Avnet accused of selling counterfeit parts in PCs

A former employee of PC distributor Avnet has filed a lawsuit against the company, alleging that Avnet installed counterfeit components in PCs sold by the former Compaq, according to a copy of the complaint.

The suit, filed May 13 in the U.S. District Court for the District of Arizona on behalf of Art Denardo, claims that Denardo was pressured into covering up records of the alleged scam by Avnet management, who feared that Compaq was about to discover their ploy. According to the complaint, Avnet would purchase counterfeit parts from a German company, Nexpress GmbH, and install them in Compaq PCs that Avnet would then resell to customers such as The Boeing Co., Intel and Honeywell International, among others.

Avnet was required by its contract to purchase only Compaq parts when assembling Compaq PCs, but found that it could save money by purchasing the parts from Nexpress and adjusting its inventory costs, the complaint alleges. Dernardo claims the money saved through the scheme was placed into an account that was used to adjust Avnet’s profit and loss every quarter.

The complaint also says that Avnet engaged in age discrimination, demoting older employees in favor of younger ones. In addition, it says the pressure placed upon Dernardo by Avnet management to cover up the scheme resulted in physical and mental distress.

“Mr. Denardo has raised several issues pertaining to his employment, and among them are issues regarding possible impropriety in Avnet Computer Marketing’s purchasing of certain products. The company is committed to conducting its business in accordance with its code of conduct. Mr. Denardo’s accusations are serious, and we are in the process of conducting an internal and external review of the allegations,” Avnet said in a statement.

HP, which acquired Compaq, was not immediately available to comment for this story.