Former Cisco exec jailed for fraud, dodging taxes
Lean in for a tale of shell companies, fake CEOs, bribes, prison time and $3.6m in fines
A former Cisco executive was this month sentenced to 36 months in a US prison, and ordered to pay more than $3.6m in fines, for wire fraud and tax violations.
Former senior director of Cisco's global supplier management operation, Prithviraj "Roger" Bhikha, admitted in November last year, as he pleaded guilty, that he took kickbacks to the tune of $1.15m while sourcing suppliers on Cisco's behalf.
A supplier that hoped to do business with Cisco paid money to a Hong Kong company Bhikha created, called Lucena. Lucena was later transferred under his wife's name. Bhikha then hired Lucena to provide Cisco with price negotiation services.
Cisco had no idea what was going on.
Lucena and an affiliated Singapore-based company pulled in a cool $10.06m from Cisco between August 2014 and April 2017. Bhikha even concealed his efforts to distance himself from Lucena by having a fake CEO attend a 2016 Cisco meeting and present fictional data in order to ensure continued business.
Bhikha and his wife extracted $9m from Lucena's foreign accounts and neglected to include the income on his taxes, resulting in an underpayment of $2.5m.
The business arrangement fell apart in 2017 when Cisco cottoned on to its employee's illicit dealings.
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Interestingly, a court document [PDF] signed by Judge Charles Breyer asserted that Bhikha's endeavors did benefit Cisco to some extent.
"Bhikha did not simply use his companies to steal money from Cisco without providing anything in return. Consistent with their contractual obligations, his companies negotiated lower prices on behalf of Cisco," said the filing, adding "Even assuming that the $69 million figure is inflated, there appears to be no dispute that Bhikha's secretly-owned companies saved Cisco tens of millions of dollars."
Of the more than $3.6m Bhikha must cough up, $1.15m will go to Cisco, while the remainder will go to the IRS. Bhika and his wife will also forfeit two San Francisco properties.
The three-year jail sentence was handed down on August 25, 2021. Bhikha remains out on bail until October 28.
This is not Cisco's first brush with insider fraudsters. In 2003, exec Robert Gordon received a five and a half year sentence for fraud and insider dealing after he diverted $50 million of Cisco-owned stock through overseas accounts. Gordon's criminal case was much more dramatic than Bhikha's, as it culminated in an unsuccessful mental health plea, some time spent on the run and an attempted suicide, and a failed 2005 appeal to reduce financial penalties. ®