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Former Critical Path president pleads guilty

Former Critical Path president pleads guilty

Compaq Computer and the U.S. Marshals Service have seized a large quantity of what they say are counterfeit computer components from reseller Hardware 4 Less.

In a statement issued yesterday, Compaq said it had learned that the Bow, New Hampshire-based company, which is not an authorized Compaq reseller, had supplied fake parts to other wholesalers, which then sold the parts to users.

Hardware 4 Less couldn't be reached for comment.

The parts seized included memory boards and hard drives, as well as fake Compaq labels, packing materials, warranty booklets and software licenses. The seized goods are now in the possession of the U.S. District Court for the District of New Hampshire.

Compaq spokeswoman Elizabeth Gillan said the company first learned of the situation from a customer who said he had received a suspicious memory board.

After an investigation, Gillan said Compaq discovered counterfeit parts and obtained a temporary injunction against the Hardware 4 Less, prohibiting it from manufacturing and distributing fake goods. Gillan said Compaq is in the process of determining the value of the counterfeit products.

"We will be seeking a permanent injunction and several million dollars in damages," Gillan said.

The Web site of Hardware 4 Less also advertises products from Sun Microsystems Inc. and IBM. At press time, those companies had not returned calls for comment.

The Hardware 4 Less home page also displays the logo of a resellers' trade organization, the Information Technology Reseller Association (ITRA), which includes a link to its code of ethics. However, former ITRA co-chairman Kay Almond said in an e-mail that the group merged last year with another trade organization, the Association of Service and Computer Dealers International (ASCDI). The Delray Beach, Florida.-based ASCDI lists Hardware 4 Less as a member.

At its Web site, the ASCDI also prominently displays its code of ethics, which requires members "to conduct business in a manner which brings credit to and enhances the reputation of the service and computer dealer industry" and "to publicize products and services in a professional manner, avoiding all conduct, practices and promotions likely to discredit the industry."

Any member violating the group's code of ethics is subject to disciplinary actions, including expulsion. However, it's unclear what expulsion would mean for a member company. Joe Marion, who heads up ASCDI, couldn't be reached for comment.

This isn't the first time Compaq has acted against resellers it believed were engaged in illegal activities.

Last year, Compaq, in conjunction with the U.S. Marshals Service, the FBI and the U.S. Attorney General's office, carried out a similar search and seizure operation against reseller Dynasty Memory Inc. in Santa Ana, Calif. As a result, several million dollars worth of fake Compaq computer parts were seized, which Dynasty had manufactured and intended to sell to the public, according to Compaq.

Ultimately, Dynasty paid a substantial penalty to Compaq, and its owners are currently under investigation by both local and federal law enforcement agencies, Compaq said.

Compaq is also pursuing -- and has obtained court orders against -- several other companies believed to be buying and selling counterfeit Compaq products.

Compaq said it has put security labels on products such as hard drives, memory and processors, to allow the company and its customers to verify product authenticity and cut down on duplication by counterfeiters.


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