Three people, including a husband and wife, have been found guilty of bilking Cisco Systems out of more than $US20 million in revenue in a money-laundering scheme.
Mario Easevoli, 33, of Port Charlotte, Fla., was sentenced to 12 1/2 years in prison, according to U.S. Attorney George E.B. Holding in the Eastern District of North Carolina, Raleigh, N.C. His wife, Jennifer Easevoli, 29, of Oro Valley, Ariz., received a nine-year prison sentence and Jason Allan Conway, 34, of Hendersonville, N.C., received a four-year sentence.
In addition, all three are ordered to pay $US21.7 million in restitution to Cisco. All three pled guilty to money laundering and Mario Easevoli and Conway also pled guilty to conspiring to commit mail fraud. The scheme first came to light when Mario and Jennifer Easevoli were arrested by the F.B.I. in October of 2009 after a lengthy investigation.
According to the U.S. Attorney's office, Mario and Jennifer Easevoli, also known as Jennifer Leigh Harmon, were doing business as Synergy Communications Corp., with Mario Easevoli as founder and president and Jennifer Easevoli as senior vice president. Conway was an agent and employee, according to the attorney's office.
According to the indictment, the defendents submitted fraudulent claims to Cisco to receive replacement parts under the vendor's SMARTnet contract program from January 2003 to July 2005.
They then sold those replacement parts on the gray market and deposited the money into a Synergy bank account. The defendants reportedly created more than 50 fictitious company names and 35 fictitious people and instructed Cisco to ship replacement parts to mailboxes as UPS stores, residential addresses and commercial addresses in seven states.
Cisco offers SMARTnet service contracts which allow end users to obtain replacement parts immediately without having to return the failed or defective part first. The contracts are not transferable and are intended to benefit on the original end user purchaser. If the product is transferred to another party, the new owner has the option of registering the part with a new contract, according to the U.S. Atorrney's office.
"Many companies today continue to support their customers in honest transactions. Unfortunately, people, such as these defendants, try to take advantage of a company, dishonestly working the system to receive money or merchandise in which they are not entitled," Holding said in a statement. "I emphasise—try to take advantage of a company—because will continue to support law enforcement at all levels as they identify those who make a living through dishonest means."
Warranty and service abuse continues to be a problem in the United States and globally, according to Ram Manchi, president of the Alliance for Gray Market and Counterfeit Abatement (AGMA). "The sentence handed down in this particular case is one of the harshest to date," Manchi said. "Warranty and service abuse is not going to decline as the economy remains difficult."
In October 2009, AGMA and PricewaterhouseCoopers released a study that estimated warranty and service abuse to be approximately a $US10 billion a year problem just for companies who participated in the survey.
"Perpetrators are constantly looking for creative ways to commit fraud. There are no rules for people who are intent on committing fraud. However, those who are trying to prevent it are constrained by a multitude of laws, which makes for a very unlevel playing field," Manchi said.