Using False Identities and Private Mailboxes in at Least 39 States, Suspect Allegedly Carried out the Fraud at Least 700 Times
SAN JOSE – LAWFUEL – Law News, Law Jobs – Michael A. Daly, 53, of Danvers, Massachusetts was arrested yesterday afternoon and charged with defrauding Cisco Systems, Inc. of millions of dollars worth of computer networking equipment, United States Attorney Scott N. Schools announced today. Agents also executed a search warrant yesterday at Daly’s business–Data Resources Group–in Salisbury, Massachusetts, seizing computer equipment, documents, and other evidence. Daly was charged by a complaint that was unsealed at the time of his arrest.
According to the criminal complaint, from approximately July 2003 to the present, Daly engaged in a scheme to defraud Cisco in which he contacted Cisco using numerous false identities and fraudulently arranged for Cisco to send him replacement parts. Daly allegedly received and sold the parts, spending at least some of the illegal proceeds on classic automobiles. Daly either did not return any defective parts to Cisco, or returned parts not covered by SMARTnet that were worth little or nothing.
Under the SMARTnet program, Cisco agrees to provide customer with technical support, including advance hardware replacement. Advance hardware replacement allows customers to obtain replacement equipment from Cisco immediately, without having first to return the broken part. According to the complaint, Daly used false identities in 39 states to obtain networking equipment from Cisco under the SMARTnet program. Daly allegedly carried out the fraud at least 700 times, on each occasion obtaining equipment with a list price ranging from $995 to $25,000. Cisco estimates that the loss is in the millions of dollars.
The criminal complaint charges Daly with wire fraud and aiding and abetting, in violation of 18 U.S.C. §§ 1343 and 2. The maximum statutory penalties for wire fraud are 20 years in prison, a $250,000 fine (or twice the gain or loss resulting from the fraud), three years supervised release, and a mandatory special assessment. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of sentences, 18 U.S.C. § 3553.
A criminal complaint contains only allegations against an individual and, as with all defendants, Daly must be presumed innocent unless and until proven guilty.
Daly is currently in custody and is scheduled to be arraigned this afternoon at the federal courthouse in Boston, Massachusetts. After preliminary proceedings in Boston, Daly will appear in federal court in San Jose, California to face charges.
Further investigation of SMARTnet fraud will continue. Individuals and companies involved in SMARTnet fraud who wish to turn themselves in or cooperate with law enforcement should contact the Federal Bureau of Investigation at 408-369-8900.
Matthew A. Lamberti is the Assistant United States Attorney who is prosecuting the case, with the assistance of legal assistant Susan Kreider. The prosecution is the result of an eight-month investigation by the Federal Bureau of Investigation. Cisco also assisted the investigation.
A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.
Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.
All press inquiries to the U.S. Attorney’s Office should be directed to Luke Macaulay at (415) 436-6757 or by email at [email protected]