Pennsylvania Man Admits Defrauding Computer Equipment Companies for $2.5 Million
TRENTON, N.J. – A Gladwyne, Pennsylvania, man today admitted using phony documents and “straw buyers” to fraudulently secure millions of dollars in discounted computer equipment from Hewlett-Packard Co. (HP) and Cisco Systems Inc. (Cisco), U.S. Attorney Paul J. Fishman announced.
Andrew Silverman, 51, pleaded guilty before U.S. District Judge Michael A. Shipp in Trenton federal court to an information charging him with one count of wire fraud.
According to documents filed in this case and statements made in court:
From January 2008 through May 2012, Silverman exploited HP and Cisco discount programs that provided reduced prices on products used locally within a certain country and were not resold. As the president and owner of DataQ Internet Equipment Corp., which sold computer hardware and software, Silverman was not eligible to receive these discounts.
Silverman admitted that he recruited business owners to pose as buyers interested in securing a large volume of computing products. He directed these straw buyers to falsely tell HP and Cisco that the procured products would be used internally by those individuals’ businesses and not resold. Once negotiations were complete and the straw buyers fraudulently secured the discounts, Silverman sent funds via international wire transfers to the straw buyers to cover the purchase cost. He then had the discounted equipment shipped to destinations other than the straw buyer’s businesses, including to New Jersey and other locations in the United States.
Silverman also admitted he sent multiple emails to HP representatives posing as an individual named “P.B,” regarding the purchase of deeply discounted HP equipment. Silverman created a company called Integrated Data Centers to conduct negotiations with an HP representative so he could fraudulently obtain discounted HP products.
The estimated combined losses to HP and Cisco are $2.5 million.
The wire fraud charge to which Silverman pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Silverman will be required to forfeit $2.5 million under terms of the plea agreement. Sentencing is scheduled for May 19, 2015.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel in Newark; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the investigation leading to today’s guilty plea.
The government is represented by Assistant U.S. Attorney Lakshmi Srinivasan Herman of the U.S. Attorney’s Economic Crimes Unit in Newark.
Defense counsel: William Winning and Megan Scheib Esqs., Conshohocken, Pa., and Gerald Krovatin Esq., Newark