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Verizon Tech Given 4-year Federal Prison Sentence For $4.5M Equipment Scam 163

Posted by timothy
from the job-opportunities dept.
McGruber writes "Michael Baxter, the network engineer at the southeastern regional headquarters of Verizon Wireless who submitted hundreds of fraudulent service requests to Cisco, has been sentenced to four years in federal prison, followed by three years of supervised release. Baxter was also ordered to pay $2.3 million in restitution to Cisco Systems, and $462,828 in restitution to Verizon. Instead of placing the replacement parts into service in the Verizon Wireless network, Baxter took the parts home and sold them to third-party re-sellers for his own profit. He used the money to buy cars, jewelry and multiple cosmetic surgeries for his girlfriend."
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Verizon Tech Given 4-year Federal Prison Sentence For $4.5M Equipment Scam

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  • Company Liable? (Score:5, Informative)

    by Bigby (659157) on Thursday October 04, 2012 @02:21PM (#41552151)

    So when an employee does something great using the company's resources, the company gets the money. But when an employee does something illegal on the company resources, the company doesn't suffer?

    I understand that guy getting something. But Cisco should be suing Verizon, not the person. Verizon would then sue their former employee.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Cisco isn't suing anyone. This schmuck was prosecuted under Federal Wire Fraud charges. The fines constitute restitution.

    • So when an employee does something great using the company's resources, the company gets the money.

      His employer didn't really get the money in this case. If the employee had sold the equipment and then given all the profits to his employer, so that his employer could give him a raise or a promotion, then yes, you probably would have a point.

      Or if the employer prevents you from investigating the case properly by blocking you every step of the way, then yes, then you sue the employer, you sue everybody who doesn't cooperate, this will then force people to turn on each other.

      Personally in this case, I'd sue

    • by jmerlin (1010641) on Thursday October 04, 2012 @02:56PM (#41552537)
      Listen man, it could've been much worse. He could've pirated some music or a movie, too. He'd have 20 years in prison and owe $50,000,000.

      Sounds to me like he got off pretty easy.
      • Re: (Score:3, Funny)

        by MrEricSir (398214)

        Could have gone better too -- if he'd only set his sights a little higher he could have gotten a job on Wall Street.

    • by khallow (566160)

      But when an employee does something illegal on the company resources, the company doesn't suffer?

      What makes you think Verizon isn't suffering from the use of its resources?

      I understand that guy getting something. But Cisco should be suing Verizon, not the person. Verizon would then sue their former employee.

      Why? What's Verizon's part in this? I gather you are claiming that since Verizon resources were misappropriated as part of the scam, it somehow generates responsibility for the resulting crime. I can think of a simple example that illustrates the absurdity of this claim. If I rob a 7-11 (say even I was an employee who used my job to gather information for planning the crime) and use the funds I obtained to buy a gun, does the 7-11 bu

  • Crime pays (Score:4, Informative)

    by Smartcowboy (679871) on Thursday October 04, 2012 @02:23PM (#41552157)

    He is a living proof that crime pays.

    He got millions of dollars and a great lifestyle for years and now he basicaly got free home and free meals for a number of years.

    • by tgeek (941867)
      . . . and probably will get conjugal visits from his cosmetically enhanced girlriend!
    • Re:Crime pays (Score:5, Insightful)

      by spire3661 (1038968) on Thursday October 04, 2012 @02:28PM (#41552213) Journal
      Id rather be poor and free. 4 years of life is a very long time to me.
      • I suspect that with "good behavior" and prison overcrowding, he could be out on parole in as little as 18 months ...now how he intends to feed himself and make a living after that is another question entirely.

        • He scammed 45 million dollars. He's going to retire to the Cayman Islands somewhere with the 5-6 million they couldn't account for.

          • Sigh, reading fail.

            He scammed 4.5 million, so he'll retire to the Cayman Islands with the 1-2 million they couldn't account for or take back from him.

            As long as he wasn't a total moron at least.

            • by tehcyder (746570)

              Sigh, reading fail.

              He scammed 4.5 million, so he'll retire to the Cayman Islands with the 1-2 million they couldn't account for or take back from him.

              As long as he wasn't a total moron at least.

              He got caught and sent to prison, of course he's a total moron.

        • Re:Crime pays (Score:4, Informative)

          by z_gringo (452163) <z_gringoNO@SPAMhotmail.com> on Thursday October 04, 2012 @02:39PM (#41552343)
          The Federal system doesn't have parole. And federal prisoners must complete at least 85% of their sentence, so good behavior will get him a 15% reduction at most.
        • Re:Crime pays (Score:4, Informative)

          by timeOday (582209) on Thursday October 04, 2012 @02:49PM (#41552457)
          Exactly - the problem with prison time isn't just the prison time, it's wearing the scarlet letter of "FELON" for the rest of your life.

          Is this [thebeehive.org] the life to which you aspire?

          I am a 69 y/o exfconvicted felon. I'd been strugling to make end meet because I can't get a job because my record and my age, there r a lot of descrimination in florida for both. I'm retired and make $672.00 a month. and I can't survive on that kind of money.

          I was working in a little restaurant but it shut down last month, I'm desperate to pay my rent, my bills, gas etc. How can I find a job for my age.?

          (shudder)

          • Exactly - the problem with prison time isn't just the prison time, it's wearing the scarlet letter of "FELON" for the rest of your life.

            Is this [thebeehive.org] the life to which you aspire?

            As opposed to half of recent college grads being unable to find full time work, according to a Rutgers University study? http://www.heldrichpodcasts.com/Chasing_American_Dream_Report.pdf [heldrichpodcasts.com]

            The problem isn't "The Scarlet FELON", it's that the jobs just aren't there for anyone, unless they have in-demand skill sets. Convicted felons and half of all recent college graduates typically don't have them.

            On the flip side, half of recent college graduates do have full time jobs, and convicted felons can get jobs; in b

            • by jandrese (485)
              FYI, that study doesn't say half of college grads are out of work, many of them have jobs but are underemployed. People with philosophy degrees flipping burgers for example.
              • by yurtinus (1590157) on Thursday October 04, 2012 @04:13PM (#41553181)

                People with philosophy degrees flipping burgers for example.

                I don't understand how this qualifies as underemployed...

              • FYI, that study doesn't say half of college grads are out of work, many of them have jobs but are underemployed. People with philosophy degrees flipping burgers for example.

                I refer you to the part of my post where I specifically stated "in-demand skill sets".

                A lot of people would dearly like to be paid to do things which society simply does not value. I know at least one tone-deaf singer who'd like to be paid to sing, but I'm pretty sure Yoko Ono has cornered the market on that, unless you count autotuning as singing, in which case I'd say the market is larger than I initially thought, but she's probably still not going to get paid. Personally, I'd like it to be my job to li

                • by tehcyder (746570)
                  What retards like you don't seem able to comprehend is that getting a degree in philosophy doesn't mean you have committed your life to sitting on a fucking pillar contemplating the universe, any more than getting a degree in English means you feel entitled to spend the rest of your life writing poetry while being hand fed caviare by oiled houris.

                  Getting a degree in anything just proves you are intelligent, organised and motivated enough to learn how to study up to a certain level, which employers find u
            • by tehcyder (746570)

              convicted felons can get jobs... they have to have in-demand skill sets

              The point is that unless they are some sort of super genius specialised rocket surgeon (or something), there will always be at least one other person with the same in-demand skill sets but no conviction for theft/fraud, and it's hard to argue that away just by being good at the HR interview.

          • by jandrese (485)
            I'm having trouble feeling too sorry for the guy being labeled a criminal after he scammed 4.5 million dollars worth of equipment over a several year period. He's being labeled a criminal quite justly in this case. Maybe he'll reform in prison and deserve a second chance, but he's earned some extra scrutiny from whomever wants to hire him.
            • by timeOday (582209)
              Hey, I didn't say I would ever want to hire somebody convicted of employee theft myself. But unlike the GP I don't envy the crook in this case, he's getting what he deserves and I wouldn't want to be in his shoes now.
      • Re:Crime pays (Score:4, Insightful)

        by Belial6 (794905) on Thursday October 04, 2012 @02:45PM (#41552405)
        And yet you are likely to give up far more than 4 years of your life for far less money.
        • by geekoid (135745)

          Insightful.

        • I know I did, and $1-2m is a lifetime's worth of pay...if he has access to that money after he gets out, that's a damn good deal, he'll never have to work again, or could have many options for starting his own business if he wants to.

          • by tehcyder (746570)

            I know I did, and $1-2m is a lifetime's worth of pay...if he has access to that money after he gets out, that's a damn good deal, he'll never have to work again, or could have many options for starting his own business if he wants to.

            Do you really think that the authorities worked out he stole 4.5m USD and just said "oh well, guess he must have spent it all, never mind"?

        • by tehcyder (746570)

          And yet you are likely to give up far more than 4 years of your life for far less money.

          You don't give up ALL your life to your work unless you're an idiot. You have to make a compromise between spending a certain amount of time doing something you'd rather not and living an even more miserable life by being poor.

          Anyone over about fourteen who thinks that working for a living is the same as being in prison is just...ignorant.

    • by cvtan (752695)
      Lets see. Invest 4 years of your life to get several million dollars. I think there are a large number of people that would take that deal just to support their families.
      • by tehcyder (746570)

        Lets see. Invest 4 years of your life to get several million dollars. I think there are a large number of people that would take that deal just to support their families.

        You are assuming that this self-entitled minor criminal is also some sort of financial genius who has salted away those millions he stole in cunningly hidden, untraceable offshore investments or something. That is not impossible, but it is hardly likely.

    • He is a living proof that crime pays.

      No, he got caught and lost it all including his freedom. His girlfriend is living proof that crime pays.

    • by tehcyder (746570)

      He is a living proof that crime pays.

      He got millions of dollars and a great lifestyle for years and now he basicaly got free home and free meals for a number of years.

      Plus he'll probably have more sex than he's ever had in his life, and he's practically guaranteed a great job when he gets out. Clearly, it's a win-win for him.

      You really are a fucking retard.

  • Then he simply would've received a harshly worded letter or speech from congress. Eh, like everything else, when it comes to 'justice', it all depends on who you are.

    • by mcgrew (92797) *

      Then he simply would've received a harshly worded letter or speech from congress

      You mean like the strongly worded letter Bernie Madoff, former head of NASDAQ, got?

  • by Penguinisto (415985) on Thursday October 04, 2012 @02:26PM (#41552195) Journal

    ...incidentally, I don't mean the theft part, which is pretty dumb on its own. What I mean is, he should have been socking that money into Cayman Island accounts (or maybe Venezuelan bank accounts and such), then get out of dodge once he hit the $2m mark or so. Get enough scratch and live in a 3rd-world country that doesn't do extradition, and you can get an entire flock of local women instead of having to throw a ton of money on just one.

    Then again, dunno how much money he himself got, as the $4.5m figure could be what Cisco values the parts to be, which given Cisco's pricing could be as little as three fans and a 6509 power supply w/ SmartNet support. :p

    I am curious as to WTF these guys think when they start pulling stunts like this, however. I mean, if you're gonna flirt with PMITA Prison time, you'd best be damned smart about it, do at least some research, and get your shit planned in advance...

    • Get enough scratch and live in a 3rd-world country that doesn't do extradition, and you can get an entire flock of local women instead of having to throw a ton of money on just one.

      Even a criminal is capable of being in love with someone.

      • Get enough scratch and live in a 3rd-world country that doesn't do extradition, and you can get an entire flock of local women instead of having to throw a ton of money on just one.

        Even a criminal is capable of being in love with someone.

        Or hedonistically in love with her body.

        • by sconeu (64226)

          He wasn't in love with her body until she had all the plastic surgery done...

    • by OzPeter (195038)

      Get enough scratch and live in a 3rd-world country that doesn't do extradition

      Hmm I think Gottfrid Svartholm [slashdot.org] tried that approach and you can see where it got him.

    • by jandrese (485)
      I wouldn't be so quick to go for the "dump money in some overseas numbered account and head off to some country with no extradition laws" approach. Have you seen the list of countries that don't extradite?

      Bhutan Botswana Brunei Burkina Faso Burundi Cambodia Cape Verde Central African Republic Chad China Comoros Djibouti Equatorial Guinea Ethiopia Gabon Guinea Guinea Bissau Indonesia Iran Ivory Coast Jordan Kuwait Laos Lebanon Libya Madagascar Mali Maldives Mauritania Mongolia Morocco Mozambique Nepal Niger

    • I doubt he planned this advance. He probably ordered a part that they ended up not needing, Verizon got billed for it, he ended up with it and sold it. Then he just sort of kept doing that.

    • by Khashishi (775369)

      It sounds stupid because you don't hear about the guy who got away with it.

    • Your idea is stupid.

      I wouldn't trust the government of the hosting 3rd-world country (extortion and corruption runs rampant) for one, 2nd, I wouldn't be trusting their banking system. And 3rd, I wouldn't be trusting of the women and/or her extended family and friends. What you suggest is jumping out of the frying pan and into the fire. To Hell with that idea!

  • by smooth wombat (796938) on Thursday October 04, 2012 @02:27PM (#41552199) Homepage Journal

    We had a Department of Corrections employee (for the state) who bought $123,000 worth of IT equipment then sold it on eBay for $54,000.

    Obviously he was caught when the audit was done. So far, no comment from his attorney.

  • by SomeoneGotMyNick (200685) on Thursday October 04, 2012 @02:30PM (#41552231) Journal

    cosmetic surgeries for his girlfriend

    Just HOW MUCH does it cost to modify a blow-up doll?

    • Re: (Score:3, Funny)

      by Anonymous Coward

      Apparently it's somewhat pricey [realdoll.com]. Although $2.3 million is easily enough to order the most depressing harem in history!

  • by Anonymous Coward
    I think the Cisco folks are entitled to some action, since they can get their money back on this specific situation.
  • Boob job, nose job, vaginoplasty?

    Probably all three. She should have to "return" them as well if she knew about the fraud or spend time in jail.

  • What no pictures of the girlfriend?
  • Pics or it didn't happen.
  • reason to put someone in prison.
    There are better ways to punish and develop corrective measures.

  • I have been doing this same procedure with Cisco for years an years, When a card breaks in the feild and you do a RMA on that part (which can happen allot if you have lots of gear) you get the new replacement part in the mail right away, you then have a certain amount of time to return the old bad part.
    If Cisco does not receive that part in a certain amount of time they will be contacting your boss or someone until they get that part back.
    I have had Cisco say I did not return a part that I did return and fi

    • I've seen major ISPs put networking gear acquired on the used market into service. During the years after the dot-com bust, it was pretty common.
      • by Comen (321331)

        Yes but this is stolen gear, and I have never worked for a company that did not have service contracts on all the gear they have with live customers on it.
        It would ne hard for a bigger company to tell its employees to not open a ticket on certain gear because its stolen.

    • by jandrese (485)
      I suspect there is a healthy grey market for Cisco parts from people who don't want to pay for a service contract. If the equipment is not mission critical and maybe a few years old this would seem to be a reasonable option. You don't get software updates, but if the device is doing its job it really doesn't need them. This is especially true if you're buying used hardware at a fraction of the price.
  • A $4.5 million dollar scam. Restitution of $2.3 million to Cisco, $462,828 to Verizon. So that makes his net profit approximately $1.75 million. He'll be in prison for 4 years. Probably out in 2 with good behavior but let's say he does the full 4. That's $1.75 million / 4 = $435,000 a year. Not bad.

    I'd hardly call that a deterrent to crime. Hell, he's currently more profitable than the company I work for.

    • by nedlohs (1335013)

      Except it would be unlikely he got full price reselling things. And his future earnings are going to be significantly impacted as well.

  • by JRHelgeson (576325) on Thursday October 04, 2012 @03:17PM (#41552705) Homepage Journal

    Verizon has been targeted many times. They would steal network equipment, then call Cisco to get an advance replacement RMA, which would take their stolen equipment and double it. Then they would sell the gear on the 'Grey Market' for Cisco hardware. They focused primarily on Cisco 12000 line cards, where an individual card sells for $100k+ and are installed in a redundant fashion.

    Then they started just getting serial numbers for equipment and starting RMA's for that, and selling it on the Grey market. When Cisco called to get the status on the return... Verizon would reply with "what return".

    I helped track one of these cats back in early 2000's - once he found we were hot on his trail, he abandoned his Bentley, and his Mansion and fled back home to Russia - where he lives currently. Interestingly, this same type of scam popped up in eastern Europe shortly after his relocation.

    Our suspect had a friend who worked in security at one of the Verizon data centers. He would grant 'back-door' access to a facility, and permit the theft of the hardware. Stories abound of this guy being too poor to buy gas one day, borrowing $50 from friends in order to make to to the airport to fly out to New York then from New York to California, then California back home - pulling a massive roll of C notes from his pocket and repaying the $50 loan + a couple of C-notes to show his gratitude.

    Perhaps the reason we hear about this happening with Verizon was that they became aware of the scam early, then kept tracking the perps until they were finally able to catch them. Kudos to Verizon Security for being able to close the loop on this one. These cases are extremely hard to track and crack.

    http://www.nytimes.com/2004/11/27/nyregion/27theft.html?_r=2&ex=1152936000&en=28ee4e10417b8e50&ei=5070&oref=login [nytimes.com]

    http://www.zdnet.com/level-3-falls-victim-to-data-centre-robbery-3039284520/ [zdnet.com]

    • by OzPeter (195038)

      Verizon has been targeted many times. They would steal network equipment, then call Cisco to get an advance replacement RMA, which would take their stolen equipment and double it. Then they would sell the gear on the 'Grey Market' for Cisco hardware.

      How the hell does Cisco not noticed that RMA'ed equipment never seems to show up? At $100k+ a card someone at Cisco should have gotten reemed for not doing their job.

      • by JRHelgeson (576325) on Thursday October 04, 2012 @05:03PM (#41553533) Homepage Journal

        Well, if a piece of Cisco network equipment goes down that is covered contractually, they must ship a replacement. With a company as huge as Verizon, there are parts being shipped out *all* the time, and defective parts shipped back *all* the time. If you have 30 days to ship parts back, and the parts don't come back, the procedure is to initiate emails, then escalate from there. Quite often, Verizon gets involved trying to track down the missing parts, trying to solve the mystery - and never is able to resolve the issue until they see a pattern emerge and start to investigate.

        The problem is that when conducting business, you must assume that your counterpart is working with you in good faith. In this instance, you have a man-in-the-middle who is transacting the business and defrauding both parties. It takes some time to find that 'leak', especially when you are doing billions a year in network gear, and RMA's of 10's of millions, and this person is doing fraud in the range of 100k+/yr. Then the person doing the fraud is using disposable phones, disposable numbers, and so tracing the fraud down after-the-fact is even more difficult.

  • by JustAnotherIdiot (1980292) on Thursday October 04, 2012 @03:31PM (#41552853)
    ...was doing this outside a CEO position.
  • The Slashdot title says $4.5M, but the article it links to says $2.8M

  • by Lashat (1041424) on Thursday October 04, 2012 @03:53PM (#41553029)

    The prison time is only PART of the sentence! " Baxter was sentenced to 4 years in prison to be followed by 3 years of supervised release, and ordered to pay $2.33 million in restitution to Cisco Systems, and $462,828 in restitution to Verizon."

    Nearly $2.8 million to pay back off of the $2.8 million they say he stole. I am guessing that he doesn't have ALL of the proceeds from his caper.

    IF he gets minimum security Federal Prision Camp, he will likely go closest to home. FCP Montgomery. http://www.bop.gov/locations/institutions/mon/MON_aohandbook.pdf [bop.gov]

    Don't sound like 4 years of fun to me. In any institution or camp there is going to be a heirarchy. This guy is none of the things that are going to make his life in "camp" fun. He is not rich! He may be a tough bird, but he is an old bird at 62. All those ailments that get treated outside of "camp" are going to go untreated. No more private doctors. Dentists that only pull teeth. Hey, maybe he can get one of the best jobs there and make $1.46/hour.

    Neither Cisco or Verizon lost their lives or were even traumatized by his actions. However, they need a sentence that works as a deterrent, which this is.
    Punishment fits the crime.

    • by Lashat (1041424)

      I have seen different $ amounts reported of his haul. $4.5 and $2.8 I don't know which is more accurate. Suffice it to say that they got all his property and accounts. Maybe that Cayman Islands or Isle of Man account survived, but I doubt it.

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