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GPS tracking Feds bust Cisco reseller 'fraud'

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A GPS tracking sting has led to accusations that a reseller defrauded Cisco of millions of dollars in networking gear by fiddling its hardware maintainance program on a grand scale.

The US Attorney claims Michael A. Daly, 53, set up false identities and rented mailboxes in at least 39 states, which he used to bag Cisco parts. Investigators say they have evidence that Daly sold the kit on, spending some of his haul on his classic car collection. He was arraigned in Boston yesterday to face federal charges in San Jose, California.

The FBI raided Daly's business, Data Resources Group, in Salisbury, Massachusetts, on Tuesday, seizing computers, documents and other evidence.

Prosecutors allege the fraud ran from July 2003 until it was busted this week. They said Daly scored at least 700 pieces of gear worth up to $25,000 each under Cisco's SMARTnet maintenance program, which customers call to replace defective network infrastructure. The SMARTnet policy of advance replacement, which meant customers got replacement parts before they had to return malfunctioning parts to Cisco, was open to abuse.

A pattern of dodgy claims was spotted by Cisco's internal investigation team. Fault reports from SMARTnet contracts "sold" by Daly's Data Resources Group came in via emails traced to the same AOL address. The ficticious companies often shared physical mailbox addresses too, which were rented on a credit card in Daly's name.

The claims always angled for the same 12 parts: a switch, a chassis, and 10 different slot cards. Around 40 per cent of the claims were for the WS-X4516 network controller, which lists at $16,500.

According to the criminal complaint (PDF) filed in Northern California District Court, Daly was finally nailed when FBI officers got a warrant to fit replacement hardware granted to one of the suspicious claims with a mobile tracking device. The package was trailed to a rented mailbox and then to a firm in Virginia which banking records showed Daly had taken payment from for discounted Cisco gear.

Hit with wire fraud charges, Daly faces a maximum 20 year prison sentence and fine of $250,000.

Cisco did not return calls for comment. ®

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