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DoJ Alleges Cisco Reseller Made $37 Million Selling Counterfeit Equipment

Posted by Unknown on from the cisco-routers-and-name-brand-sunglass-shop dept.

netbuzz writes "The latest scam involving stolen and/or fake Cisco equipment may also be one of the largest, as the Department of Justice says a 43-year-old San Jose-based reseller accumulated $37 million in ill-gotten gains over a period of years that he then poured into real estate and luxury cars. The feds say the guy also used part of the loot to set up college funds for his four children. At least four other such scams have been perpetrated against Cisco in recent years."

11 of 74 comments (clear)

  1. Scams against Cisco? by h4rr4r · · Score: 3, Insightful

    How is this a scam against Cisco?
    They won't let you put smartnet on a used device, so not like they have to support it. This is a scam on Cisco customers, not Cisco.

    1. Re:Scams against Cisco? by fuzzyfuzzyfungus · · Score: 3, Interesting

      I assume that it is treated as a 'scam against Cisco' because their precious, precious IP rights were violated in building and branding the counterfeit gear(I'm just guessing that counterfeit shops don't exactly bother with doing cleanroom re-implementations of 100% Cisco compatible gear, which might actually be legal, save any exciting patents involved; but would also be far more valuable to one of Cisco's competitors than it would be to some slimy flea-marketeer...) and the individual customers who got stiffed aren't the ones with the resources to push a successful investigation and prosecution.
       
      (It's also possible that, depending on what parts were on offer, the customers didn't really suspect they were getting genuine goods; but the price was good enough that they didn't much care, in which case they probably aren't lining up to tell the feds their tale of woe.)

    2. Re:Scams against Cisco? by Anonymous Coward · · Score: 4, Informative

      So, if everyone else in this thread is done guessing or waxing idiotic, I'd like to point out that, per TFA, he was buying not just counterfeit equipment, but actual stolen Cisco goods from Cisco employees.

  2. Re:The moral of the story is... by Anonymous Coward · · Score: 3, Interesting

    Cisco engineer here. We don't modify our equipment for anybody beyond basic CALEA-type compliance requirements. We don't even market ourselves for interception/monitoring type roles in most cases. There is a ton of money in other, less politically contentious areas.

    Hope this sets some of the record straight.

  3. Re:College Funds? by bmo · · Score: 4, Insightful

    Do you need to earn "Crime pays" kind of money to fund college funds for 4 children in America?

    Yes. It's why there is a TRILLION dollars in student debt.

    How much do Americans borrow/have borrowed for college?

    There is roughly somewhere between $902 billion and $1 trillion in total outstanding student loan debt in the United States today. The Federal Reserve Bank of New York reports $902B while the Consumer Finance Protection Bureau reports $1T.

    http://www.asa.org/policy/resources/stats/

    --
    BMO

  4. Most fake Cisco gear is real... by Kenja · · Score: 4, Informative

    Most of the "fake" Cisco hardware I've seen is the real stuff that failed a quality check and was rejected by Cisco. The manufacturers overseas tend to just sell these rejects out the backdoor rather then destroy them.

    --

    "Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
  5. This is impossible by slashmydots · · Score: 2

    So one single piece of fake gear breaks and you call cisco about it with the serial #. They say it's made up and they or you report the vendor to the FBI. They're in jail within days. How the hell would a fake cisco gear racket possibly work given that situation?

  6. Re:The moral of the story is... by IndustrialComplex · · Score: 2

    Cisco engineer here. ...We don't even market ourselves ... in most cases

    In otherwords, we don't except when we do.

    --
    Out of modpoints but really liked a post? 1BDkF6TtmmeZ3yqXbz9yhdYVqRYnwFoXDj
  7. Re:The moral of the story is... by ShanghaiBill · · Score: 4, Insightful

    Intel engineer here. We get the same shit. Everyone thinks we fill the chips with back doors when we don't.

    As a low level engineer, why do you assume that you would know about the back doors?

  8. Pfft.... Cisco brought it on themselves, largely. by King_TJ · · Score: 3, Insightful

    I'm not saying any of this counterfeiting of gear is legally or morally "ok" -- but Cisco has LONG been inflating the prices of their equipment FAR beyond what it's reasonably worth, given the components inside.

    I remember at least 10 years ago opening up one of the Cisco PIIX firewalls our company had recently upgraded to, and discovering it was essentially a Pentium class PC motherboard and CPU inside. They were charging all that money for standard (outdated at that point) PC hardware, crammed into a Cisco labeled rack mount case.

    More recently, one of our branch offices had their Cisco router/VPN die on me. The office moved to a new location and all I did was unplug the power to it, move it to the new office down the road, and plug it back in. It refused to power on at all .... totally dead. At first we assumed it might just be a bad AC power adapter, but nope. The whole unit was defective. (Finally found a CIsco tech document online mentioning the issue. Supposedly early revisions of this unit had a problem where they could get caught in an endless loop after a power cycle and never come back up. Nice!)

    The worst part? All of the office's complex configuration settings were in the old, dead router. Luckily, they were saved on a CF memory card in the unit, so I took it apart and pulled the card out. When my boss went through the big song and dance to get Cisco to send us a replacement router and open an RMA for the dead one, I swapped the flash cards. It worked, but only sort of.... Turns out every connection made beyond the first 10 were getting nowhere, because all the licensing we had didn't transfer over. Cisco ties that part of each unit's serial number. So the office was down for hours while we fought again to get tech. support to do a license transfer to the replacement router.

    I fail to see what point there was at all to forking out the money for real Cisco gear, when it failed us like that AND was made so artificially difficult to get back up and running again? If we had used some cheaper, off the shelf product (like D-Link or what not?), we could have easily gotten another new unit going with far less downtime and had the ability to keep a spare around for the price of the 1 Cisco.

    The counterfeiters wouldn't be targeting Cisco so heavily if they weren't aware of the huge price markup on the stuff in the first place.

  9. Re:College Funds? by WCMI92 · · Score: 2

    Yes. It's why there is a TRILLION dollars in student debt.

    The education bubble is LONG overdue to bust. People are graduating with more student loan debt than a nice house costs and finding they can't get jobs (because what can you REALLY do with that degree in 16th Century Feminist Studies?)

    Colleges and universities are going to have to prove their value from scratch again by remaking themselves to efficient operations that do not waste their customer's money and deliver their product at a reasonable cost...

    --
    Corporatism != Free Market