Compaq accuses brokers of $20m rebate fraud
Compaq is sueing three dealer principals for the recovery of $20m in rebates allegedly defrauded from the company.
Compaq accuses Harry Martin and Shafiq Ahhmed of Millenium Technology Group, a Virginia-based computer broker, and Stephen Pridemore, of South Carolina Creative Resources Group Inc, of conspiring to "defraud Compaq into paying millions of dollars
in unearned rebates and special marketing support funds".
The alleged scam was very simple: the brokers told Compaq that they had won a large government contracts that required special discounts from the computer maker. But no contracts existed: instead, the defendants trousered the Compaq kickbacks and siphoned off the kit into the broker market.
Compaq is throwing the book at the threesome; as well as demanding the return of its money, it is filing claims for "conspiracy, fraud, breach of contract and tortious interference with its contractual relations".
The company says it is committed to stamping out illegal brokering - so is this just the tip of the iceberg? And if Compaq was taken so easily to the cleaners, what about other big channel-led manufacturers such as IBM, HP or Sun? Certainly we have never come across this practice in the UK. Does anyone know different?