Fraudulently Inflated by Nearly $100 Million the Cost of Software Company CSC Purchased
https://www.justice.gov/usao-cdca/pr/american-living-australia-charged-securities-fraud-case-involving-scheme-fraudulently
Department of Justice
U.S. Attorneys Office
Central District of California
FOR IMMEDIATE RELEASE
Tuesday, September 27, 2016
American Living in Australia Charged in Securities Fraud Case Involving Scheme to Fraudulently Inflate by Nearly $100 Million the Cost of Santa Monica Software Company Being Purchased by Computer Sciences Corp.
LOS ANGELES A former executive at Commonwealth Bank of Australia (CBA) was charged today in federal court with participating in a scheme to fraudulently generate revenue for a software company that was being purchased by Computer Sciences Corporation (CSC), which was misled into paying a $98 million incentive bonus as a result of the scheme.
Keith Hunter, 62, of Surrey Hills, Australia, a United States citizen who was the executive general manager in charge of infrastructure and operations at CBA, was named in a two-count criminal information filed this morning. The information charges Hunter with two counts conspiracy to commit securities fraud and wire fraud, and wire fraud.
The information alleges a scheme in which Hunter and several co-conspirators in Australia and the United States developed a plan to defraud CSC by inflating revenues for a Santa Monica-based company that CSC was purchasing ServiceMesh, Inc., which provided cloud computer management software. In the scheme, members of the conspiracy in late 2013 and early 2014 caused CBA to purchase $10 million in goods and services from ServiceMesh. According to the court documents filed today, CBA employees, including Hunter, received undisclosed kickbacks from a senior executive of ServiceMesh in exchange for awarding the $10 million in contracts to ServiceMesh.
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Solely as a result of the scheme described in the information, ServiceMesh reached a performance goal that triggered CSC to pay a $98 million earnout payment to ServiceMesh shareholders in March 2014. The information alleges that a portion of the earnout payment received by the senior executive of ServiceMesh who was involved in the scheme funded the kickbacks paid to CBA employees, including payments to Hunter of approximately $630,000.
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The scheme allegedly caused CSC to suffer nearly $100 million in losses when it made the unwarranted earnout payment that followed a base payment of $163 million for ServiceMesh.
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