UK Man Sentenced To Five Years For Ripping Off Hp For $20 Million

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UK Man Sentenced To Five Years For Ripping Off Hp For $20 Million
By Paul DeBenedetto

Law360, New York– A British man was sentenced to five years in prison on Wednesday for using straw buyers to make fraudulent Hewlett Packard Co. computer equipment orders at steeply discounted rates and then reselling the products, costing the company more than $20 million, according to a Texas U.S. attorney.

Mark Allen James, 48, recruited business owners to pose as customers interested in buying millions of dollars' worth of computers and other equipment from the company, telling them to lie and say the products would be used by their individual businesses and not resold, the original indictment said.

HP gave the customers business discounts under its Big Deal program for large-volume sales and continued usage and repair of HP products, according to indictment.

In addition to the five-year sentence followed by three years of supervised release, U.S. District Judge Lee H. Rosenthal ordered James to pay HP more than $13 million in restitution for causing it “huge institutional harm” motivated by “money, greed and a misplaced sense of financial need,” according to U.S. Attorney Kenneth Magidson of Texas' Southern District.

A spokeswoman for HP said the company was pleased with the court’s decision.

The court handed down the two-count indictment in December 2011, charging that for two years beginning in May 2009 James recruited straw buyers to buy the equipment under the Big Deal program, which is generally offered in the hope of securing long-term relationships with companies.

Once negotiations for the Big Deal were complete, Arbitech LLC, the company for which James procured the discounted equipment, wired cash directly to a U.K. bank account under the name of James’ company, Roamer Media Ltd. James would then transfer the funds to the straw buyers, the indictment said.

Arbitech resold the equipment on at least four occasions, including one transaction in which James unwittingly corresponded with buyers cooperating with law enforcement, according to the indictment.

James was charged with conspiracy to commit mail fraud and conspiracy to commit international money laundering, which could have netted him as much as 20 years for each count in addition to fines.

James’ lawyer, Chris Flood of Flood & Flood, argued during trial that HP was attempting to avoid responsibility for a practice they had long turned a blind eye to.

The discount was common among sales associates at HP, who encouraged customers to misrepresent themselves in order to make a profit on merchandise that the company could not otherwise sell, Flood said.

"The idea that Hewlett Packard was defrauded is laughable," Flood said. "There's no evidence they would have sold this product to anybody else for any higher price. Zero. None. Zilch. Some of this was sitting in warehouses, probably costing them money."

Despite the conviction, Flood said he was relieved that Judge Rosenthal did not hand down the maximum sentence.

"We appreciate the court’s careful consideration of who Mark James is, and what he did," Flood said. "We applaud the court for giving a very thoughtful sentence, but we still disagree with the jury's verdict that Mark James committed fraud."

James was represented by Chris Flood of Flood & Flood.
The U.S. is represented by assistant U.S. attorneys Jason Varnado and John Pearson.
The case is U.S. v. James, case number 4:11-cr-00869-1, in the U.S. District Court for the Southern District of Texas.
–Editing by Brian Baresch.

UK Man Sentenced To Five Years For Ripping Off Hp For $20 Million
By Paul DeBenedetto

Law360, New York– A British man was sentenced to five years in prison on Wednesday for using straw buyers to make fraudulent Hewlett Packard Co. computer equipment orders at steeply discounted rates and then reselling the products, costing the company more than $20 million, according to a Texas U.S. attorney.

Mark Allen James, 48, recruited business owners to pose as customers interested in buying millions of dollars' worth of computers and other equipment from the company, telling them to lie and say the products would be used by their individual businesses and not resold, the original indictment said.

HP gave the customers business discounts under its Big Deal program for large-volume sales and continued usage and repair of HP products, according to indictment.

In addition to the five-year sentence followed by three years of supervised release, U.S. District Judge Lee H. Rosenthal ordered James to pay HP more than $13 million in restitution for causing it “huge institutional harm” motivated by “money, greed and a misplaced sense of financial need,” according to U.S. Attorney Kenneth Magidson of Texas' Southern District.

A spokeswoman for HP said the company was pleased with the court’s decision.

The court handed down the two-count indictment in December 2011, charging that for two years beginning in May 2009 James recruited straw buyers to buy the equipment under the Big Deal program, which is generally offered in the hope of securing long-term relationships with companies.

Once negotiations for the Big Deal were complete, Arbitech LLC, the company for which James procured the discounted equipment, wired cash directly to a U.K. bank account under the name of James’ company, Roamer Media Ltd. James would then transfer the funds to the straw buyers, the indictment said.

Arbitech resold the equipment on at least four occasions, including one transaction in which James unwittingly corresponded with buyers cooperating with law enforcement, according to the indictment.

James was charged with conspiracy to commit mail fraud and conspiracy to commit international money laundering, which could have netted him as much as 20 years for each count in addition to fines.

James’ lawyer, Chris Flood of Flood & Flood, argued during trial that HP was attempting to avoid responsibility for a practice they had long turned a blind eye to.

The discount was common among sales associates at HP, who encouraged customers to misrepresent themselves in order to make a profit on merchandise that the company could not otherwise sell, Flood said.

"The idea that Hewlett Packard was defrauded is laughable," Flood said. "There's no evidence they would have sold this product to anybody else for any higher price. Zero. None. Zilch. Some of this was sitting in warehouses, probably costing them money."

Despite the conviction, Flood said he was relieved that Judge Rosenthal did not hand down the maximum sentence.

"We appreciate the court’s careful consideration of who Mark James is, and what he did," Flood said. "We applaud the court for giving a very thoughtful sentence, but we still disagree with the jury's verdict that Mark James committed fraud."

James was represented by Chris Flood of Flood & Flood.
The U.S. is represented by assistant U.S. attorneys Jason Varnado and John Pearson.
The case is U.S. v. James, case number 4:11-cr-00869-1, in the U.S. District Court for the Southern District of Texas.
–Editing by Brian Baresch.

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December 4, 2014 at 12:16 PM