Former Network Engineer Indicted in Multi-Million-Dollar Warranty Fraud
Baxter Allegedly Stole Over $4.5 Million in Equipment Using His Position
|U.S. Attorney’s Office December 09, 2011|
ATLANTA—MICHAEL W. BAXTER, 62, of Ball Ground, Georgia, was arraigned on federal charges today before United States Magistrate Judge E. Clayton Scofield III. BAXTER was indicted on a total 30 counts of fraud in connection with a scheme to steal millions of dollars in high-value network communications equipment. BAXTER was released on a $50,000 unsecured bond.
United States Attorney Sally Quillian Yates said, “Fraudulent schemes are only limited by the imagination of those who engage in the fraudulent conduct and are motivated by the desire to make money at the expense of an unwitting victim. This defendant allegedly found to a way to rip off a company that provided high-dollar network communications equipment to Verizon. His scheme, like so many others before it, ultimately was uncovered.”
Brian D. Lamkin, Special Agent in Charge, FBI Atlanta Field Office, said, “Large companies such as Cisco Systems interact and engage in commerce with other companies with a mutual trust. When an employee of one of those companies chooses to breach that trust by engaging in a high dollar scheme to defraud, it can have immense adverse consequences for not only the victim company but also its partner companies. The FBI is well suited to assist those companies who are engaged in interstate commerce with such investigations of large scale fraud.”
According to United States Attorney Yates, the charges, and other information presented in court: Between 1994 and 2010, BAXTER was employed in Alpharetta, Georgia, as a network engineer at the southeastern regional headquarters of New Jersey-based Verizon Wireless, the wireless voice and data communications provider. During that period, Verizon Wireless purchased “extended warranty” contracts from Cisco Systems, Inc., a San Jose, California-based network communications and information technology equipment manufacturer, on certain network communications equipment that Verizon Wireless had purchased from Cisco Systems, such as processors and cards. Some of the parts were valued at as much as $40,000 per item. If a part malfunctioned, the warranty contracts required Cisco Systems to service the part or, if necessary, replace it in advance of receiving the malfunctioning part from Verizon Wireless, to avoid potential interruptions in Verizon Wireless’ network. Authorized Verizon Wireless employees could make service requests and order replacement parts through Cisco Systems’ online customer service database.
Beginning at least as early as December 2006 and continuing until he was terminated by Verizon Wireless in May 2010, BAXTER allegedly submitted hundreds of fraudulent service requests on behalf of Verizon Wireless via Cisco Systems’ online customer service database that caused Cisco Systems to ship millions of dollars in parts to BAXTER at Verizon Wireless from various Cisco Systems distribution centers throughout the United States. The service requests were fraudulent in that no parts needed to be replaced, and instead of placing the replacement parts into service in Verizon Wireless’ network, BAXTER simply took them home and sold them to third-party re-sellers for his own profit.
BAXTER then allegedly used the illicit proceeds to buy jewelry, cars, extravagant international travel, and other personal luxury goods and services, including multiple cosmetic surgeries for his girlfriend.
Cisco Systems and Verizon Wireless are cooperating in the investigation.
BAXTER was indicted by a federal grand jury on December 6, 2011, on 15 counts of mail fraud, and 15 counts of wire fraud. The charges carry a maximum sentence of 20 years in prison and a fine of up to $250,000 on each count. There is no parole in the federal system. In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.
Members of the public are reminded that the indictment only contains charges. The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.
This case is being investigated by special agents of the Federal Bureau of Investigation.
Assistant United States Attorney David M. Chaiken is prosecuting the case.
For further information please contact Sally Q. Yates, United States Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.