Risk Management

Cisco Outsmarted of $1 Million, Say Feds

The network-equipment company's SMARTnet replacement-parts program was allegedly bilked by four employees of a company that bought and sold Cisco p...
Stephen Taub and Dave CookMarch 16, 2007

Four former employees of a networking-equipment reseller have been charged with engaging in a scheme that defrauded Cisco Systems out of more than $1 million, reports the Associated Press.

According to the U.S. Attorney’s Office for the Northern District of California, during 2001 and 2002 the defendants submitted more than 100 fraudulent claims to Cisco’s SMARTnet replacement-parts program for items they were not entitled to, then pocketed the money from the sale of those parts.

Named in the indictment are Stephen D. Chicoine, president of Interlink Communications; vice president Mark B. Faris; senior sales support representative Amy M. Ihrke; and sales representative Charles L. Lytle, according to the AP. Chicoine and Ihrke have not worked at the company, now called Zycko, for a number of years; it is unclear whether Faris or Lytle is still employed there.

The four individuals were reportedly charged with a number of counts of conspiracy, mail fraud, and wire fraud, which carry sentences ranging from 5 years to 20 years in prison and a fine of up to $250,000 per count.

Chicoine, Faris, and Ihrke were arrested Wednesday and released on $25,000 bond, reports the wire service, which adds that Lytle was expected to surrender to authorities.

Gregg Corwin, Ihrke’s attorney, told CFO.com his client is not guilty and will vigorously contest the charges. According to Corwin, she was “basically a clerical person” who processed paperwork and was not part of any criminal conspiracy. She has always cooperated with prosecutors and even agreed to testify before a grand jury in San Jose, where Cisco is headquartered, he added.

Chicoine’s attorney, Bill Michael of Dorsey & Whinney, said that “Steve intends to contest the charges,” adding that he “did not participate in any fraud.”

John Hopeman, an attorney for Faris, could not immediately be reached for comment; an attorney for Lytle could not immediately be identified for comment.