In The Shadows: The Rise And Fall Of Torrey Point

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In 2011, Juniper Networks was locked in a bitter battle for network market share with archrival Cisco Systems. Juniper, playing the part of the plucky underdog, was coming off a banner year of growth in 2010 and had introduced a number of new products, including the QFabric data center technology, that the company hoped would help it put some major dents in the Cisco machine. In addition to new cutting-edge products, Juniper had a growing and fiercely loyal partner corps that the company believed would help it gain ground against Cisco. One such partner was Torrey Point Group, a shining star in the Juniper channel. The Sunnyvale, Calif.-based solution provider, originally founded in 2005 as Torrey Point LLC, became one of the strongest solution providers in Juniper's partner stable and a key soldier in the vendor's battle against Cisco.

Torrey Point rose to prominence first as the vendor's Western Region Partner of the Year in 2009 and 2010, bucking the economic downturn, and was named to CRN's 2011 Fast Growth list with a whopping 325 percent growth rate over two years. The networking solution provider reached more than $60 million in revenue by 2012 (and the No. 275 spot on CRN's Solution Provider 500 list), and to top it off, Torrey Point earned its biggest prize: Juniper's Partner of the Year for the Americas for 2011.

But at the same time Torrey Point was generating massive sales and earning glowing praise from Juniper, it was engaged in an elaborate scheme with Juniper's primary competitor: Cisco. According to documents obtained by CRN from the Los Angeles Superior Court, Torrey Point was secretly selling new Juniper equipment to Cisco, a violation of the Juniper partner agreement that eventually led to Torrey Point's de-authorization as a Juniper solution provider.

[Related: 2014 Solution Provider 500: The Top 50]

"They had a legitimate business with an $80 million run rate, great people, and a strong partnership with Juniper, but it wasn't enough," said one former Torrey Point salesperson, who wished to remain anonymous. "It was classic greed and arrogance."

The documents show dozens of purchase orders and invoices totaling millions of dollars of Juniper equipment that was originally procured by Torrey Point and then sold to Cisco through another company, PHW International, owned by two of Torrey Point's top executives: CEO Steve Fazio and Executive Vice President and COO Ryan Young.

Fazio and Young have not responded to repeated requests for comment.

According to former Torrey Point and former Cisco employees with direct knowledge of the Torrey Point-Cisco relationship, the purchasing of Juniper products was part of a larger "program" within Cisco where the vendor would use the products for the purpose of analyzing and deconstructing the products for competitive advantages.

The documents were part of a lawsuit filed by Torrey Point founder and former CTO Michael Baker, who sued the company, along with Fazio and Young, in November 2011 for wrongful termination, breach of contract, fraud and other charges. Baker had relaunched the solution provider as Torrey Point Group with Fazio and Young in 2007, and the three men served as joint owners and top executives.

But Baker accused Fazio and Young of pushing him out of his own firm in late 2011. According to court documents, Baker also owned a part of PHW and was "shocked" to learn it was being used to sell Juniper products—ordered by Torrey Point—to Cisco. Court documents also show Young and Fazio were included on email correspondences with Cisco regarding the PHW orders.

Fazio and Young filed a cross complaint against Baker, alleging the theft of proprietary information, defamation, and breach of contract, among others. The cases were settled last summer, and the terms were not disclosed.

CRN contacted Neil Capobianco, an attorney at law firm Dentons in New York, who represented Torrey Point, Fazio and Young in the lawsuit. Capobianco said he was "not at liberty to disclose any confidential information" regarding the case and hung up.

Baker and his attorney declined to comment. However, the court documents filed in the lawsuit speak volumes about the relationship between Torrey Point and its top vendor, Juniper, as well as its ties to Cisco.

NEXT: Peaking Behind The Curtain

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