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Xerox defrauded of $25 million?

August 10, 2017

In the U.S. District Court in Florida, five men were accused of defrauding Xerox of $25 million (€21 million).

Will Cleveland at the Democrat and Chronicle reported on the case: ”Robert Lee Fisher, Bryan Day, Jason Haynes, Kyle Haynes, and David Haynes, all of Daytona Beach, were charged by criminal complaint with mail and wire fraud, conspiracy to commit mail and wire fraud, and money laundering conspiracy in connection with a scheme to defraud Xerox.”

The criminal complaint alleges that Fisher owned RBM Imaging Inc. (an authorized reseller of Xerox office equipment). Under Fisher’s contract made in 2006 with Xerox, the toner used in the machines sold would use Xerox original toners when they needed replacing. The toner was according to the contract Xerox’s property until in use and was exempt from resale.

The article explains that the other two defendants owned Haynes Brothers Furniture, HDH Graphics LLC and Aldar Securities, the latter two according to the U.S. Attorney’s Office were two sham companies. HDH Graphics LLC and Aldar Securities were used to defraud Xerox.

According to Cleveland, “between 2008 and 2013, Fisher allegedly sold more than 60 printers to the sham companies, HDH and Aldar. With the help of Fisher, the other four defendants allegedly over-ordered $25 million worth of toner from Xerox.” The defrauding happened through HDH breaching the manual meter read process.

The complaint alleges that these quantities of machines are showing criminal intent and although two warning letters were sent by Xerox to Fisher about the breach, court action had to be taken by Xerox.

According to the article “Authorities allege the defendants never used the toner to make prints, “or for legitimate business purposes.” Jason, Kyle, and David Haynes, along with Day, falsely reported to Xerox that their two companies made 61,147,896 prints during the five-year period.”

Although the toner was exempt for resale other than to use in those delivered machines, Haynes allegedly resold the toner to a buyer in Miami for $9.4 million (€8.02 million).

Again the criminal complaint notes that Xerox wrote to Fisher in April 2011, explaining it will stop sending toner to Aldar until Xerox received a reasonable explanation as to why so much toner was ordered.

Soon after, Fisher allegedly sent through some “false print samples that made it appear Aldar was legitimately using more toner than the industry average,” according to the criminal complaint document, resulting in Xerox stopping the supply of toner.

A maximum penalty of 20 years in prison and a $250,000 fine is what the defendants are faced with. 

 

 

 

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