3Com wins again: Awarded US$6.5m in channel fraud case

3Com this week said it won US$6.5 million in a fraud case against a former Canadian channel partner, its second court victory in recent weeks against a reseller.

In a ruling issued last week, the Ontario Superior Court of Justice held Toronto-based solution provider Zorin International and its two principals, Sam Marotta and Domenic Sicilia, liable for a tort of deceit, finding that the company fraudulently received special pricing for 3Com products, the networking vendor said in a statement. The decision is believed to be the largest reseller fraud judgment ever issued in Canada, 3Com said.

The same court awarded US$3.4 million in damages to 3Com last month in a fraud case against Intelligent Decisions, another former Canadian channel partner, which is not affiliated with US solution provider Intelligent Decisions.

In his ruling, Justice Russell Juriansz said Zorin provided false documents -- including invoices and shipping receipts -- that caused 3Com to authorise special pricing for products purchased by the solution provider through distributor Tech Data.

3Com authorised the special pricing because it thought Zorin had closed large-volume product sales to the Ministry of Education in Beijing, China, and several Ministries of Education in Australia, according to court documents.

By tracking serial numbers, 3Com found "a significant portion" of the products purchased by Zorin under the special pricing on the gray market, the ruling said.

Justice Juriansz rejected the defendants' suggestions that employees of 3Com Canada, a subsidiary of 3Com, may have created the fictitious documents to gain approval for the deal from their parent company. He also discounted suggestions from the defendants' counsel that parts of Zorin's shipments ended up on the gray market after being stolen in transit, since no evidence of theft was introduced at trial.

Martin Mahoney, senior corporate counsel for 3Com, said the networking vendor has no other reseller fraud litigation currently pending in Canada or the US.