Prosecutors swoop on Cisco reseller fraud (again)
SMARTNet dragnet widens
Federal prosecutors in California have indicted four former employees of a defunct networking resellers for allegedly scamming Cisco's replacement parts program. which could land them long jail terms.
The four, who worked for Minnesota firm Interlink Communications Corp, are accused of conspiring to defraud Cisco's SMARTnet warranty program of more than $1m of networking equipment. Prosecutors allege that between at least January 2001 and May 2002 they illegally re-sold replacement parts received under the scheme, which sends out new gear before faulty equipment is returned to Cisco.
Three indictees, Mark B. Faris, 49, Stephen D. Chicoine, 56, and Amy M. Ihrke, 39, were arrested on Wednesday morning and arraigned in federal court in Minneapolis. They were bailed after each paying a $25,000 bond. The fourth, Charles L. Lytle, 35, is expected to surrender himself to authorities.
The Cisco products the four are accused of swindling retail at up to $34,995 each. The indictments say that all 125 SMARTnet claims made by Interlink Communications in a five-month sample period were fraudulent. Interlink now operates as Zykco USA, which released a statement distancing itself from the investigation. It said: "Zycko wishes to clarify that Zycko is now and always has been an entirely separate business entity to Interlink Communications Corp. Neither Zycko USA nor any of its affiliates is a target of this investigation." One unidentified indictee is a Zycko USA employee.
A lawyer for Ihrke told Associated Press he was shocked at her indictment and that she had offered to cooperate with authorities since the reseller's offices were raided four-and-a-half years ago. Chicoine's attorney said his client was innocent.
This is the third case of alleged SMARTnet fraud busted this month. The US Attorney's office in San Francisco said the Interlink Communications scam was similar to the one it is arrested Massachusetts man Michael A. Daly for, but said there was no indication the two were related. Daly is accused of setting up false companies and addresses throughout the US to have the replacement parts mailed to. Soon After Daly's arrest, a New Jersey reseller was also arrested for defrauding Cisco.
An investigation last year saw a transatlantic bust of a Russian-run alleged $9m SMARTnet fraud.
Prosecutors added that investigations into the warranty program were continuing. Cisco has not made any comment on the run of arrests. ®