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Money Laundering Conviction Delivers Big Win to Gray Market Alliance

U.S. District judge convicts three defendants for scamming Cisco out of $20 million for illegally selling replacement parts on the gray market.

December 18, 2010
By

D.H. Kass

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In late September, a U.S. District judge in Raleigh, N.C. sentenced three defendants for scamming Cisco Systems Inc. out of some $20 million by reselling replacement parts fraudulently procured under the vendor's Smartnet warranty service program.

The defendants, whose combined sentences totaled 25 years in prison and $21 million in restitution to Cisco, pled guilty to selling the vendor's replacement parts on the gray market to downstream customers from January 2003 to July 2005, in what amounted to a lucrative money laundering and mail fraud scheme.

Although convictions of this sort aren't an everyday occurrence in the IT industry, this one delivered a huge win to the Alliance for Gray Market and Counterfeit Abatement (AGMA), a non-profit organization homed in on warranty and service abuse. Read more...

TAGS: Cisco,service,FBI,Smartnet,warranty



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