Angering the Wrong Party - Operation "Cisco Raider"

Here is an interesting chat with Mike Sheldon, CEO of Network Hardware Resale and President of UNEDA.

Sheldon makes several interesting points regarding the sale of counterfeit networking product, and specifically, Cisco networking equipment. With Cisco the market leader in an industry where components can easily cost thousands of dollars and counterfeits are difficult to spot, counterfeiting has proven to be a big problem for Cisco.

The problem of counterfeit Cisco equipment attracted the attention of the FBI and other government agencies after Cisco counterfeiters sold fake Cisco equipment to GSA-approved vendors, who then turned around and sold the counterfeit equipment to the government. Big mistake. The government started an investigation dubbed "Operation Cisco Raider", leading to over 400 seizures of equipment valued at over $76 million. And considering some of the implications of counterfeit equipment in government computers, including embedded hardware in sensitive military equipment, one can understand the concern.

The initial transaction came thru eBay, and Sheldon discusses why the secondary market for Cisco equipment is so attractive - for example, vastly lower prices and quicker turnaround. Cisco is aware of its counterfeiting challenge, and has taken a variety of steps to combat this problem, primarily through its used equipment operation.

In a time of uncertain economic prospects, IT purchasing managers can be tempted to purchase gray market Cisco and other OED equipment through non-authorized channels. And as Cisco Raider has shown, the opportunity to "flip" the gray market purchases and essentially launder the equipment for profit can be lucrative. However, the US government has taken notice. While certainly having his own motivations for doing so, people like Sheldon do a good job in sounding an alarm over the risks of purchasing out-of-channel equipment.