Jury Convicts British National In $14 Million Computer Equipment Scheme
HOUSTON – Mark Allan James, 47, a citizen of the United Kingdom (UK), has been convicted for conspiring with a number of other individuals to defraud Hewlett-Packard (HP) of millions of dollars, announced United States Attorney Kenneth Magidson. James utilized straw buyers to make false representations in order to fraudulently secure HP computer equipment at steeply discounted rates. The verdict was returned moments ago after seven days of trial and approximately five hours of deliberation.
The trial evidence showed that James recruited individual business owners from around the globe to pose as persons interested in securing a large volume of computing products. 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, 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 that the products would be used internally and not be re-sold.
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, identified in the indictment as Company A. 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 in Canada, the United States and Singapore. 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 Company A.
The trial included testimony from members of HP’s Global Security and Brand Protection Departments as well as one of the straw buyers who assisted James in fraudulently procuring HP products on his behalf. Trial evidence included a large number of emails between James and others which demonstrated the level of deception used to deceive HP at every stage of the fraudulent transactions. In addition to the use of straw buyers, James also took care to hide his true identity and the role of Company A when inspecting the products prior to shipping. He also took care to disguise the true destination of the products by either routing them to an intermediary location or utilizing blind shipping techniques that hid the fact that the products were ultimately destined for Company A.
James was found guilty of conspiring to direct four different straw buyer transactions, spanning between May 2009 and November 2011. During one undercover transaction, James unwittingly corresponded with individuals cooperating with law enforcement in an attempt to fraudulently procure a Big Deal discount. The estimated losses to HP are in excess of $14 million.
James faces up to 20 years imprisonment and up to a $250,000 fine in connection with the conspiracy to commit wire fraud. He faces the same sentence for his conviction to conspiring to commit international money laundering, as well as 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 John Pearson.