November 16, 2006
EDMONDS BROTHERS CHARGED WITH DEFRAUDING THE GOVERNMENT ON COMPUTER EQUIPMENT CONTRACTS
Pair Falsely Represented That Equipment and Software Was from Cisco and Sun Microsystems
MIKE SONG aka MIKE BROWN, 32, and SCOTT SONG aka SCOTT NIELSON, 32, both of Edmonds, Washington pleaded “Not guilty” in U.S. District Court in Seattle today to a five count indictment charging them with Conspiracy, Mail Fraud, and Counterfeit Trademark. The Grand Jury returned the indictment November 1, 2006. The men, who owned and operated an Edmonds business named eGlobe Solutions Inc., are scheduled for trial in front of U.S. District Judge Thomas S. Zilly on January 8, 2007.
From November 2003, to July 2004, eGlobe Solutions Inc. was authorized by Sun Microsystems Inc. to sell Sun equipment and services to end users. From January 2004, to May 2005, eGlobe Solutions was an authorized reseller of Cisco Systems products and equipment. Both companies terminated eGlobe for violating terms of the reselling agreement.
According to the indictment, between May 2003, and July 2005, eGlobe sold more than $788,000 worth of computer networking equipment and software to U.S. Government agencies. The company represented that the equipment was genuine, new and sourced appropriately through the authorized distributors of Cisco or Sun. The SONG brothers and eGlobe represented that the equipment was covered by Cisco and Sun warranties and that the software was legitimately licensed. In fact, some of the equipment and software sold to the government was “gray market” – previously sold and used by another entity – and, therefore, was without valid warranties or software licenses. Some of the equipment had also been altered by unauthorized vendors in order to make it fraudulently appear that it met the contract specifications. The SONG brothers also sold counterfeit Cisco equipment obtained from China. The SONG brothers and eGlobe engaged in labeling and packaging equipment with counterfeit labels and packaging materials in order to make them appear to be genuine, new Cisco products.
The indictment alleges that eGlobe sold gray market or counterfeit software to the U.S. Naval Academy, the Bonneville Power Administration, the Naval Air Warfare Center, the Naval Undersea Warfare Center, Barksdale Air Base. Little Rock Air Base, the Naval Surface Warfare Center, Spangdahelm, Germany Air Base, and the General Services Administration. The company also sold software and equipment to Raytheon Systems Company while Raytheon was a contractor for the Department of Defense.
An indictment contains allegations that have not yet been proven at trial beyond a reasonable doubt.
If convicted MIKE SONG and SCOTT SONG face up to 10 years in prison and a $250,000 fine.
The case is being investigated by the Office of Inspector General, Department of Defense Criminal Investigative Service, and the Department of Energy, and is being prosecuted by Assistant United States Attorneys Kathryn Kim Frierson and Jim Oesterle.
For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110.
