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Big Ugly Ball of Wax Rolls Over HP

DALLAS (CN) - Hewlett Packard bribed Dallas Independent School District officials to land federal E-Rate Internet access contracts, three minority-owned information technology firms claim in court.

Lazo Technologies and W&R Technologies, both of Dallas, and Hill Professional Services, of Plano, sued Hewlett Packard, HP Enterprise account manager Garrett Goeters, of Austin, and five John Does, in Dallas County Court.

The plaintiffs say they joined a consortium of companies to provide, interconnect and manage 8,000 new Compaq Evo desktops for DISD, which awarded the contract in 2003.

The work was to be paid largely by the nonprofit Universal Service Administrative Co. (USAC), which administers the Schools and Libraries Program of the Universal Service Fund under the direction of the U.S. Federal Communications Commission. DISD was to pay for the rest.

The plaintiffs say in the complaint that they began installations under the contract in 2004, but that payments were suspended at least three times due to allegations of wrongdoing by consortium leader Micro Systems Engineering (MSE), its president Frankie Wong and DISD official Ryan Bohuchot.

USAC suspended payments after a July 2005 Dallas Morning News article described "possible wrongdoing" by Micro and the two men, but USAC resumed making the payments in October 2005, after an investigation "failed to uncover any evidence of wrongdoing," the complaint states.

However, "In May of 2007, Frankie Wong of MSE, the lead entity in the consortium, and Ruben Bohuchot of DISD, were indicted for bribery, conspiracy and money laundering in connection with the consortium being named the successful bidder for the USAC work," the complaint states. "They were convicted in July of 2008, and were debarred by the FCC on August 27, 2009."

In May 2009, USAC again refused to pay the consortium, so the plaintiffs appealed to the FCC. The FCC rejected it in November 2011, claiming the plaintiffs were not entitled to payment due to illegal conduct by the defendants and others.

The plaintiffs say it was not until November 2010, when records were unsealed in an unrelated qui tam case in Houston Federal Court, that it learned of HP's alleged involvement in the bribery scheme.

"After the qui tam case was unsealed, plaintiffs determined that one or more HP employees engaged in conduct of which plaintiffs were not previously aware, even after a due diligence review and at least four prior investigations," the complaint states. "The conduct by HP employees directly contributed to USAC denial of funding."

They claim that HP met with MSE and DISD employees before the school district issued its request for proposals, and discussed elements of the request - both of which are violation of proposal rules.

"HP employees worked with MSE to land the seat contracts and obtain inside information on the RFP's from DISD employees," the complaint states. "HP employees apparently also provided gifts and meals to DISD employees that were not disclosed and otherwise prohibited."

The plaintiffs say the defendants breached their responsibilities to them as co-partners by engaging in illegal activity that prevented the plaintiffs from being paid for their work.

The plaintiffs seek actual and punitive damages for fraud, negligence, breach of fiduciary duty, tortious interference, conspiracy and deceptive trade.

They are represented by James Pennington of Dallas.

Follow @davejourno
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