Pennsylvania Man Sentenced To Six Months In Prison For Defrauding Computer Equipment Companies For $2.5 Million
TRENTON, N.J. – A Gladwyne, Pennsylvania, man was sentenced today to six months in prison and six months of home confinement for 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, 52, previously pleaded guilty before U.S. District Judge Michael A. Shipp to an information charging him with one count of wire fraud. Judge Shipp imposed the sentence today in Trenton federal court.
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.
In addition to the prison term, Judge Shipp ordered Silverman to serve three years of supervised release, pay a $75,000 fine and forfeit $2.5 million in restitution.
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 sentencing.
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