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Palo Alto Weekly

News - May 11, 2012

News Digest

Palo Alto engineer pleads guilty to fraud conspiracy

A Palo Alto systems engineer who bilked 3Com Corporation out of nearly $600,000 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, 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 rebates. 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.

Qiang's sentencing is scheduled for Sept. 4.

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.

Judge rejects challenge to California Avenue plan

The City of Palo Alto's effort to remove two lanes from California Avenue took a leap forward Monday, May 7, when a Santa Clara County Superior Court judge rejected a lawsuit from a local merchant who opposes the lane-reduction plan.

The lawsuit was filed by Robert Davidson, whose business, California Paint Company, is located on California Avenue. This was the second lawsuit by California Avenue merchants opposed to reducing the number of lanes from four to two. In February, Judge Patricia Lucas rejected a similar challenge from Terry Shuchat of Keeble & Shuchat Photography and resident Joy Ogawa. Both lawsuits claimed that the city violated environmental law in approving the $1.8 million streetscape project.

Like Shuchat and Ogawa, Davidson claimed in his suit that the city had failed to accurately describe the project and that it did not adequately analyze the potential impact on area businesses. The city argued that Davidson's suit is nearly identical to the first challenge and that the court should throw it out.

Though Lucas allowed the challenge to go forward, she ultimately sided with the city after concluding that Davidson did not express any objections to the lane-reduction project prior to filing his lawsuit against the city. Because he did not exhaust his "administrative remedies" before contesting the lane-reduction plan in court, his petition cannot advance, she concluded.

Even though they did not prevail in court, the merchants could claim a victory of sorts. By tying up the project in litigation, critics of the project have kept Palo Alto from receiving a $1.2 million grant city officials were expecting to get from the Metropolitan Transportation Commission. The city had hoped to begin the project this spring and complete it by fall. With the delay in grant funding, planning officials now hope to start the project next year.

Silicon Valley cash to fund Stanford Hospital

Stanford University has launched a $1 billion fundraising campaign to build its new hospital and invest in medical research and teaching, and already half of that sum has been pledged by Silicon Valley companies and individuals, Stanford announced Monday.

Three donors are contributing $150 million: John Morgridge, former Cisco Systems CEO, and his wife, Tashia; Anne and Robert Bass, philanthropists; and the Christopher Redlich family. Morgridge, the Basses and Redlich are all Stanford graduates.

Seven companies have committed $175 million for the project through the Stanford Hospital Corporate Partners initiative: Apple, eBay, Hewlett-Packard, Intel, Intuit, Oracle and NVIDIA.

The new hospital will replace aging facilities and bring the medical center up to state seismic standards.

A major portion of the campaign — $700 million — will support the new hospital, but the remaining $300 million will fund a number of initiatives in the School of Medicine that hospital officials said would improve the delivery of care and advance research.

The campaign funds will also support graduate education programs in the biomedical sciences.

— Sue Dremann

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