PHILADELPHIA (CN) – Four IBM vice presidents orchestrated a 5-year-long Ponzi scheme, demanding money from investors even after canceling the related development project, according to a federal RICO complaint. Devon IT claims the vice presidents, who worked in IBM’s hardware division, the Systems and Technology Group, used part of Devon’s $12 million investment to inflate the division’s earnings and fund projects with other business partners.
“The RICO defendants are responsible for orchestrating a widespread Ponzi scheme, in violation of the Racketeer Influenced and Corrupt Organizations Act (‘RICO’), over a period of nearly five years, involving the direct solicitation of $12 million in investment money from Devon for two information technology projects,” according to the complaint.
“While leading Devon down this road of deceit and as part of their scheme, the RICO defendants improperly included the funding provided by Devon on the financial reports of STG, thereby exaggerating its performance,” the complaint states.
Named as defendants are IBM, Thomas M.S. Bradwich of Apex, N.C.; Bernard S. Meyerson of Yorktown Heights, N.Y.; James A. Gargan of Research Triangle Park, N.C.; and Rodney C. Adkins, of Greenwich, Ct.
Devon claims it thought it was investing in the development of a space-saving, energy-reducing desktop terminal called Blade, and a state-of-the-art data center server complex called iDataPlex.
Devon says the vice-presidents trumped up sales projections and covertly terminated the Blade project while allowing Devon to continue investing in the defunct venture.
Devon claims it had to lay off more than 60 employees because of the racketeering conspiracy. It demands more than $12 million in damages.
It is represented by Maurice Mitts with Mitts Milavec.