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DXC Technology Accuses Contractors Of Bilking Company Out Of $12.2M

New Jersey-based Atlas Communications Technology and Smart IMS “pushed the fraud, actively concealed it from DXC, and were compensated for the role they played, all at DXC’s expense,” DXC’s court filing states.

DXC Technology is accusing contractors and an ex-DXC employee of carrying out a years-long, multi-pronged fraud scheme that, among other elements, included a currency swap scam in which the subcontractor charged the client in dollars, but paid employees in Indian rupees, according to court filings.

Atlas Communications Technology and Smart IMS, both with offices in New Jersey, were used by DXC Technology to help service the company’s Citibank contract, providing technical support in 85 locations for one of the largest banks in the country, according to a lawsuit filed in U.S. District Court in New Jersey.

[RELATED: 3 Major DXC Technology Lawsuits That Made Waves In 2019]

However early in 2019, Tysons, Va.-based DXC discovered billing discrepancies which led to an internal investigation that revealed the managing director of its Citibank account, ex-DXC employee Mark Angarola, had been submitting inflated expense invoices, hiring friends and family members for no show jobs and charging hourly rates of between $400 and $600, well above the technician rate of $22 to $34 per hour. Between 2016 and 2018, DXC estimates that it was overcharged some $12.2 million.

“Atlas received payment for phantom services allegedly provided by friends and family of the ex-DXC employee, and also received a 10% markup on millions of dollars in fraudulent expenses incurred by the friends and family of the ex-DXC employee, which were funneled through Atlas, processed by employees of Smart IMS, and sent to DXC for payment,” DXC stated in court filings.

In October, Atlas Communications sued DXC in U.S. District Court accusing the massive business process outsourcer of withholding $3 million in payment and of hiring away its workforce. DXC said it did withhold payment after it discovered that it had been overchared for years as a result of Angarola’s scheme.

“Personally, I have nothing to say,” Angarola told CRN on Tuesday afternoon when reached for comment. “I’d rather it go away. It’s unfortunate. There’s stuff going on between other people and I keep getting brought up in it. Let me talk to my lawyer and see what they say.”

In its response to the Atlas suit, DXC is making a counter claim that Atlas and Smart IMS “pushed the fraud, actively concealed it from DXC, and were compensated for the role they played, all at DXC’s expense,” the counter claim filed Jan. 6 reads.

While DXC said technicians were authorized up to $300 a day in necessary expenses, between 2016 and 2018, all expenses submitted by Atlas and Smart IMS to DXC for repayment were inflated by 10-percent, in what DXC called the company’s “take.”

“Atlas and Smart IMS disguised the extravagant expenses by submitting invoices for such knowingly fraudulent expenses to DXC together with a 10% markup in violation of the Statement of Work. Upon information and belief, the 10% markup was Atlas’ take for facilitating the scheme,” the counter claim reads.

Prior to the February 2019 investigation, DXC said Smart IMS was working on two other DXC accounts. As the internal investigation unfolded, DXC stopped using both Atlas and Smart IMS as subcontractors. However, it opted to hire some of their workers to keep servicing accounts. As a part of that process it said it uncovered a currency swap scam using foreign workers.

“DXC discovered that Smart IMS perpetrated another fraudulent scheme, whereby it charged DXC for services performed by contractors purportedly based in the United States, when the contractors were actually based in India,” DXC said. “As a result, DXC paid for these contractors in U.S. dollars, while Atlas and Smart IMS paid the contractors in Indian rupees and pocketed the difference in conversion rates. At current rates, the rupee to dollar conversion rate is 70:1.”

CRN reached out to lawyers for DXC, and Atlas. Neither returned a call for comment. CRN also reached out to Smart IMS for comment, but did not hear back.

Previously, DXC said it has been providing services to Citibank for 14 years – going back to the time when DXC was part of HPE.

Angarola – who became a DXC employee as part of the 2017 spin-merger -- was HPE’s liaison with Citi beginning in June 2014. DXC described the nature of the work on its website.

“DXC supports Citi across 85 locations and approximately 80,000 associates in Citi Campus environments in the U.S. and Canada,” it says. “With about 200 dedicated staff members, DXC provides break/fix, IMAC, site maintenance and project support. We also assist Citi technology teams with voice and data networking, VDI support, tech room fit-outs, asset and materials management, vulnerable asset remediation and a variety of major project initiatives”

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