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Former Newark IT contractor pleads guilty to defrauding Cisco

Man ran scheme for 4.5 years and defrauded networking giant of millions of dollars

July 3, 2008 12:00 PM ET

Computerworld - A former IT contractor for the city of Newark, N.J., this week pleaded guilty to using his position to defraud Cisco Systems Inc. of millions of dollars.

Michael Kyereme, 41, of Piscataway, N.J., pleaded guilty in U.S. District Court in Newark on Wednesday to mail fraud and tax evasion in connection with the scheme. Kyereme, also known as Michael Appiahkyeremeh, faces a maximum sentence of 25 years in jail and a fine of up to $350,000.

He is slated to be sentenced on Nov. 5 and is free on a $500,000 bond and wears electronic monitoring technology.

According to the U.S. Attorney's Office, Kyereme was an independent contractor hired by the city of Newark to handle IT support for municipal employees. He was authorized to request new or refurbished replacement parts from Cisco under the city's service contract with the vendor. As part of that contract, the city was obligated to return the defective parts to Cisco within 10 days of receiving the replacements.

As part of his plea agreement, Kyereme admitted that between January 2003 and March 2007, he requested and received Cisco replacement parts after fraudulently claiming that certain components in Newark's computer system had failed. Kyereme did not use these parts for the city but instead resold them to a third party in California and kept the proceeds.

Kyereme did not dispute that in November of 2006, he requested and received a $260,000 one-port optical card. He returned a different part -- an eight-port adapter worth approximately $2,000, according to the U.S. Department of Justice.

Kyereme admitted that between January 2003 and March 2007, he received about $6.9 million in Cisco replacement parts, which he resold to third parties.

The contractor also admitted that he filed fraudulent tax returns for 2003 through 2006, greatly understating his income. For example, in his 2006 tax return, he stated that he earned $81,494 when he actually brought in an additional $1,242,483.

Assistant U.S. Attorney Deborah J. Gannett handled the case. It was investigated by the FBI and the IRS Criminal Investigation Division.

Read more about Government IT in Computerworld's Government IT Topic Center.

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