Compaq sues alleging $20M fraud

Compaq Computer Corp. has filed lawsuits against executives of two U.S. companies for more than US$20 million after the companies allegedly defrauded Compaq of product rebates and special marketing funds, the company said Wednesday.

The lawsuit, filed in the U.S. District Court for the Eastern District of Virginia, alleges that the companies, in Virginia and South Carolina, falsely claimed to have large contracts with the U.S. government. To fulfill the contracts, they told Compaq they would need significant rebates and discounts. After it provided products with those rebates and discounts, the defendants then diverted the products to the brokering market, Compaq alleged, according to a Compaq statement.

Compaq is suing Harry Martin and Shafiq Ahmad, principals in Millenium Technology Group Inc., as well as Creative Resources Group Inc. of South Carolina and Creative president Stephen Pridemore. It charges them with fraud, breach of contract and conspiracy and is seeking damages of more than US$20 million, plus interest, costs and attorney's fees.

The lawsuit was made in order to protect Compaq's customers and distribution channels and ensure the integrity of its products, according to the statement.

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