The head of CGC Digital faces charges of wire fraud and identity theft for allegedly bilking Cisco Systems out of $2 million as well as equipment after allegedly having Cisco believe he had a contract to lease, install and service the gear.
Quin Rudin of San Diego, who also goes by Dean Rubin or David Rubin, allegedly had a Cisco representative believe that CGC Digital had a contractual agreement to arrange for the lease of Cisco equipment on behalf of Altura Pharmaceuticals. Cisco approved the lease of equipment last fall to Altura and agreed to provide more than $5.8 million in financing for the lease, according to the FBI, which arrested Rubin in San Diego on Feb. 26.
On March 7, a federal grand jury in San Francisco indicted Rubin with two counts of wire fraud and one count of aggravated identity theft, according to the U.S. Attorney's Office.
"In truth, Altura did not intend to lease any Cisco equipment, and no employee of Altura had engaged CGC to arrange a lease," the FBI said in an announcement of Rudin's arrest.
FBI investigators said Rudin allegedly set up a phony squatting website for Altura using the Altura.net domain and sent emails to a Cisco employee who was checking on the validity of the contract. After making payments to CGC totaling approximately $2 million, Cisco eventually was tipped off by Altura that the transaction was fraudulent and notified law enforcement.
At the end of October 2012, a CGC representative had emailed Cisco signed copies of allegedly forged agreements regarding Altura's purported lease of Cisco equipment. Each agreement was purportedly signed by Altura's CFO, according to the FBI.
Cisco and other large vendors typically offer financing so partners can purchase equipment from a distributor and then install the equipment for the end user.
CGC became a Cisco partner in 2011, according to court documents obtained by CRN. The CGC website shows the company's headquarters in Newport Beach, Calif., with offices in Hawaii and American Samoa.
The court documents detail the allegedly fraudulent transaction, which included two audited financial statements about Altura's financial health and its ability to make monthly lease payments for the equipment. The allegedly phony lease agreement between Cisco and Altura was signed Oct. 26. The progress payment agreement authorized Cisco to pay the financing to CGC in three separate progress payments.
Cisco was tipped off about the allegedly fraudulent contract when an Altura representative inquired as to why the company filed a financing statement in its name when it never purchased the equipment.
In early February, CGC allegedly contacted Cisco to inform it that all the equipment was installed at Altura and requested the third and final financing payment. Rudin agreed to meet with the Cisco representative in San Diego, where FBI agents made the arrest.
Rudin made an initial appearance in federal court in San Diego. He remains in custody pending his arrival in San Francisco to face the charges.
Rudin faces a maximum penalty for each count of wire fraud of 20 years in prison and a fine of $250,000 or twice the gross gain or loss of the allegedly fraudulent transaction. Rudin also faces an additional two years in prison for the aggregated identity theft charge.
Rudin and others were sued for allegedly attempting to pull off a similar scheme in 2010, according to the court documents. Oracle had sued Rudin and his firm in an attempt to get back money that its finance arm had extended to him and his company. Rudin allegedly had attempted to obtain more than $1 million from Oracle through a plan that involved phony partners and clients. Rudin did not appear in court and the judge carried out a default judgment against him.
Cisco issued a statement on the matter calling the charges serious and pledging the company's full cooperation with investigators.
"Wire fraud and identity theft are serious criminal activities that impact the entire high-tech industry on a global level, and we appreciate the US Attorney's attention to this matter," the company said. "We will continue to cooperate fully with law enforcement in an effort to stop criminal activities of this nature."
PUBLISHED MARCH 12, 2013
This story was updated on Tuesday, March 12, 2013, at 12:09 p.m. PST to include information regarding the statement Cisco made after press time.