Former Owner Of SMC Electronics Sentenced To 13 Years In Prison For Defrauding Nortel Networks

Oklahoma City, Oklahoma – Mehran Koranki, formerly of Yukon, Oklahoma, has been sentenced to 13 years in prison for defrauding Nortel Networks by submitting bogus warranty claims for computer parts, announced Sanford C. Coats, United States Attorney for the Western District of Oklahoma.

Koranki owned and controlled two Oklahoma City companies in the business of maintaining, repairing, and selling computer networking components – SMC Electronics and Allied Solutions Technical Center (“ASTC”). Both companies had extended warranty agreements with Nortel Networks that allowed businesses with Nortel computer systems to receive replacements for broken or defective parts. These agreements required these businesses to use replacement parts in their own Nortel systems and not to sell replacement parts to third parties.

From February of 2005 until March of 2006, SMC used its extended warranty agreement with Nortel to obtain hundreds of thousands of dollars’ worth of computer networking equipment. During 2005 and the first three months of 2006, SMC fraudulently claimed that it needed replacements for over 850 computer parts under its warranty agreement, mostly line cards for Passport 8600 computer networks. The evidence also showed that SMC did not even use a Nortel computer network. With Koranki’s knowledge and encouragement, SMC then sold these parts for a profit. After Nortel refused to send more parts to SMC, Koranki used his other company, ASTC, to ask for even more replacement parts under a separate extended warranty agreement registered under an employee’s home address and a fake name.

A grand jury indicted Koranki on February 2, 2010, on mail fraud and money laundering charges. The mail fraud counts were based on Federal Express shipments of replacement parts from Nortel’s warehouse in Memphis, Tennessee, to SMC’s offices in Oklahoma City. The money laundering counts related to SMC’s deposits of more than $10,000 from computer companies that purchased Nortel replacement parts that SMC had obtained fraudulently.

After four days of testimony in November of 2010, a jury found Koranki guilty of all 48 counts of mail fraud and two counts of money laundering. After trial, Koranki left the United States and is currently an international fugitive.

Today United States District Judge Timothy D. DeGiusti sentenced Koranki in absentia to 156 months in prison and ordered him to pay $6,010,157.95 in restitution to Nortel Networks. The court also entered a forfeiture money judgment against Koranki in the amount of $6,299,182.95.

This sentence is the result of an investigation conducted by the Postal Inspection Service and Internal Revenue Service Criminal Investigation. The case was prosecuted by Assistant U.S. Attorneys Scott E. Williams and Amanda Maxfield Green.