MN Credit Union Worker Admits to $388K Scam

A credit union worker admitted to running a computer parts scheme through which he defrauded Cisco Systems, Inc., of about $388,000.

Phillip Adrian Webb, a 46-year-old man from Brooklyn Park, admitted Monday to scamming about $388,000 from San Jose, California-based Cisco Systems, Inc., Minnesota's U.S. Attorney's Office announced.

Webb-who was charged in early October-pleaded guilty to one count of mail fraud. He appeared in federal court in Minneapolis before U.S. District Court Judge John R. Tunheim.

Between June 2007 and October 2009, Webb was a manager of network services for Woodbury-based Postal Credit Union (PCU). While working for PCU, Webb notified Cisco-a computer parts manufacturer-that some of the parts in PCU's computer system were faulty.

Cisco then shipped replacement parts to PCU, and in return, PCU was supposed to return the defective parts to Cisco. Webb admitted that he instead sold the Cisco replacement parts online to reap profits for himself, and he obtained inexpensive second-hand parts to return to Cisco, according to the U.S. Attorney's Office.

For example, in June 2009, Webb told Cisco that an Ethernet port switch-worth about $7,500-was defective. Cisco sent a replacement part, which Webb kept for himself. He returned a cheap second-hand unit that he acquired from a different source.

Webb ultimately returned 55 so-called “defective” parts to Cisco-45 of which were cheap replacements that he obtained elsewhere. Cisco lost an estimated $388,000 as a result of the scheme, the U.S. Attorney's Office said.

Webb faces up to 20 years in prison. His sentence will be determined by Judge Tunheim at a yet-to-be-scheduled hearing.