British National Charged With Defrauding Hewlett-Packard in the Purchase and Resale of Computer Equipment
|Dec. 14, 2011|
More than $10 million in estimated losses to HP
HOUSTON – In an indictment returned a few minutes ago, a British National has been charged with conspiring with a number of other individuals to defraud Hewlett-Packard (HP) by utilizing straw buyers to make false representations in order to fraudulently secure HP computer equipment at steeply discounted rates, United States Attorney Kenneth Magidson announced today.
Mark Allan James, 44, a citizen of the United Kingdom (UK), is expected to make his initial appearance on these charges tomorrow afternoon.
James is alleged to have recruited individual business owners to pose as persons interested in securing a large volume of computing products. The indictment indicates he then directed them to falsely state the procured products would be used internally by those individuals’ businesses and not be resold. Based upon those false representations, according to the indictment, HP applied steep discounts to the products for various business reasons to include the opportunity for future large volume sales, further utilization of HP products in the customer's technology infrastructure and continued maintenance of existing HP products. These types of transactions fell under HP’s “Big Deal” program and HP would not have offered the degree of discount on its products, which often reach millions of dollars in a single transaction, without the false representations by James’s straw buyers that the products would be used internally and not be re-sold.
The indictment further alleges that once negotiations were complete on a Big Deal, James would receive money via international wire transfer from the company for whom James was procuring the discounted products. After that company wired money from the United States to a bank account James maintained in the UK in the name of his company, Roamer Media Ltd., James would then send the funds to the bank accounts of the straw buyers. After the straw buyers received the funds from the Roamer Media bank account, they then forwarded payment for the products to HP or its partners, thereby further deceiving HP and its partners into believing that the computer equipment was being purchased by the straw buyer. In reality, the HP computer equipment never reached the straw buyers, but was instead diverted for re-sale by the company for whom James was procuring the discounted products. The indictment sets forth four different straw buyer transactions, including an undercover transaction in which James was unwittingly corresponding with individuals cooperating with law enforcement in an attempt to fraudulently procure a Big Deal discount.
The two-count indictment alleges that the scheme spanned from May 2009 through November 2011 and caused losses to HP in excess of $10 million. James is charged with one count of conspiracy to commit mail and wire fraud and one count of conspiracy to commit international money laundering. If convicted of the mail and wire fraud conspiracy, James faces up to 20 years imprisonment and up to a $250,000 fine. He faces the same sentence if convicted of the international money laundering conspiracy in addition to a fine of up to $500,000 or twice the value of the laundered funds, whichever is greater.
The case was investigated by the United States Postal Inspection Service and is being prosecuted by Assistant United States Attorneys Jason Varnado and Gregg Costa.
An indictment is a formal accusation of criminal conduct, not evidence.
A defendant is presumed innocent unless and until convicted through due process of law.