A Palo Alto systems engineer pleaded guilty in federal court Monday, May 7, to one count of conspiracy to commit mail fraud, United States Attorney Melinda Haag announced.
Sheng Qiang, who is also known as Becky Sheng Qiang, admitted to committing a sophisticated rebate fraud scheme with her husband, co-defendant Yezhou Zhao. He also goes by the names Jake Zhao and Jake Chao, according to the U.S. Attorney's office.
In pleading guilty, Qiang, 38, admitted that for approximately 5 1/2 half years, from 2002 to 2008, she and Zhao perpetrated a scheme to defraud 3Com Corporation, a computer-equipment manufacturer headquartered in Grand Rapids, Mich.
3Com offered a "Trade-Up" program, which encouraged customers to replace old computer equipment with new 3Com equipment through a rebate program.
Qiang admitted that she and Zhao submitted 98 fraudulent rebate claims to 3Com, totaling more than $634,000, and received more than $577,000 in rebate money from 3Com. Hewlett-Packard (HP) Company, an information technology corporation based in Palo Alto, acquired 3Com in April 2010.
According to Qiang's plea agreement, she admitted that the couple established numerous shell companies and private mailboxes around the San Francisco Bay area. They submitted rebate requests to 3Com using various fake corporate and personal identities and forged and falsified documents.
After fraudulently receiving rebate money from 3Com, the couple deposited the funds in shell-company bank accounts and then transferred the money to their personal bank accounts or wired it to their account in the People's Republic of China. The fraud was committed while the couple lived in Milpitas.
Qiang was arrested at her Palo Alto home on July 24, 2009. She originally faced 25 counts, including conspiracy to commit wire fraud, mail fraud, conspiracy to commit money laundering, international money laundering to conceal illegal activity, and engaging in monetary transactions in property derived from specified unlawful activity.
Qiang's sentencing is scheduled for Sept. 4 at 9 a.m. before United States District Court Judge Ronald M. Whyte in San Jose. The maximum statutory penalty for conspiracy to commit mail fraud is five years in prison, a $250,000 fine, or twice the gain or loss resulting from the fraud, and restitution.
The prosecution is the result of an investigation by the United States Postal Inspection Service. Both 3Com and HP assisted the investigation, Haag's office noted.
Zhao has not appeared in court to face the charges in the indictment and is considered a fugitive. Authorities request anyone with information about his whereabouts to call the United States Postal Inspection Service at 877-876-2455.