07/01/2009

News / Employee of Massachusetts Computer Parts Company Pleads Guilty to Conspiring to Commit Wire Fraud Conspired To Make Fraudulent Request For Replacement Parts Under Cisco's SMARTnet Warranty Program

SAN JOSE, CA—A former employee of Data Resource Group, a company based in Salisbury, Mass., plead guilty today to defrauding Cisco Systems Inc. of computer networking equipment through Cisco's SMARTnet warranty program, United States Attorney Joseph P. Russoniello announced.

Damian Prescott, 34, of Amesbury, Mass., admitted that from approximately June 2003 to February 2007, he conspired with Michael Daly, the owner and operator of Data Resource Group, in a scheme to defraud Cisco by submitting fraudulent SMARTnet service contract claims to receive replacement parts that Data Resource Group was not entitled to. Prescott admitted to assisting Daly in creating fictitious company names, obtaining e-mail accounts related to those names, and using the fictitious names to rent private mailboxes in at least 39 states. The mail boxes were used to receive replacement parts from Cisco. The parts were then forwarded to Data Resource Group in Salisbury.

According to the plea agreement, Prescott conspired with Daly to engage in approximately five successful fraudulent contacts with Cisco, which resulted in approximately $89,485 worth of Cisco product being fraudulently shipped to Data Resource Group.

Under the SMARTnet program, Cisco provides customers with technical support, including advance hardware replacement. Advance hardware replacement allows customers to obtain replacement equipment from Cisco immediately, without having to return the broken part first. Prescott admitted that even though Cisco requires that defective or broken parts be returned under the SMARTnet program, he never returned any parts to Cisco.

Prescott plead guilty to conspiracy to commit wire fraud and agreed to make restitution in the amount of $89,485 to Cisco. Sentencing is scheduled for October 5 at 9 a.m. before Judge Ronald M. Whyte in San Jose. Daly pled guilty on April 9 and is scheduled to be sentenced on July 27.

The maximum statutory penalty for conspiracy to commit wire fraud in violation of 18 U.S.C. Section 371 is five years, and a fine of $250,000 or twice the gross gain or loss, whichever is greater, plus restitution and three years of supervised release. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Richard C. Cheng is the Assistant United States Attorney who is prosecuting the case, with the assistance of paralegal Lauri Gomez. The guilty plea is the result of an investigation by the San Francisco Field Office of the Federal Bureau of Investigation, with the assistance of the Boston Field Office of the FBI, the Salisbury, Mass. Police Department and Cisco Service Abuse Investigations.

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