SAN JOSE, Calif. -- A computer technician working for the city of Newark, N.J., was arrested on charges he defrauded technology giant Cisco Systems Inc. of more than $10 million by cheating one of the company's programs for replacing broken or defective parts.
Michael Kyereme, 40, of Piscataway, N.J., was arrested Friday on a charge of mail fraud and made his initial appearance in Newark federal court on Monday, according to the FBI. He will remain in custody at least until a bail hearing Thursday.
Kyereme worked as independent contractor for Newark, assisting city employees when their computers needed troubleshooting, the FBI said. When he could not resolve a problem without outside help, he was authorized to contact Cisco for technical assistance and to order replacement parts.
According to the criminal complaint, Kyereme ordered about 280 parts from Cisco since August 2002 _ some worth more than $250,000 _ and made false claims that they were replacements for Cisco parts in the city's computer system that were "dead" or "not responding."
Kyereme is accused of cheating a Cisco program that requires the company to immediately replace broken or defective equipment without customers having to send in the problem parts first.
Investigators said Kyereme ordered replacements for pricey equipment that the city never had or didn't need replaced, sold the new gear to an out-of-state computer reseller, and pocketed the profits. He often didn't send back the parts he claimed were defective, and in some cases sent back the wrong parts that were worth less than the defective hardware, the FBI said.
A search of Kyereme's home on March 2 uncovered more than $3 million worth of parts that he ordered under false pretenses, the FBI said.
According to the criminal complaint, Kyereme told investigators that he was offered an "overwhelming" amount of money by the unidentified computer reseller to procure the Cisco parts and that "I knew what I was doing was wrong and that it was stealing."
A call to Kyereme's lawyer by The Associated Press was not immediately returned late Monday.
Kyereme's arrest was the second in a week involving a multimillion-dollar scam of Cisco's equipment-replacement program.
Michael Daly, 53, of Danvers, Mass., was arrested Tuesday on a wire fraud charge after he allegedly used false identities in 39 states and ordered replacement parts at least 700 times from Cisco without ever returning the defective items, or in some cases returning worthless parts that weren't covered under the program.
A Cisco spokesman declined to comment, other than to say the San Jose-based company is aware of the investigations and is cooperating with authorities.