Alameda County Resident Pleads Guilty To Wire Fraud In Connection With Scheme To Defraud Networking Equipment Manufacturer
Former School District Employee Admits Making over $1 Million in Fraudulent Claims for Replacement Computer Parts and Selling Parts to Customers
SAN JOSE –Ferdinand Pasion Arafiles, a/k/a Dennis Arafiles, pleaded guilty today to charges he defrauded a Bay Area manufacturer and seller of networking equipment and services, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The guilty plea was accepted by the Honorable Edward J. Davila, United States District Judge.
Arafiles, 49, of Alameda County, was an employee of a Bay Area public school district. According to his plea agreement, beginning in October of 2009 and continuing until February 2016, he devised a plan to take advantage of the relationship between the district and a leading networking equipment and services corporation (the “Corporation”). Specifically, Arafiles maintained access to the Corporation’s warranty contract and service program for the school district and used that access to order, receive, and then sell, replacement computer parts to which he was not entitled.
In the plea agreement, Arafiles acknowledged he created multiple email accounts, including variations on the name of the school district that employed him, and used those email accounts to create user accounts with the Corporation. He then made service requests on the Corporation’s customer support website. Using those email accounts and fraudulent identities, Arafiles instructed the Corporation to send “replacement” parts to designated addresses, including Arafiles’s personal residence in Alameda County. Arafiles understood that the Corporation required the return of failed or defective parts, so he returned bogus parts that contained forged or altered serial number labels. Arafiles also posted for sale and sold on internet market places some of the parts he fraudulently obtained from the Corporation.
A federal grand jury indicted Arafiles on June 23, 2016. In sum, Arafiles was charged him with five counts each of wire fraud, in violation of 18 U.S.C. § 1343; interstate transportation of stolen property, in violation of 18 U.S.C. § 2314; and mail fraud, in violation of 18 U.S.C. § 1341. Pursuant to today’s plea, Arafiles pleaded guilty to one count of wire fraud and the remaining charges will be dismissed at sentencing.
Arafiles faces a maximum statutory sentence of 20 years’ imprisonment and a fine of $250,000 plus restitution, if appropriate, for violating 18 U.S.C. § 1343. Additional fines and a term of supervised release also may be imposed, however, any sentence following conviction will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Arafiles currently is released on bond. Judge Davila has scheduled his sentencing hearing for May 10, 2018, at 1:30 p.m. An interim status date was also set for March 19, 2018, at 1:30 p.m.
Assistant U.S. Attorney Timothy Lucey is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the FBI.