IBM executive indicted on alleged mainframe fraud scheme

A former IBM executive has been accused of participating in a bribery scheme that allowed third parties to sell $20 million worth of surplus IBM mainframes and memory fraudulently.

Robert St Germain, who managed Big Blue's reutilisation department from 1990 to 1993, was charged with conspiracy and tax fraud in a federal court in New York. Lawrence Laspina, whose companies purchased the kit, was charged with conspiracy and obstruction of justice.

A company named Recycler's Consulting allegedly resold equipment to Laspina?s firms, even though under the terms of its deal with IBM - which was overseen by St Germain - it was supposed to dismantle it and was barred from selling it on. In the case of kit that it was allowed to sell, Recycler?s Consulting was supposed to share the revenues with Big Blue.

But St Germain and other unidentified IBM staff allegedly accepted $575,000 in cash bribes from an unidentified owner of Recycler?s Consulting to look the other way while such deals were taking place.

Laspina allegedly partly funded the bribes and knew the Recycler?s Consulting sales were fraudulent. Recycler?s Consulting also allegedly underreported the true value of its sales to Laspina?s companies to prevent IBM from finding out what it was entitled to.

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