Federal Judge OKs RICO Lawsuit Against IBM Execs

"A federal judge has refused to dismiss a
massive RICO suit against four high-level IBM
executives who are accused of swindling a King
of Prussia, Pa., firm into investing $12 million in
technology projects by hiding the truth about their market
potential and continuing to solicit funds even after one of the
projects had been canceled.

In his 32-page opinion in Devon IT Inc. v. IBM Corp., U.S.
District Judge Joel H. Slomsky dismissed a claim against IBM for
aiding and abetting the RICO conspiracy, but refused to dismiss
claims against IBM for fraud, breach of contract and negligent
supervision.

But the most significant ruling in Slomsky's opinion is his refusal
to dismiss RICO claims against the four IBM executives —
Thomas S. Bradicich, Bernard S. Meyerson, James A Gargan,
and Rodney C. Adkins — who are accused of operating their
department as a "wide-spread Ponzi scheme" that lured
investors to fund projects "with no real intention of completing
the development of the projects."

Slomsky found that the complaint "complies with heightened
pleading requirements for fraud" because it identifies "specific
persons, dates, and conduct, which serve to place defendants
on notice of the precise misconduct charged."

The suit also alleged a valid "pattern of racketeering activity" by
citing a series of alleged wire frauds over more than four years,
Slomsky found.

Significantly, Slomsky rejected one of the main thrusts in IBM's
motion to dismiss — that nearly all of Devon's claims were
waived in two broadly worded releases when the two companies
struck new agreements in 2008.

Devon had urged Slomsky to disregard the releases on the
grounds that Devon was fraudulently induced to sign on the
basis of more deceptive promises.

Slomsky agreed and found that Devon had "sufficiently alleged
such inducement."

The ruling is a victory for attorneys Maurice R. Mitts, Mark L.
Rhoades and Amy L. Blackmore of Mitts Milavec in Philadelphia.
IBM spokesman Steve Eisenstadt said the company was
"gratified" that Slomsky had dismissed some of the claims in the
suit, and that "the remainder of Devon's claims consist of
allegations that are both unproven and without merit. We will
continue to defend the case vigorously."

According to the suit, executives in IBM's Systems and
Technology Group approached Devon in September 2005 to
pitch an investment in a new IBM server project referred to as
"Blade" — a computer system designed to replace the typical
stand-alone desktop personal computer.

The suit alleges that, in a presentation to Devon, Bradicich said
Blade would be available for sale during the first quarter of 2006
at the competitive price of $1,500 a unit, and that he projected
that 500,000 units would be sold over the first three years. "

Source and Full Article
http://www.mittslaw.com/assets/4%206%2011%20Legal%20Intelligencer-Federal%20Judge%20OKs%20RICO%20Lawsuit%20Against%20IBM%20Execs.pdf

When looking at Pattern and History on IBM, look deep there is plenty.  Including the iViewit Technology Scandal.  http://www.deniedpatent.com/