Compaq sues over alleged fraud

Compaq is suing Harry Martin and Shafiq Ahmad, principals of the Virginia-based Millennium Technology Group, and South Carolina-based Creative Resources Group and its president, Stephen Pridemore. Compaq is seeking to recover what it alleges were millions of dollars in unearned rebates and marketing support funds for government contracts that Compaq alleges never existed.

The alleged fraud was related to $70 million in orders from August 1998 to October 1999, Compaq spokeswoman Elizabeth Gillan said.

Compaq's suit claims the defendants told the computer maker that they had large U.S. government contracts that required significant rebates and discounts from Compaq. Compaq claims that no such contracts existed and that the defendants collected payments from Compaq and diverted Compaq products to computer brokers instead of to final customers--something that authorized Compaq resellers are not allowed to do. --Ian Fried, Special to ZDNet News