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Verizon Crime

Verizon Tech Charged In $4.5M Equipment Scam 104

Posted by samzenpus
from the show-me-the-money dept.
McGruber writes "Michael Baxter, a 62-year-old man from Ball Ground, Georgia, was recently arrested and charged with multiple counts of fraud for allegedly placing false equipment orders. As a network engineer at the southeastern regional headquarters of Verizon Wireless, Baxter allegedly submitted hundreds of fraudulent service requests to Cisco. According to prosecutors: 'The service requests were fraudulent in that no parts needed to be replaced, and instead of placing the replacement parts into service in Verizon Wireless network, Baxter simply took them home and sold them to third-party re-sellers for his own profit.'"
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Verizon Tech Charged In $4.5M Equipment Scam

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  • Re:RMA System (Score:4, Interesting)

    by alen (225700) on Monday December 12, 2011 @08:46AM (#38341714)

    Almost everyone offers a super precious metal support contract where you keep the bad parts

  • Re:RMA System (Score:5, Interesting)

    by TheCarp (96830) <sjc&carpanet,net> on Monday December 12, 2011 @09:02AM (#38341762) Homepage

    Well, when you work for a large company, and know how disorganized they are, I can see how a person would get to thinking "they will never know" and 99.9% of the time... be right.

    I distinctly remember a few incidents...very very minor stuff I am thiniing of. One machine, can't find it in the asset DB. So I look up an old work order, there it is... with asset tag info. I look up the tag, different machine. What gives?

    So we track it down (because we needed to submit work order for the original machine).... turns out, somebody never updated the asset DB, so whoever submitted this old work order must have just put the name in, and selected a different asset tag, just because he had no way to look up the real one (we only found it because we asked the right person who had it on a spreadsheet). No fraud, just "this place is so big, and tracks things so poorly, that I can enter anything" even more "I have to to get my job done".

    Translate that to an order system, you probably have several systems, all ordering through some central department. Between all the engineers and departments, they probably get some number of these non-return fees as a matter of course. He probably found that out, and realized that they didn't have the right info to really track them down easily. My guess would be he got a bit greedy and they noticed the numbers steadily climbing and wanted to know why.

    Then, well, it takes time to build a case. I bet they let him do it a couple of times before they finally fired him.

  • Re:greed kills (Score:5, Interesting)

    by Migraineman (632203) on Monday December 12, 2011 @10:00AM (#38342152)
    Lesson to would-be equipment thieves - don't try to dupe the accountants. They have the skills to balance the books, skills acquired over years of training. Skills that will make them a nightmare for people like you. That's ALL they do. They WILL spot the problem, and they WILL find you.

    About a decade ago, a couple was running a similar scam at my job. She worked in sales as an order processor - basically the back-end of the sales process that initiates production orders. He worked in the repair department as a line manager. She would initiate a product order, and set it up with a genuine customer account, but a bogus "ship to" address. The product ($40k+ telecom test gear) would be manufactured and shipped, closing the loop on the production accounting end. UPS would try to deliver the product, but fail. It would be returned to the company as "undeliverable" ... to the repair department where He would intercept it. The undeliverable shipment would be de-booked from the sales accounting system. At this point, they had moved a piece of equipment off the production floor while maintaining the integrity of the production accounting system. Undeliverable equipment was supposed to be returned to the sale-able product queue, but only after inspection by the repair group. He would step in and take the equipment out of the system, preventing the asset from being re-introduced into the production/sales pipeline.

    Manufacturing production was big enough that the float concealed the missing items. You'd have to reconcile the production, sales, shipping, and repair accounts to try to spot the anomalies. This scam persisted for a few years, slipping a couple of units out the door on an occasional basis. They finally got pinched when one of the phantom manufacturing units showed up on a repair order. It was fairly new, and the customer was attempting to get warranty service. Warranty repairs were handled by a different sales entry person, who couldn't resolve the actual sale of the unit to ... anybody. There was a very stealthy internal investigation which was coordinated with the State Police. He and She were arrested in the office when they tried to remove the bogus equipment from the facility.

    They ran their scam too long. Had they moved somewhere else, I doubt any prosecution would have happened. Almost every bit of evidence would have been circumstantial. They got nailed because the Police observed them executing the scam, and grabbed them in the parking lot with the equipment in their possession. Best guess was that they swiped about $500k of equipment.
  • Re:RMA System (Score:4, Interesting)

    by klubar (591384) on Monday December 12, 2011 @10:56AM (#38342766) Homepage

    I suspect the RMA agreements are different for very large customers. At least with Dell if you are a preferred buyer you can issues your own RMA (and I suspect the really large customers have even better deals of on-site spares and more). It's not uncommon for vendors to trust their best customers and to make it easy to get repair parts. Even ordinary retailers are able to get credit for customer returned items without physically shipping the defective part back to the vendor. In many cases the vendor just trashes the return part so there is a cost associated with handling an RMA. The total value of the defective parts in this case was probably a small percentage of Verizon's purchases. And if you're Cisco you don't want to piss off a good customer by accusing them of cheating on RMAs.

    But eventually you'll get caught.

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