IT exec sets up fake biz, uses it to bill his bosses $6m for phantom gear, gets caught by Microsoft Word metadata
A now-former senior IT exec has admitted conning his employer out of $6m – by setting up a fake tech services biz that billed his bosses for bogus services.
US prosecutors announced on Friday that Hicham Kabbaj, 48, of Floral Park, Long Island, New York, pleaded guilty to one count of wire fraud. He faces up to 20 years in the clink, though in all likelihood will get much less, and will be sentenced later this year by presiding federal district Judge Richard Berman.
“Today, Mr Kabbaj pled guilty to a serious felony because he chose to misuse his position of trust as a corporate executive to steal company funds for his own personal gain,” said Jonathan Larson, the Internal Revenue Service special agent in charge of the case.
According to Uncle Sam’s court filings [PDF], between August 2015 and May 2019, while in various roles that allowed him to handle IT purchasing for his unnamed employer, described as a “global internet company” based in Manhattan, Kabbaj funneled millions into his own pockets through phony tech purchases.
For what it’s worth, between May 2015 and August 2019, a certain Hicham Kabbaj worked for Rakuten Marketing, a global online marketing outfit, in New York, in various IT-related roles including senior veep of technical operations and engineering, according to LinkedIn. Rakuten did not respond to a request to comment.
According to investigators [PDF] here’s how the scam worked. Back in 2015, Kabbaj set up a shell company called Interactive Systems that was pitched as an IT services provider, but was in fact little more than a business name and a bank account.
Over the course of the next four years, Interactive Systems billed his employer for various bits of equipment – including a firewall and 16 servers – with Kabbaj receiving and approving the invoices at his end. Interactive Systems was also paid a monthly retainer. However, no gear or services ever turned up, and payments for the bogus kit just went straight into Kabbaj’s personal coffers.
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To cover his tracks, and avoid scrutiny, the crook omitted to put any serial numbers on the invoices, or reused serial numbers of equipment his employer already owned. However, he wasn’t that smart: four of the invoices were written in Microsoft Word, and the file metadata showed they had come from Kabbaj’s copy of the software.
“From in or about August 2015 through in or about April 2019, Interactive Systems submitted to Company-1 approximately 52 invoices,” prosecutor Scott McNeil told the New York courts. “Four of these invoices were submitted in Word document format, and the metadata for these four invoices identified Kabbaj as the author. Each invoice from Interactive Systems was addressed to Kabbaj.”
Once his bosses had paid for the phantom gear, Kabbaj would simply shift the received cash from Interactive Systems into his own bank account. This netted the fraudster a cool $6m (£4.6m). The last of the payments was said to have occurred in May 2019. A few months later, Kabbaj was collared and charged by the Feds in September after investigators spoke to two of his colleagues and gathered the evidence they needed to nail him.
As part of his guilty plea, Kabbaj agreed to return $6,051,453 to his former employers, and hand over any proceeds from his crime, including his two homes at Palm Beach Gardens, Florida, and Hewitt, New Jersey.
While proficient, Kabbaj is not revolutionary in his scheme. Other IT managers have previously been busted for running the same racket. Which makes you wonder how many others might be out there (our tip line is always open.) ®
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