Mark James: Took Hewlett-Packard for $10 Million by Posing As Big Companies

Categories: Courts, Crime

hp121411.jpg
HP: Not such a Big Deal after all.
A British citizen has been charged with conspiracy to defraud Hewlett-Packard out of $10 million by setting up phony companies to get big discounts on computers he would then resell.

The U.S. Attorney's Office announced that Mark Allan James, 44, had been charged and is expected in court today.

Jones took advantage of HP's "Big Deal" program, prosecutors say, in which the company offers large discounts for customers who will be buying lots of product.

The USAO says he "recruited individual business owners to pose as persons interested in securing a large volume of computing products...HP applied steep discounts to the products for various business reasons to include the opportunity for future large volume sales, further utilization of HP products in the customer's technology infrastructure and continued maintenance of existing HP products."

The straw companies would pay HP for the equipment, so the computer giant thought everything was on the up and up.

James, however, took the deeply discounted merchandise and resold it for a handsome profit, prosecutors say.

"In reality, the HP computer equipment never reached the straw buyers, but was instead diverted for re-sale by the company for whom James was procuring the discounted products," the USAO says.

The scheme worked from May 2009 through November 2011 "and caused losses to HP in excess of $10 million," prosecutors say.

He faces up to 20 years imprisonment and up to a $250,000 fine. He faces the same sentence if convicted on an international money laundering conspiracy in addition to a fine of up to $500,000 or twice the value of the laundered funds, whichever is greater.

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22 comments
john
john

The entire situation is ridiculous.  HP dropped the case.  It sounds more like "loss leading" on HP's part in the hopes of getting more business downstream. 

jared
jared

American justice, my Ass, what a crock, HP were paid the price they asked for the items, on the promise of future buisness, OH DEAR !! the future buisness didn't happen, and Mark sold them on and made money, big bloody deal, in the Western World I thought that was a FREE MARKET ECONOMY !!!! Sounds to me like HP should be reffered to the pricing commission for price fixing. HP YOU SHOULD BE ASHAMED AND WHEN MARK IS RELEASED I HOPE HE SUES YOUR ASS. 

Crazy
Crazy

How can a big company like HP be duped by 1 man? Who made the profit on the $10 million sales, maybe the discounts were greater than they might have been but they had the choice to sell or not to sell. Or am I too niave. Who is Jones in this, if a name is mis reported how many other facts are also

Ed Hughes
Ed Hughes

Mark James is a man of previous good character, he is happily married, with 4 young sons, who he brought to the US for their education.  He has been in custody since his arrest on 9 November.  His wife and children have NOT been allowed to pay him a visit.  During the time he has been detained two of his young sons have had birthdays and have been upset by the absence of their devoted father.  It now looks like he will be in custody over Christmas and into the new year.  The reason, the prosecution say he is a 'flight risk' , this is absolute and utter nonsense!  He has agreed to wear an electronic tag, he has had his passport taken, he has people willing to stand bail for him, he has a stable family environment in accommodation in the US. Whatever happened to the principles 'a man is innocent until proven guilty' and more significantly, 'America is the Land of the Free'.  There is such a huge injustice here, HP are not $millions out of pocket.  They sold this equipment under a 'Big Deal' arrangement, they made a profit, nobody sells this amount of goods at a loss, particularly HP.  They made a profit on the sale!  This absolutely smacks of a 'Big Company' trampling opportunity.  Free Mark James TODAY!!!  Habeas Corpus must prevail!I cannot believe this is happening today in America, a Country held in high regard by all of us in the UK

Ty
Ty

Happens every day in business, that's why there are sellers on Ebay and Amazon that continually sell for less than retailers can buy them for. Companies commonly tack on employee purchases at discount, the worst are the higher ups. They will tack on a few thousand units and sell them at their small internet business they do on the side. What he did is no different, aside from not actually working at a large company.

Khalil McMillan
Khalil McMillan

I feel HP.  But, uh...what James is alleged to have done is what we in the "hood" would call "hella gangsta"!

You've Got to Be Kiddlng
You've Got to Be Kiddlng

This is the most preposterous thing I have heard in a long time. They have to be kidding with this nonsense.  I would say that HP needs to can its "Big Deal" program if they are so upset.  I don't think that you can negotiate "future" business, no matter what you do.  People can decide whether or not they want to buy in the future and they might not want to buy more of HP's crappy products.  I cannot believe that someone is sitting in jail on this one.  Maybe they should go after Jon Corzine instead...but we all know that won't happen, right??  This is one of the things that is wrong with this country...all of the big wigs get to do whatever they want but when someone takes advantage of a legitimate business deal orchestrated by HP, they get busted?  OMG, this just makes me sick.

Far Too Far
Far Too Far

So if I go to a car dealership and tell them I want to buy two cars. But in the future I'll need fifty more. But, that future business is contingent on how cheap I can buy these initial two cars. Well once I've paid for them I can do what I wish with them. Sorry I think HP made a deal with the devil and got burned, and now they want to cry about it some "Big Deal" program.

alehound
alehound

hmm, sounds like good business to me.....

DuckDuckGoose
DuckDuckGoose

Google the story on Courthouse News Service.  Whether or not this is accurate, it does provide some additional info:

" "The indictment indicates he then directed them to falsely state the procured products would be used internally by those individuals' businesses and not be resold," the U.S. Attorney's Office said in a statement. "Based upon those false representations, according to the indictment, HP applied steep discounts to the products for various business reasons to include the opportunity for future large volume sales, further utilization of HP products in the customer's technology infrastructure and continued maintenance of existing HP products.     "These types of transactions fell under HP's 'Big Deal' program and HP would not have offered the degree of discount on its products, which often reach millions of dollars in a single transaction, without the false representations by James's straw buyers that the products would be used internally and not be resold.""

Far Too Far
Far Too Far

I  don't see what he did wrong unless again there were contracts, HP doesn't want me on the jury.

Stevotx
Stevotx

Is that illegal? Possibly contracts were signed to guarantee future business? Sounds like it’s the cost and risk of doing such business on HP’s behalf. Yes they were bamboozled into offering steep discounts but how often are any of us bamboozled into paying too much? Lets take this discussion to a car Steelership.  

Jj
Jj

Happens throughout the entire world across most manufacturers, it's called brokerage!!Hp would lose that much business if it was not for the brokers in the world.If they really want to put a stop to this, take a leaf out of Apple's book as they have much tighter control mainly due to client after care!The reason why they are perusing this would no doubt be someone within Hp losing his 'brown envelopes'

Bobhope
Bobhope

they dont keep some one in custody unless they have solid evidence on them. Which they obviously have. 

BB
BB

Absolutely agree. Free Mark James today. Let him be with his family for Christmas. What on earth is going on here. Innocent until proven guilty.

LW
LW

Well said. I totaly agree! This is crazy and Mark James should absolutely not be held in custody.

Tunnel Mole
Tunnel Mole

Yeah, this sounds like "business as usual" to me--Go Capitalism!!!

Sam
Sam

The issue HP has is not so much with any future deal that didn't happen. You're right - you can't lock somebody into a buy x years down the road. But to specifically go out and get different companies to dupe HP into giving the discount, and to then take the discounted products received and sell them on at a profit is stealing. There were stipulations to getting that amount of discount, one of them obviously being one massive discount per customer - which is why James had to get other companies involved in order to apply for more fraudulently obtained discount. Another, according to the Courthouse News Service article DuckDuckGoose mentions, means the receiving company has to sign a contract stating that the products are for internal use and not resale. Lie #2. And this wasn't a small venture - HP apparantly lost out on $10,000,000. Do you have any idea how many PC's that is??

Let's put it this way - say you're starting a cupcake bakery, and in order to attract customers you offer the first cupcake for free for any new customer. And then one guy comes in twenty times in a row, each time with a slightly different disguise on, to get another free cupcake, and another, and another. You're saying that wouldn't piss you off??

Ihtravis
Ihtravis

To bohope yes bo hope 

How naive are you! ! 

LW
LW

it would tell me that they liked my cupcakes - surely any business is good business?

Nycerie
Nycerie

You should be wary, and if you put no other stipulations on recieving the cupcake tough cookies.

Sam
Sam

'Kay... well if you think being tricked into giving all your wares away for free constitutes good business, then please, set up shop in my town, would you?

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