HANOVER COMPUTER COMPANY AGREES TO STATE-OF-THE-ART COMPLIANCE PROGRAM AFTER RECEIVING STOLEN COMPUTER EQUIPMENT ONLINE
BOSTON, Mass. - In an effort to avoid purchasing stolen computer equipment online, a Hanover computer company has agreed to establish a unique compliance program, one of the first of its kind in the country. The program also establishes measures to ensure that the company does not misuse manufacturers’ updates improperly for used equipment.
BL TRADING, LLC, had previously been charged in an information with wire fraud and the sale and receipt of stolen property in interstate commerce. The information alleged that over a 10-year period, BL TRADING repeatedly bought stolen equipment from Kevin Kelly, an employee at the North Carolina factory of EMC Corporation, a large manufacturer of computer equipment headquartered in Massachusetts.
On January 6, 2011, Kelly pleaded guilty in U.S. District Court in Boston, to stealing approximately $929,891 worth of EMC equipment, by concealing it in a small duffle bag as he left the factory. He then sold the stolen equipment over the Internet using the identity of an associate, without the associate’s knowledge. Kelly is set to be sentenced on April 7, 2011.
The charges allege that a former BL TRADING employee (now deceased) who had primary responsibility for purchasing equipment for its resale business, knew or was willfully blind to the fact that Kelly’s equipment was stolen. The information also alleges that BL TRADING lawfully used software obtained from EMC, to update EMC computer equipment that it was supposed to use only for its EMC-authorized business. Instead, BL TRADING used it to update equipment for its separate resale business, which was not authorized by EMC.
In the state-of-the-art compliance agreement, the United States agreed to defer prosecution and dismiss the charges after two years if the company takes measures to:
• identify the true identity of its sources of equipment, such as by requiring the sources to fill out federal tax forms to document payments and requiring that all new sources be first approved by the company’s compliance officer;
• avoid purchases from computer manufacturers’ employees if they have not been authorized to sell equipment;
• inquire of vendors if they offer equipment of a type or quantity materially inconsistent with what is normally available in the market;
• give computer manufacturers limited information about the company’s sources of equipment;
• refrain from using a computer manufacturer’s software to update used equipment unless the computer manufacturer agrees beforehand in writing;
• report suspicious vendors or equipment update violations to the compliance officer;
• train its employees in the program;
• certify compliance to law enforcement officials on a regular basis;
• pay restitution to EMC; and
• cooperate with law enforcement officials in this and future investigations.
This federal corporate compliance program is one of the first of its kind in the country for a computer reseller. “Congress and the public have become increasingly concerned with the ease by which people can steal items and sell them over the Internet under false or assumed identities,” said U.S. Attorney Carmen M. Ortiz. “The compliance program announced today will provide a model for online equipment resellers to ensure that their vendors are legitimate.”
If BL TRADING breaches the two-year agreement, it faces prosecution, a fine of $500,000 or twice the gain or loss, whichever is highest, per count and full restitution.
U.S. Attorney Ortiz and Bruce M. Foucart, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Office of Homeland Security Investigations in Boston made the announcement today.
The case was investigated by the U.S. Immigration and Customs Enforcement’s Office of Homeland Security Investigations in Boston with help from EMC. It is being prosecuted by Assistant U.S. Attorney Scott L. Garland of Ortiz’s Computer Crimes Unit.
The details contained in the information are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.