Brit Convicted of Rolling HP for $14 Million
HOUSTON (CN) - A British national faces up to 40 years in federal prison after a jury convicted him of taking Hewlett-Packard for $14 million in a computer equipment buying scheme.
Mark Allan James, 47, used straw buyers to procure HP computer products at steep discounts, a jury determined after five hours of deliberation and a seven-day trial.
James recruited business owners in the United States, Canada and Singapore to feign interest in buying large volumes of HP computer equipment, the U.S. Attorney's Office said in a statement after the Thursday verdict.
"He then directed them to falsely state the procured products would be used internally by those individuals' businesses and not be resold. Based upon those false representations, HP applied steep discounts to the products."
HP provides discounts for bulk buyers under its "Big Deal" program, with an eye on future large volume sales to the customer and maintenance work on the client's HP products, according to the criminal complaint.
The company for which James actually ordered the products for is identified only as "Company A" in the indictment.
Prosecutors said James managed a series of transactions to pull off the fraud.
First he had Company A wire the funds to the bank account of his UK-based business, Roamer Media Ltd., then he sent the funds to the straw buyers' bank accounts.
"After the straw buyers received the funds from the Roamer Media bank account, they then forwarded payment for the products to HP or its partners, thereby further deceiving HP and its partners into believing that the computer equipment was being purchased by the straw buyer," prosecutors said in the statement.
"In reality, the HP computer equipment never reached the straw buyers, but was instead diverted for re-sale by Company A.
James' undoing came when federal agents caught wind of the scheme and persuaded a "cooperating witness" to pose as a straw buyer, according to the criminal complaint.
Testimony from HP employees and the undercover informant led the jury to convict James of pulling off four phony deals with HP between May 2009 and November 2011 that cost HP more than $14 million.
James faces up to 20 years in federal prison and a $250,000 fine for conspiracy to commit wire fraud, and another 20-year hitch for conspiring to commit international money laundering.
His sentencing date has not yet been set. His attorneys filed a motion for a new trial on Friday.