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Former Verizon Engineer Sentenced for Cisco Equipment Scam

Michael W. Baxter, 62, a former network engineer for Verizon Wireless, took advantage of flaws in the company’s procurement process to obtain access to millions of dollars in Cisco equipment, which he then sold in order to fund what authorities call a lavish lifestyle.

Between 1994 and 2010, Baxter was employed as a network engineer at Verizon Wireless. According to court documents, between 2001 and 2010 he used an extended warranty contract from Cisco to obtain parts that were valued at $40,000 per item or more, as one of the people authorized to access procurement system.

Instead of placing the replacement parts into service in Verizon Wireless’ network, Baxter simply took them home and sold them to third-party re-sellers for his own profit. Baxter then used the illicit proceeds from the sale of this equipment to buy jewelry, cars, extravagant international travel, and other personal luxury goods and services, including multiple cosmetic surgeries for his girlfriend.

“To accomplish his fraud, this defendant exploited a program designed to keep this critical infrastructure running uninterrupted: Cisco’s program for replacing expensive equipment on a moment’s notice. He also abused his insider access to Verizon’s procurement system. He funded a lavish lifestyle with his stolen funds and has now earned himself several years in a federal prison,” United States Attorney Sally Quillian Yates said in a statement.

There has been no explanation as to how Baxter wasn’t flagged sooner for his abuse, but Verizon reported a half-million dollars in fraudulent replacement part orders. It seems that given the scale of Verizon’s procurement system, it just fell below the threshold of the company’s audit system.

Baxter was sentenced to four years in prison, which will be followed by three years of supervised release, last week by a federal court in Georgia. In addition, he was ordered to pay $2,333,241.18 in restitution to Cisco Systems and $462,828.00 in restitution to Verizon.

Baxter pled guilty to the charges against him in February.

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Steve Ragan is a security reporter and contributor for SecurityWeek. Prior to joining the journalism world in 2005, he spent 15 years as a freelance IT contractor focused on endpoint security and security training.