14 DAY TRIAL // 62-year-old Michael W. Baxter of Ball Ground, Georgia, was sentenced to four years in prison after a court found him guilty of running a multi-million dollar fraud scheme involving valuable Cisco and Verizon network telecoms and computing equipment.
Besides the four-year jail sentence and the three years of supervised release, Baxter will also have to restitute over $2.3 million (1.7 million EUR) to Cisco Systems and over $462,000 (355,000 EUR) to Verizon Wireless.
Employed as a network engineer at Verizon Wireless between 1994 and 2010, sometime in 2001, the fraudster came up with the clever idea of leveraging the terms of a warranty contract between Cisco and his employer for his own profit.
Verizon Wireless purchases telecoms and IT equipment from Cisco. To make sure that Verizon wouldn’t experience system interruptions because of malfunctioning equipment, Cisco agreed to send replacements before actually receiving the faulty component.
Baxter submitted hundreds of fraudulent service requests on behalf of his company and Cisco complied, sending him parts, some of which were valued at as much as $40,000 (30,000 EUR).
The fraudster then simply took the components home and sold them for his own profit.
However, he didn’t settle for the fraudulent service requests. He also purchased $462,000 (355,000 EUR) worth of equipment from Cisco on Verizon Wireless’ behalf.
He spent the millions of dollars on jewelry, cars, travels, luxury goods, and to pay for his girlfriend’s multiple cosmetic surgeries.
“Telecommunications networks are a vital part of our infrastructure, supporting governments, health and emergency services, and businesses throughout this nation and the world,” United States Attorney Sally Quillian Yates explained.
“To accomplish his fraud, this defendant exploited a program designed to keep this critical infrastructure running uninterrupted: Cisco’s program for replacing expensive equipment on a moment’s notice. He also abused his insider access to Verizon’s procurement system. He funded a lavish lifestyle with his stolen funds and has now earned himself several years in a federal prison.”