FOR IMMEDIATE RELEASE:
WEDNESDAY - October 13, 2009
TWO ARRESTED IN $23 MILLION FRAUD SCHEME
RALEIGH - Two defendants were arrested for a mail fraud and money laundering scheme that brought a loss of over $23 million to Cisco Systems, Inc. (Cisco), a world leader in the design and manufacturing of computer network routers and other equipment, announced United States Attorney George E.B. Holding. Mario Easevoli, 33, and his wife, Jennifer Easevoli, also known as Jennifer Leigh Harmon, 28, and doing business as Synergy Communications Corporation (Synergy) were arrested on September 28 2009, in Tucson, Arizona. A third defendant, Jason Allan Conway, 33, has not yet been arrested.
The Criminal Indictment returned by a Federal Grand Jury on September 9, 2009, and unsealed on September 23, 2009, charges Mario Easevoli, founder and president of Synergy, Jennifer Easevoli, vice president of Synergy, and Conway, an agent and employee of Synergy, with conspiring to commit mail fraud, in violation of Title 18, United States Code, Section 1349; aiding and abetting mail fraud, in violation of Title 18, United States Code, Section 1341; and conspiring to commit money laundering, in violation of Title 18, United States Code, Section 1956(h).
Cisco, a San Jose, California-based company, offers SMARTnet, a contract service covering Cisco equipment, that allows end users to obtain technical support and advance replacement parts. Advance replacement allows end users to obtain replacement parts immediately without having to return the failed or defective part first. SMARTnet contracts are not transferable and benefit the original end user only. However, if the covered product is transferred to another party, the new owner has the option to register the part with Cisco to obtain a new SMARTnet contract.
According to the indictment, from approximately January, 2003, to July, 2005, the defendants submitted fraudulent claims to SMARTnet in order to receive replacement parts. They then sold these replacement parts on the grey market to downstream customers, depositing the payments into a Synergy bank account. After creating more than 21 fictitious company names and 80 fictitious personal names, the defendants obtained private mailboxes at UPS stores throughout eight states, instructing Cisco to ship the replacement parts to these addresses.
Mr. Holding commented, “When individuals resort to making their living through fraudulent schemes, all consumers pay the price. In order for the company to stay in business, they must raise the price of their goods and services to sustain their loses.”
The maximum penalties for conspiring to commit mail fraud and aiding and abetting mail fraud are up to 20 years imprisonment followed by up to three years of supervised release and a fine of up to $250,000. For conspiring to commit money laundering, the maximum penalty is up to 20 years imprisonment followed by up to three years of supervised release and a fine of up to $500,000 or twice the value of the property involved in the transaction, whichever is greater.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
Investigation of this case was conducted by the Federal Bureau of Investigation, the Internal Revenue Service - Criminal Investigations, and the United States Postal Inspection Service. Assistant United States Attorney Thomas Murphy represented the government.
News releases are available on the U. S. Attorney’s web page at www.usdoj.gov/usao/nce within 48 hours of release.