Cuong Cao “Calvin” Dang Sentenced To 7 ½ Years In Prison For Role In $37M Cisco Fraud And Related Crimes

SAN JOSE – Cuong Cao “Calvin” Dang was sentenced to 90 months in prison for his role in a scheme to sell products stolen from Cisco Systems by its employees, announced United States Attorney Brian J. Stretch, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.  The sentence was handed down today in San Jose by the Honorable Edward J. Davila, U.S. District Judge, following the entry of two guilty plea agreements.  In the first plea agreement, Dang admitted to running a business that bought and sold merchandise stolen from Cisco.  In the second plea agreement, Dang admitted to blackmailing a person by threatening to tell the government about the person’s involvement with the fraud scheme.   

According to the plea agreement, Dang, 47, of San Jose, Calif., owned and operated Network Genesis, based in San Jose, from approximately January 2006 until January 23, 2013. Dang admitted to having a small network of Cisco employees who delivered stolen Cisco merchandise to Network Genesis for resale to customers both in and outside California. Dang admitted that, to cover his tracks, he changed the serial numbers on the stolen merchandise and created fraudulent “test sheets” to give to customers. (A test sheet shows the diagnostic information, including the serial number, for a particular part.)  Dang also admitted using nominees to launder the illicit proceeds, enabling him to obtain large amounts of cash without having the money go through bank accounts associated with him or his businesses. 

On October 30, 2013, a federal grand jury returned a superseding indictment in which Dang and seven other defendants were charged with various offenses related to Dang’s scheme. For his part, Dang was charged with conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349; six substantive mail fraud counts, in violation of 18 U.S.C. § 1341; two counts of engaging in financial transactions (money laundering) using criminally derived proceeds, in violation of 18 U.S.C. § 1957; and six counts of money laundering, in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i) and (a)(1)(B)(i). 

On December 11, 2015, Dang entered into the first of two plea agreements.  In this plea agreement, Dang pleaded guilty to one count of conspiracy to commit mail fraud, one count of mail fraud, one count of money laundering, and one count of money laundering of criminally derived proceeds. Dang admitted that Network Genesis’s business was “overwhelmingly that of buying and selling merchandise stolen from Cisco” by its employees. Dang also admitted that from January 2006 until Network Genesis was raided by federal law enforcement officers in January 2013, sales revenues totaled approximately $37,000,000.  Despite entering into this plea agreement and admitting this criminal conduct, Dang did not cease all of his criminal activity.

As part of his original plea agreement, Dang participated in interviews with agents for the government to provide detailed information about all of his Network Genesis activities.  Dang promised to provide details of financial transactions in which he participated and government agents specifically asked Dang about the details of any other instances of potentially unlawful financial transactions in which he may have participated.  Instead of providing all such details, Dang and his wife renewed contact with an individual with whom Dang had engaged in financial transactions in the past and blackmailed the individual.  Specifically, Dang and his wife demanded that the individual pay $350,000 in exchange for not telling the government about the transactions. With Dang’s agreement, Dang’s wife told the individual that if Dang and his wife were not paid hundreds of thousands of dollars, Dang would “leave [the] name on the list” and tell the government about the individual. Over time, the individual paid approximately $270,000 to Dang and his wife in exchange for Dang’s silence.

On March 9, 2017, a grand jury indicted Dang and charged him with obstruction of justice, in violation of 18 U.S.C. § 1510; contempt, in violation of 18 U.S.C. § 401(3); and blackmail, in violation of 18 U.S.C. § 873.  Dang pleaded guilty to all three charges yesterday.  His wife, Ly Thi Be Le, was also charged in the same indictment with obstruction of justice and blackmail. She pleaded guilty to the blackmail charge.  Le’s sentencing is scheduled for December 11, 2017. 

Dang’s co-defendants include Loc Xuan Hoang, Thuy Nguyen, Long Pham, Emily Le, David Huynh, and Edwin Lin. Judge Davila has sentenced Loc Xuan Hoang to 14 months’ imprisonment, Thuy Nguyen to 15 months’ imprisonment, Long Pham to 12 months and 1 day in prison, and Edwin Lin to time served.  Sentencings for Emily Le and David Huynh, are scheduled to take place in 2018.  

In addition to the prison term, Judge Davila also sentenced Dang to serve a three-year period of supervised release.  The amount of restitution to the blackmail victim will be determined at the December 11, 2017, sentencing hearing. Judge Davila ordered Dang to begin serving his sentence immediately.  

Assistant United States Attorney Amie Rooney is prosecuting the case with the assistance of Elise Etter and Lakisha Holliman. The prosecution is the result of an investigation by the IRS Criminal Investigation, with the assistance of the Santa Clara Regional Enforcement Allied Computer Team (R.E.A.C.T.) Task Force.