News
Network Gear Reseller Arrested in Cisco Fraud Plot
Massachusetts man is alleged to have defrauded Cisco of millions through a scheme involving orders of 'defective' hardware.
- By The Associated Press
- February 28, 2007
(San Jose, Calif.) A Massachusetts businessman who resold Cisco Systems
Inc. networking gear was arrested on charges he defrauded the technology
company out of millions of dollars by cheating its program to replace
broken or defective hardware.
Michael Daly, 53, of Danvers, Mass., was arrested Tuesday and was scheduled
to be arraigned Wednesday in Boston federal court, according to federal
prosecutors. After preliminary hearings in Boston, his case will be moved
to San Jose, prosecutors said.
Daly faces up to 20 years in prison and a $250,000 fine if convicted
of wire fraud.
Daly is accused of using false identities in 39 states to order networking
gear from Cisco since 2003. He allegedly exploited a Cisco program that
allows customers to immediately obtain replacements for broken or defective
parts without having to send in the problem hardware first.
Daly ordered replacement parts at least 700 times and resold them without
ever returning the defective items, or in some cases returning worthless
parts that weren't covered under the program, prosecutors said.
San Jose-based Cisco makes the routers and switches that direct data
traffic over computer networks, and the parts Daly obtained were worth
between $995 to $25,000 each, prosecutors said. Some of the proceeds were
used to buy classic cars.
Investigators also seized computer equipment, documents and other items
from Daly's business, Data Resources Group, based in Salisbury, Mass.
The company's Web site describes Data Resources Group as a private company
established in 1991 and offering the full line of Cisco products at "substantially
discounted prices."
No one answered the phone at the number listed for the company Wednesday,
and it was not immediately clear if Daly had retained a defense lawyer.