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Reseller Busted in $37 Million Cisco Fraud Scheme

By Craig Galbraith
July 26, 2013 - News

Police in the Bay Area have arrested a man they say bought and sold Cisco equipment that was either stolen or counterfeit. Prosecutors say the crime spree involved $37 million in goods.

Federal charges against Cuong Cao Dang include mail fraud, money laundering and conspiracy, the San Francisco Chronicle reported.

Here's how authorities say the San Jose, Calif., man pulled off his scheme: It started with buying stolen gear from Cisco employees. Then he would resell it to customers through his business, Network Genesis, whose tagline is "Consciously Up to Speed." Prosecutors claim Dang changed the serial numbers on the equipment, making it harder to uncover the wrongdoing. And he didn't work alone. Authorities say the man had accomplices who received payment from customers. They would then deposit the money into their own accounts and then send it back to Dang.

Cisco is a common fraud target because its brand reputation and demand for its products makes it easy to sell through the gray market, or unauthorized sales channels. The high margins Cisco maintains on its products means fraudsters can attract buyers willing to save money by bypassing authorized suppliers.

This isn't the first time Cisco has been targeted. A former Verizon worker was indicted last year for stealing $3 million worth of Cisco equipment and using part of the money to buy plastic surgery for his girlfriend.

Follow senior online managing editor @Craig_Galbraith on Twitter.

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