A former city contractor from New Jersey is pleading guilty to pilfering nearly $6.9m by exploiting Cisco's part replacement program.
Michael Kyereme worked as a network troubleshooter for the city of Newark between 2002 and 2007. His job involved assisting city employees with IT troubles and ordering replacement networking kit should the need arise.
At the time, Newark had a service contract with Cisco which required the company to provide customer service for faulty gear and to replace any pieces pushing up digital daisies.
Because Newark is trying to run a city, the service contract entitled "advance replacement" of defective parts to help minimize network disruption. Defective parts were to be replaced upon the city's request — so long as the dead kit was sent home to Cisco within ten days of receiving the replacement.
Kyereme is accused of ordering replacements for expensive networking gear the city never had (some costing upwards of $250,000) as well as replacing parts that were in working order. He later admitted to holding the Cisco gear at his home for several days before shipping the hardware to an unnamed, out-of-state reseller and pocketing the profits.
According to the criminal complaint, Kyereme had requested 280 items from Cisco's replacement service. He allegedly returned faulty parts a mere 132 times, of which only 33 matched the replacement part he received. In one cited case, the IT fella requested a $260,000 optical card only to send Cisco back a $2,000 eight-port adapter.
By the time FBI arrested him on March 2, 2007, Kyereme had stashed approximately $3m in Cisco components in his home and car.
Kyereme complained to authorities that he found the money offered to order and pawn the products as "overwhelming."
Kyereme agreed to a guilty plea last week in US District Court of New Jersey. The charges against him included one count of mail fraud and one count of tax evasion in connection to $1.24m in unreported income from reselling the Cisco parts.
His charges carry a maximum of 25 years in prison and fines of $350,000. In addition, Kyereme agreed to make full restitution of losses to Cisco to a tune that will be determined by the court. ®