets, as well as funds in various bank accounts and computer gear seized during searches of Network Genesis last January.
If convicted, Dang will join a parade of fraudsters who have been prosecuted for such Cisco-related scams. Here are a few as chronicled by my Network World colleague Jim Duffy:
- In 2011, a Massachusetts man named Michael Daly was sentenced to four years in prison for bilking $15 million out of Cisco in a defective-parts scheme. Daly too, spent lavishly on cars, though his taste ran toward the classics.
- In 2010, a husband and wife team, Mario and Jennifer Easevoli, were sentenced to 12 and 9 years apiece for defrauding Cisco out of $20 million in a phony replacement parts scam.
- Also in 2010, Philip Webb of Brooklyn Park, Minn., admitted to bilking the company out of $388,000 in spare parts and received only a 15-month prison sentence, presumably because he failed to reach the seven-figure mark.
- In 2008, Charles Levi Lytle of Minnesota pleaded guilty to ripping off more than $400,000 of Cisco networking equipment. I couldn't find a story about his sentencing.
"Cisco is a common fraud target because its brand reputation and demand for its produces makes it easy to sell through the gray market, or unauthorized sales channels," writes Larry Walsh today in a post on Channelnomics. "The high margins Cisco maintains on its products means fraudsters can attract buyers willing to save money by bypassing authorized suppliers."
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