CXtec is in the business of selling new and refurbished networking equipment, voice communications equipment, cabling, and related accessories, to both private companies and government agencies. We represent a whistleblower who brought this qui tam case under the False Claims Act.
In his complaint, our client alleges that CXtec engaged in two different types of unlawful conduct. First, the complaint alleges that CXtec sold products to federal agencies that were manufactured in China, Taiwan, Indonesia, Malaysia or Thailand, even though the sale to the government of products manufactured in those countries was prohibited by the Trade Agreements Act (“TAA”), and even though CXtec’s contract with the government specifically required that all products be TAA-compliant.
Second, the complaint alleges that CXtec sold counterfeit gigabit interface converters (GBICs) to the federal government. CXtec represented to the government that the GBICs were manufactured by various well-known corporations, including Cisco, Nortel Networks, and Extreme Networks. According to the complaint, CXtec knew that it was selling counterfeit GBICs to the federal government, and had a sophisticated operation in place for sorting, testing and repackaging the GBICs to avoid detection of the counterfeit nature of the products.
In 2012, the U.S. Department of Justice intervened in the case, and settled some, but not all, of the claims for $2 million. The settlement related solely to CXtec’s sale of cables and certain GBICs. Because the settlement was limited in scope, and did not fully resolve the case, the lawsuit continues to move forward with respect to allegations that CXtec sold other products to the government in violation of the TAA.
The case is in the U.S. District Court for the Northern District of New York.