EDS sued over alleged scam

Two electronics companies said Electronic Data Systems drew them into a supposedly secret $80 billion to $120 billion NATO project that, after three years of work and millions of dollars spent, turned out to be a scam.

Akai Musical Instruments and Pioneer New Media Technologies, have filed lawsuits against EDS. The suits, filed during the past two weeks, allege that EDS in early 1997 approached Akai and Pioneer to develop electronics equipment for a NATO security procurement project that was so secret it would be paid for using "Black Hole Money," according to court documents. The firms were also required to sign nondisclosure documents.

EDS, in a statement issued last week, said it, too, was a victim of the scam. The statement said EDS was acting as a coordinator for the various bidding vendors when it discovered the scheme late last year and reported it to the FBI.

A person posing as a US Air Force officer reportedly asked EDS to do the secret project.

Akai and Pioneer developed audio signaling and speech-recognition equipment for the supposed project and were required to provide the equipment for testing at no cost, according to court documents.

Pioneer claims it shipped $1.5 million worth of equipment to Rekem, Belgium, and spent 3,000 hours developing and producing the equipment, as well as incurring other costs. The shipping address turned out to be a private residence, court documents stated.

Akai didn't list monetary damages, and a lawyer for the company refused to comment on the suit.

EDS said the lawsuit won't affect its financial position. EDS spokesman Bill Ritz refused to comment further.

A NATO spokesman said her agency had "nothing to do with" the scam.

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