California's Orange County Register is reporting that the U.S. Secret Service has busted a $5.7 million scam on eBay selling illegally obtained Cisco replacement parts.
Placentia, California resident - Thong Quoc Tran - has been arrested by U.S. Secret Service agents for allegedly filing more than 1,000 phony warranty claims on Cisco routers.
According to an affidavit by Special Agent Steven Kulpaca, Tran would obtain the serial numbers of routers legally purchased from Cisco by companies around the country.
Tran would then buy warranties on those routers, claim they were broken, and resell the replacement parts sent by Cisco at a discount on eBay.
The affidavit says Tran received $5.7 million in Cisco replacement parts over three years.
Tran was charged with mail fraud, Thom Mrozek, a spokesman for the U.S. Attorney's Office, said Friday, December 7th.
The Secret Service, which investigates cases of mail fraud, began surveillance in April of Tran, 30, who has homes in Placentia and in Westminster, California.
The agency conducted a search of his primary residence in the 400 block of North Little Drive in Placentia, California last week.
Wayne Williams, deputy special agent in charge of the Secret Service's Los Angeles office, said that, for one-target fraud cases, this is "one of the larger Orange County cases in its history."
Williams said only Cisco appeared to be targeted by Tran.
According to the affidavit, Tran would have Cisco replacement parts sent to dummy companies at various addresses – including his primary and secondary residences and three P.O. boxes he took out in Placentia, Yorba Linda and Brea, California.
After Tran sold the illegally obtained Cisco replacement parts on eBay, he would mail them to the buyers from various addresses, including his sister's house in Corona del Mar, California, the affidavit says.
"It's a simple scheme that worked in this case, but it's not particularly complex," Williams said.
Tran appeared in court Nov. 30 and posted $50,000 bail. His next scheduled court date is Dec. 20.
Special Agent Kulpaca worked with Cisco service abuse investigator Tim Walker, who tipped off the Secret Service about suspicious activity. Walker declined to comment.
Individuals and companies involved in Cisco SMARTnet fraud who wish to turn themselves in or cooperate with law enforcement should contact the Federal Bureau of Investigation at 408-369-8900.
About Brad Reese on Cisco
Brad Reese is research manager at BradReese.Com, advancing the careers of 1 million certified individuals in the growing Cisco Career Certification Program.
Contact him.
Brad's blogroll
Brad Reese on Cisco archive.
Cisco Subnet
|
|
A good Start
It is good to see Cisco directly involved and doing something about service fraud flooding the market with equipment.This isn't the first time an article has come up on network world. As a partner articles like this are encouraging. Keep em coming.
James W.
Quite a few skeletons in the closet
Hi James,
It is my understanding that "creative use of loopholes" when it comes to the superb Cisco service programs has resulted in the accumulation of more than a few skeletons in reseller closets.
Sincerely,
Brad Reese
http://www.BradReese.Com
Brad, Do you realize that
Brad,
Do you realize that Cisco does not have to do much civil litigation?
Although it appears Tran may have been engaged in fraud, why doesn't anyone ask why the government is carrying Cisco's briefcase on this and so many other cases -- against former employees, open market participants, warranty fraudsters, etc.
Just take a minute to visit the DOJ website and type in "Cisco" and see what you find. It's really quite amazing and a bit alarming.
In the past three years, the government has prosecuted about 15 cases for Cisco and just recently announced raids of about 100 US-based open market resellers.
I guess it's good to be Cisco when you have the US government on your side in any litigation.
Personally, I can't wait until this version of DOJ INC. is nipped in the bud.
Cisco is one of the most profitable US companies - and now you know part of the reason why.
Cisco has been way too complacent in litigation matters!
Totally disagree with you!
In my opinion, Cisco has been way too complacent in litigation matters.
eBay continues to the most visible source of counterfeit Cisco sales.
Cisco should start at the top (i.e. eBay) and work its way down!
Sincerely,
Brad Reese
http://www.BradReese.Com
Would have no issue if Cisco
Would have no issue if Cisco would do it itself.
The civil laws exist to allow businesses to protect their IP.
But, Cisco won't act itself on these cases.
Instead, Cisco sends out the gov to lock up its adversaries, if they lack political cover. (EBay has such cover; Tran does not.)
Do you think Jane's purse shop down the street gets the same gov help?
It's not a level playing field when individuals or small companies have to answer to the Feds, for business disputes with Cisco.
The issue is: why should our tax dollars be used to pay for a multitude of government criminal cases to protect Cisco (normally against individuals or small competitors, not EBay)?
(EBay by the way is just a marketplace; should EBay now be responsible also for enforcing Cisco's nebulous IP rights?)
Schumpeter would say this is the gov slowing down the market, impeding the natural creative destruction of monopoly rents (Cisco outsized profits).
Such gov intervention is heavy handed, prevents markets from clearing, and costs our economy billions in arbitrage efficiencies (but probably helps collect some comparatively paltry political donations from Cisco-family).
It raises significant public policy questions that will sort out later, but should be noticed now, that's all.
Business Dispute?
Yours truly is quite a bit to the right of Attila the Hun.
If it were in my power, yours truly would initiate capital punishment for computer hackers and email spammers!
Furthermore, yours truly does not consider fraud to be a business dispute!
Sincerely,
Brad Reese
http://www.BradReese.Com