On November 14, plaintiff Cisco filed a complaint against defendants Mushkin et al. in the Northern District of California (Cisco Systems, In. and Cisco Technology, Inc. v. Mushkin, Inc. (d/b/a Enhanced Network Systems), Jeffrey Ramey and DOES 1-10 3:19-cv-07514) for inducing breach and interfering without contract, fraud, aiding and abetting fraud, conspiracy, negligent misrepresentation, trademark infringement, trademark counterfeiting, federal unfair competition, unfair business practices under California law, and unjust enrichment.
The complaint alleged that from December 2016 to October 2018, Jeffrey Ramey, a Senior Account Manager at Cisco Authorized Reseller General Data Tech (GDT), collaborated with a secondary market unauthorized reseller, ENS, to perpetrate an advanced fraud scheme against Cisco. They used the false end username Provident Realty Advisors, to obtain significant discounts on millions of dollars’ worth of Cisco products.
The complaint explained how Cisco’s sale and distribution works in relation to authorized partners, including authorized resellers and distributors. It is under these rules and a specific exception to discounts, that Provident was able to receive large fraudulent discounts. Since he worked for an authorized reseller as a Senior Account Manager, he was able to request discounted prices from Cisco. Ramey contacted Cisco claiming GDT (the authorized reseller he worked for) had a new customer, “Provident,” a real estate company based in Texas, that was looking to purchase $5 million worth of products from Cisco and would need a 70-80 percent discount. Later, Cisco discovered that Provident was a true real estate company in Dallas, but it had never heard of Ramey nor had it purchased Cisco products and it never agreed to be the front for his scheme.
Under the scheme, Ramey, through the fake Provident, sent repeated false statements that stated it needed discounted prices for large amounts of networking products to be used in various real estate developments. A 66 percent discount was offered for the first deal; $900,000 worth of products were sold for $300,000. The products went to ENS’ customers and the profits from the fraud discounts are believed to have been split between Ramey and ENS. The scheme purchased $17.1 million of products and negotiated 70-80 percent discounts; as a result, Cisco lost millions of dollars.
The complaint stated that ENS had been infringing on Cisco products for over ten years. “Cisco is aware of at least 477 counterfeit Cisco products ENS sold to customers including the U.S. Department of the Navy, the U.S. Justice Department, and California Department of Industrial Relations.” Another resale’s end user, according to the complaint, was San Francisco International Airport.
Cisco discovered the scheme because “[i]n early October of that year, Cisco Brand Protection noticed that many of the products sold under “Provident” Deal IDs were turning up with SMARTnet contracts registered to different end customers. In order to investigate, Cisco Brand Protection contacted some of the SMARTnet customers and determined that the “Provident” product was being resold on the secondary market by ENS.” The scheme ended after this discovery.
Cisco has sought relief in the form of monetary damages and injunctive relief.
