Former Verizon Wireless Network Engineer Sentenced to Federal Prison for Multi-Million-Dollar Fraud Scheme
Baxter Defrauded Verizon Wireless and Cisco Systems Out of Millions Through a Corrupt Scheme Involving Expensive Network Communications Equipment

ATLANTA—Michael W. Baxter, 62, of Ball Ground, Georgia, was sentenced today by Senior United States District Judge J. Owen Forrester to serve four years in federal prison on charges of wire fraud in connection with a scheme to steal millions of dollars in high-value network communications equipment from Cisco Systems Inc. and his employer, Verizon Wireless, while employed as a network engineer for Verizon between 2000 and 2010.

“Telecommunications networks are a vital part of our infrastructure, supporting governments, health and emergency services, and businesses throughout this nation and the world,” said United States Attorney Sally Quillian Yates. “To accomplish his fraud, this defendant exploited a program designed to keep this critical infrastructure running uninterrupted: Cisco’s program for replacing expensive equipment on a moment’s notice. He also abused his insider access to Verizon’s procurement system. He funded a lavish lifestyle with his stolen funds and has now earned himself several years in a federal prison.”

Baxter was sentenced to four years in prison, to be followed by three years of supervised release, and ordered to pay $2,333,241.18 in restitution to Cisco Systems and $462,828.00 in restitution to Verizon. Baxter was indicted on the charges on December 6, 2011, and convicted on February 16, 2012, upon his plea of guilty.

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 Verizon Wireless and its predecessor. During that time, Verizon Wireless purchased extended warranty contracts from Cisco Systems Inc., the 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 2001 and continuing until he was terminated by Verizon Wireless in May 2010, Baxter submitted hundreds of fraudulent service requests on behalf of Verizon Wireless via Cisco Systems’ online customer service database. In response, Cisco Systems shipped 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. 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. The investigation also revealed that, apart from the Cisco Systems product warranty program, between 2000 and 2009, Baxter fraudulently caused Verizon Wireless to purchase nearly a half-million dollars in expensive network communications equipment from Cisco Systems outright, which Baxter also took home and sold to third-party re-sellers for his own profit. Baxter then used the illicit proceeds from the sale of this equipment to buy jewelry, cars, extravagant international travel, and other personal luxury goods and services, including multiple cosmetic surgeries for his girlfriend.

This case was investigated by Special Agents of the Federal Bureau of Investigation.

Assistant United States Attorney David M. Chaiken prosecuted the case.

For further information please contact the U.S. Attorney’s Public Information Office at USAGAN.Pressemails@usdoj.gov or (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.