Bye-Bye, Carolina; Hello, California
October 11, 2003
Late last month, a North Carolina customer of Oracle Corporation found itself involuntarily headed for California to pursue its lawsuit against Oracle. This came to pass because the customer — probably without even knowing it — agreed to a forum-selection clause when it bought its Oracle software license.
Side Letter in Sales Deal Leads to SEC Fraud Suit
September 16, 2003
Last week the SEC announced that it had filed a civil lawsuit against a former Logicon executive who allegedly placed a $7 million order with Legato Systems that included a secret side letter giving Logicon the right to cancel its purchase. According to the SEC, the Logicon executive not only knew that Legato planned to fraudulently misstate its financial results, he even advised Legato’s sales people how to conceal the cancellation right from the Legato finance department.
LESSON: The SEC’s news release quoted Helane L. Morrison, District Administrator for the Commission’s San Francisco District Office, as saying, “Sales executives who book phony deals often rely on assistance from people who work for their customers. Today’s action highlights the Commission’s resolve to hold such persons responsible when they knowingly assist in fraudulent revenue recognition practices.”
Cheating on Educational Discount
Results in Damage Award,
Mail-Fraud Conviction
August 15, 2003
Hewlett-Packard announced yesterday that it had recovered some $1.8 million from a company that bought computers using an educational discount but then resold them to commercial customers. See story.
(Perhaps of greater interest to corporate managers, the company’s owner reportedly pleaded guilty to related federal mail-fraud charges.)
Lesson: Don’t lie about being eligible for discounts or other special deals — that is, unless you think you might look good in handcuffs.