Compaq settles part of US$20 million conspiracy suit

Compaq settles part of US$20 million conspiracy suit

Compaq has settled its lawsuit against the principals of reseller Millennium Technology Group (MTG) in the US. Compaq claimed that MTG conspired to defraud Compaq into paying millions of dollars in unearned rebates and special marketing-support funds.

Compaq filed suit against MTG and its principals, Harry Martin and Shafiq Ahmad, last week, as well as reseller Creative Resources Group (CRGI) and its principal Stephen Pridemore, Compaq spokeswoman Elizabeth Gillan said. Compaq claimed in its suit that the defendants told Compaq they had large government contracts that required significant rebates and discounts from Compaq.

According to the complaint, no such contracts existed with the US government agencies. Instead, the defendants collected payments from Compaq and sold the products to a variety of nongovernment companies. Compaq filed suit for conspiracy, fraud, breach of contract and tortious interference with its contractual relations, Compaq said in a statement.

From about August 1998 to October 1999, Compaq sold about US$69 million of computer equipment to companies controlled by Martin and Ahmad, and was then steered by Martin and Ahmad to do business with CRGI, according to the complaint, filed in US District Court in Virginia. Compaq suffered over $US19 million in lost profits alone, the company said in the complaint.

Although the terms of the settlement are confidential, Compaq sought $20 million in its complaint, and because it was a single complaint against all parties, the company is still seeking the same amount from CRGI, Gillan said. "Since we did file a single claim against these parties, we're going to leave the claim as it is," she said.

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