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Fry's VP busted after leaving spreadsheets outlining his scheme on his desk

Computer enthusiasts and hardware fans know that one of the best places to buy stuff in retail stores is from Fry's. Fry's is one of the larger retail sellers of electronics and computer hardware, but most of its 34 stores are located in California and Texas.

Fry's VP has allegedly embezzled over $65 million from the retailer to fund a lavish lifestyle that included massive gambling and a penchant for driving a Ferrari. The VP in question is Ausaf Umar Siddiqui and he is accused by the IRS of cutting deals with some of Fry's largest suppliers to buy larger orders of goods from them in return for kickbacks and higher than normal commissions.

Siddiqui allegedly often bought the goods at higher prices than he could have received in exchange for kick backs of up to 31% of the total sales price according to the Associated Press. The kickbacks were funneled into a company that Siddiqui set up called PC International.

The IRS reports that five unnamed vendors had made deposits into accounts owned by PC International totaling $65.6 million. Of the amounts deposited, a massive sum of $17.9 million was paid out to Las Vegas Sands Corp, the operator of the Venetian Casino Resort in Las Vegas according to complaints filed in the case.

Siddiqui's gambling habits were so massive that the casino would charter private jets to fly him to Las Vegas to gamble. The man was arrested at Fry's headquarters and a judge ordered him held on a $300,000 bond.

Siddiqui was Fry's VP of merchandising and operations making an annual salary of $225,000 and supervised a staff of 120 employees. He and his team were responsible for buying all of the merchandise sold in Fry's locations.

According to the IRS, Siddiqui was able to mass such a large amount of funds in the shell company by convincing Fry's executives to allow him to be responsible for a job normally handled by independent contractors. The typical commission for sales of products at Fry's range from three to eight percent of the total sales the items bring in.

The IRS claims that the deals for the massive commissions that Siddiqui had brokered were in exchange for guaranteeing that he'd keep the products stocked on shelves. The elaborate and lucrative scheme toppled when Siddiqui left spreadsheets on his desk outlining the payments and alleged kickbacks.

The spreadsheets were discovered by another Fry's executive while Siddiqui was away from the office. The other unnamed executive took the spreadsheets and turned them over to authorities. After receiving the spreadsheets, the IRS looked into Siddiqui's bank records and found evidence that a total of $167.8 million had been deposited into the shell company's accounts. The five Fry's suppliers had made a total of 70 wire transfers into the accounts totaling $65.6 million. The suppliers were not named as defendants in the case.

Siddiqui is a Palo Alto resident and the judge in the case has given the government 20 days to file formal charges of wire-fraud against Siddiqui, which prosecutors say they plan to do.



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Greedy SoB
By Bateluer on 12/26/2008 10:16:01 AM , Rating: 5
Is it just me, or are we seeing more instances of corporate greed and executive incompetence these days? What ever happened to ethics and responsibility?




RE: Greedy SoB
By amanojaku on 12/26/2008 10:36:03 AM , Rating: 5
You're seeing more of it because of cable TV and the Internet, along with more sophisticated monitoring methods. This stuff always existed; it's harder to hide it now.


RE: Greedy SoB
By Mitch101 on 12/26/2008 1:18:26 PM , Rating: 3
Its popular among consulting agencies as well. One particular Tek company stands out in my mind.

There should be more investigations into HR departments and Managers that get their consultants from a paticular vendor or use a limited number of agencies.

So you might not have lost the job because there was a better candidate but because there was no kick back coming to the hiring manager from the agency you were coming from.


RE: Greedy SoB
By quiksilvr on 12/29/2008 9:23:57 PM , Rating: 2
I just have to say that I freaking LOVE Fry's Electronics. In fact, I think Walmart should invest in it. Just imagine an electronics section of that magnitude attached to a Supercenter. It would be the perfect way to put some serious hurt on that ripoff known as Best Buy.


RE: Greedy SoB
By fri2219 on 12/26/08, Rating: 0
RE: Greedy SoB
By mikefarinha on 12/26/2008 4:00:06 PM , Rating: 3
Sorry, don't blame Newt. This is just human nature. I used to work for a construction company and it was common knowledge that superintendents of work sites would only allow lunch trucks(aka roach coach) on their site if they got a free lunch for them and their friends... same thing as this Fry's debacle, just a smaller scale. You can't blame Newt for that.

It is just human nature to get as much as you can with the least amount of work... any actual increase in this behavior is simply a reflex to the declining shared morals of society.


RE: Greedy SoB
By foolsgambit11 on 12/26/08, Rating: 0
RE: Greedy SoB
By masher2 (blog) on 12/26/2008 10:55:35 PM , Rating: 5
> "I will blame the government [for] failing to regulate properly"

What law would have prevented this, other than total governmental monitoring of every business transaction?

It takes a police state to prevent people from being able to break laws in the first place. I much prefer the alternative-- harsh penalties for crimes once they've been committed.


RE: Greedy SoB
By jeff834 on 12/27/2008 1:12:56 AM , Rating: 2
You'll never successfully deter people from committing crimes with just harsh penalties. But giving everyone a slap on the wrist doesn't work either. You need a good balance of enough policing to catch most of the criminals, not just the stupid ones, and harsh enough penalties. You could have the death penalty for every crime, if no one ever gets caught people will still commit crimes. And of course if everyone got caught, but all you got was a $100 fine that wouldn't stop anyone either.


RE: Greedy SoB
By rudy on 12/28/2008 2:13:48 PM , Rating: 2
Even a police state (China) cannot stop it. All they do is cover up the crime or simply do not report it. You can barely move without being corrupt their.

I once learned about Brazilian history and read a couple books did you know back in what we would call the wild west days you would feel obligated to kill your spouse and her lover if she had an affair. So the penalty was basically known to be death. Yet it simply did not deter it from happening.

Look at china you know if you screw up you are going to get executed yet corruption runs rampant.

It is sad that this guy will be hurting a great retailer but in the end he has been caught.


RE: Greedy SoB
By foolsgambit11 on 12/28/2008 8:26:03 PM , Rating: 1
Perhaps I should have been clearer. I was talking not about a failure to legislate regulation properly, but a failure to implement and effect regulation properly. You don't need to catch everyone to prevent criminal actions like this - effective regulation acts as a deterrent. Additionally, I wasn't speaking to this case specifically. I was speaking to the previous poster's comment that waste, fraud and abuse are rampant. You have to have regulation to catch enough of these people to ensure the law acts as an effective deterrent.

I think we're basically on the same side here. You support harsh penalties (I'm assuming because they are a deterrent). I'm against a police state. There's a huge chasm between the regulatory framework of the early- and mid-90's and a police state, though. Fully funding regulatory agencies, and smart tinkering with the regulatory framework - that's all I'm talking about.


RE: Greedy SoB
By Yames on 12/29/2008 2:29:06 PM , Rating: 2
This incident had nothing to do with laws and enforcement. This is a privately held company and this individual was not being double checked within the company. If it is anyone's fault other then the accused, it should be Fry's.


RE: Greedy SoB
By foolsgambit11 on 12/29/2008 4:45:59 PM , Rating: 2
There's no doubt that in the instance in the article, Fry's is at fault. The previous poster was just talking about corruption in general, though. And just like any other crime, corruption is held in check through the deterrence of proper laws, well enforced.

Although, if Fry's is a publicly held company, there are accounting procedures that are mandated by regulation. I don't know their extent, or if they are in-depth enough to catch embezzlement like this. They ought to be able to catch a budget hold millions of dollars wide. Either way, a failure of proper accounting in a publicly traded company could be a failure of regulatory authorities, as well. But most of the blame falls on Fry's, I agree.


RE: Greedy SoB
By protosv on 12/26/2008 10:41:03 AM , Rating: 2
Unfortunately, I think this kind of stuff was always going on. It's just that with a good economy and rising profits, companies only cared about their bottom line, and never bothered to look a little bit deeper into where each dollar was going. Now that the bottom line is in the red, and management is looking to pinch every penny it can, this kind of stuff is coming to light more often these days. Kinda like what happened with the Madoff scam. As long as people were making money, nobody bothered to check into how this guy was staying afloat. Once everyone wanted to withdraw their investments due to the crappy economy, his entire fraudulent scheme toppled down. Still, you gotta wonder how even in these times, the only way they caught him was by his own screwup in leaving spreasheets out on the desk.....


RE: Greedy SoB
By Xenoterranos on 12/26/2008 10:55:43 AM , Rating: 4
Seriously though, who prints spreadsheets anymore?

Actually, come to think of it, I have about 4 sitting on my desk right now...brb, finding a shredder.


RE: Greedy SoB
By phxfreddy on 12/26/2008 12:52:25 PM , Rating: 2
He should have had the manufacturers give him a rebate sales slip. If he would have filled one of those and included the UPC symbol this would probably all be considered legal! Of course he would have had to have waited for 4 months for the money though.


RE: Greedy SoB
By Indianapolis on 12/26/2008 10:42:01 AM , Rating: 3
I don't have any personal knowledge on the subject, but I doubt that there's any new kind of trend here. Corruption is nothing new, and there's always people who are willing to exploit others when given an opportunity. Unfortunately, it's probably "business as usual."


RE: Greedy SoB
By MrBlastman on 12/26/2008 10:42:19 AM , Rating: 2
This explains completely to me (through assumption) as to why Fry's magically stopped carrying Western Digital drives (except maybe raptors) and solely stocks only Seagate/Maxtor drives now.

I've been forced to go to Microcenter to buy my hard drives (which really, is a great store itself).

*checking Fry's website*

Looks like they stock WD again - at least online. I know for the past year they have been vacant from both Fry's in Atlanta.


RE: Greedy SoB
By Hiawa23 on 12/26/2008 11:27:05 AM , Rating: 3
What ever happened to ethics and responsibility?

guess when it comes to money that goes out the window


RE: Greedy SoB
By phxfreddy on 12/26/2008 12:57:39 PM , Rating: 2
There is no such thing as a free lunch. When the country embraces left wing give away policies you find that morals of all types are corroded slowly the same way as iron pipes.

What you are seeing in the empire grenade.


RE: Greedy SoB
By jeff834 on 12/27/2008 1:16:05 AM , Rating: 2
And right wingers are all greedy SoBs who would sell their mom for a buck. The only place we're safe is in the middle, but we rarely get there.


RE: Greedy SoB
By GaryJohnson on 12/27/2008 3:15:08 AM , Rating: 2
There are other directions you can go in besides left and right.


RE: Greedy SoB
By someguy123 on 12/26/2008 4:17:43 PM , Rating: 2
where have you been? i own a small business worth 30 grand and i've already embezzled 40 grand preemptively!


RE: Greedy SoB
By mtdewcmu on 12/26/2008 6:23:02 PM , Rating: 2
I look at it differently. I take it as a hopeful sign when these guys get caught.


RE: Greedy SoB
By eye smite on 12/26/2008 11:57:05 PM , Rating: 2
I think ethics fell to a new low in the early 90s at big companies. Newer generation of workers, older one retiring that would have blown the whistle..........who's to stop them from exploiting everything they can? lol


RE: Greedy SoB
By mangoluvr on 12/27/2008 1:58:04 AM , Rating: 2
I'll tell you what happened to ethics and responsibility. They are just there to keep the honest people honest. Just like the locks on our doors. Its there to keep the honest people honest. If a crook wants to break into your home, you think a lock is gonna stop him? You think ethics and responsibility is gonna stop a man that wants more money? Its just ink on paper.


RE: Greedy SoB
By geeg on 12/27/2008 9:53:03 AM , Rating: 2
quote:
What ever happened to ethics and responsibility (to others, Ed)?

Was there any?
Eh, it is called capitalism = maximize the profit. There is no room for humane values.


RE: Greedy SoB
By tubalcain on 12/31/2008 2:59:54 AM , Rating: 2
There is no such thing as "corporate greed". A corporation by its very nature and structure has greed built in. Ethics and responsibility get put aside for profit, plain and simple. It's like asking why is water wet. I don't disagree with you about ethics and responsibility but most corporations only care about profit by any means.


I HATE EXCESSIVE GREED
By ajvitaly on 12/26/2008 10:20:31 AM , Rating: 5
FRY HIM!

(get it? ha!)




RE: I HATE EXCESSIVE GREED
By icanhascpu on 12/26/2008 10:56:33 AM , Rating: 2
Holy crap I was just about to write that.

I agree!


RE: I HATE EXCESSIVE GREED
By Mitch101 on 12/26/2008 1:22:18 PM , Rating: 2
Yes but do it the Outpost.com (Aquired by Fry's) way.

http://www.youtube.com/watch?v=fzbMcsrK-tw


RE: I HATE EXCESSIVE GREED
By BladeVenom on 12/26/2008 5:51:46 PM , Rating: 2
For that kind of money, they should fry him, and I'm not joking.


RE: Greedy SoB
By ekv on 12/27/2008 2:35:09 AM , Rating: 2
quote:
but I will blame the government (both parties) for failing to regulate properly


Three thoughts. The government's job is, according to Milton Friedman (if I remember correctly), to provide a level playing field, enforce contracts, and protect domestic tranquility, etc. Criminal activity needs to be reported, rooted out and squashed ... by employees, by law enforcement, by anybody and everybody. In that respect I agree. Secondly however, there is a tendency to rely on government to solve problems, as in "there oughta be a law." Which, in simple terms, leads to bloated government and forgotten, parasitic do-gooder programs / departments, etc. [I just read that Congress has a law that they give themselves a yearly raise unless it is voted down. Guess how much this year's raise is (despite all the bail-outs and such) ? about $4700. I make that in 3 months, if I'm lucky].

Lastly, and perhaps most controversially, the matter of punishment deterring crime. A strong case can be made for capital punishment. It works. A strong case can also be made >against< our current rehabilitative mind-set, since going to state-prison is more like going to college-for-criminals. I would suggest that having to stand in the public-square and say out-loud what your crime was and otherwise apologizing is a start. Mediation and recompensing victims are perhaps better ideas, since then things get personal. See "Come, Let Us Reason Together"

http://www.pfm.org/article.asp?ID=204




RE: Greedy SoB
By kondor999 on 12/27/2008 12:02:19 PM , Rating: 2
Milton Friedman. Great. Augusto Pinochet's biggest fan.

It's funny - radical free market agendas only seem to get implemented by corrupt totalitarian regimes:

Chile 1973-1990, Russia 1991-1999, Iraq 2003-2008, and...America 2000-2008.

When given the opportunity to decide their own fate, people tend to vote for social safety nets, strong regulation of markets, and - in short - rules by which society must live by.

No one outside of the Chicago school and its fanatical adherents seems to desire a return to the atavistic state of Nature from which human societies emerged.


RE: Greedy SoB
By masher2 (blog) on 12/27/2008 4:30:37 PM , Rating: 2
> "Milton Friedman. Great. Augusto Pinochet's biggest fan"

A wonderful example of the logical fallacy known as "guilt by association". Friendman was no fan of Pinochet. He was, rather, a fan of the market reforms Pinochet implemented-- and with good reason.

Before Chile went free market, its per-capita GDP was sharply below the Latin American average. With a few years of privatization, it began to skyrocket, now reaching a level over twice the regional average. Chile also leads the entire continent in stability, economic freedom, quality of life, and low poverty rates. Friedman called that the "Miracle of Chile". And he was right to do so.

> "It's funny - radical free market agendas only seem to get implemented by corrupt totalitarian regimes"

Actually, corrupt totalitarian regimes vastly prefer socialist systems. Hitler, Stalin, Mao, Castro, Hugo Chavez, Kim Jong Il, the list goes on and on and on.

Pinochet modelled his economic reforms on what made the US the economic powerhouse of the world. That was a great gift he gave Chile, despite his brutal repression of dissidents.


RE: Greedy SoB
By ekv on 12/28/2008 3:38:50 AM , Rating: 2
Milty, in Free To Choose, denounced Pinochet's assassinations and repressions, while noting however that the average lot of Chileans was steadily improving given the free market reforms.

I believe my point, in relation to our article, is that Socialist and Communist schemes tend to encourage petty theft and a lack of ethics in general. [I work for a union shop, as it were, and the scary thing is that their mediocrity is starting to rub-off on me]. Capitalism tends to be more honest in that a man generally keeps what he earns. No work, no food. [I've stated this quite roughly and would suggest reading Ludwig von Mises "Human Action", http://www.mises.org/resources/3250, if you'd care to follow this line of thought.]

Stealing from Fry's [not to mention, voting yourself a raise] is taking money out of my wallet, literally. The authorities ought to have that guy publically apologize and make some kind of restitution.

Now, where did I put my damn wallet?


Hear me out on this one
By Lord 666 on 12/26/2008 10:46:10 AM , Rating: 1
This is where I think GWB will be hailed a hero with all of this corporate fraud surfacing.

Since GWB/9-11, the domestic wiretapping laws were loosened along with other electronic monitoring. It potentially could be a way to find all of the corporate corruption legally.

In this scenario, it was his own sloppiness that ratted him out. However, it is a very strong possibility that much of the upcoming fraud cases will have utilized the monitoring capabilities orginally intended for terrorists.




RE: Hear me out on this one
By grath on 12/26/2008 12:42:06 PM , Rating: 2
The problem is that even the increased monitoring is only effective against those who expose themselves to it, to the arrogant and overconfident, who have to make a mistake before we can catch them. The smart ones will continue to keep quiet and insulated while watching their stupider associates take the fall and the attention. Whether it be this guy leaving evidence on his desk, or Rod Blagojevich running his mouth off when he knew federal investigators were taping him, it will usually be the sloppy people who get caught while the smart and more dangerous people remain difficult targets.


RE: Hear me out on this one
By jeff834 on 12/27/2008 1:20:18 AM , Rating: 2
More likely as soon as GWB is out we'll find out he embezzled $500 million from the treasury. Cheney shot that guy in the face as a warning because he knew too much.


5 suppliers
By hellokeith on 12/26/2008 11:45:29 AM , Rating: 3
Next up on the IRS/FTC/SEC chopping block: the 5 suppliers.

I'm sorry but it doesn't take a 1st year accounting student to know that wiring sales commissions to a different company than the one purchasing the merchandise is more than just suspicious. These suppliers knew what was going on, and I hope all their CFO's get busted big time.




RE: 5 suppliers
By FNG on 12/26/2008 11:59:54 AM , Rating: 2
They may have known, but according to the article part of his job was normally carried out by a contracted company and he convinced Fry's to allow him to do it. Since they were making commission payments to this company it may have been business as usual for them. Seems like he could have been playing both ends.


fry's
By brekfsklub on 12/28/2008 1:09:15 PM , Rating: 2
question... how can such a big company not have oversite?? one man controls all buying??? don't get it

also because the 17 million the casino recieved was stolen money can fry's recover and pass the debt back to mr. gambler??




RE: fry's
By masher2 (blog) on 12/28/2008 4:33:19 PM , Rating: 2
As I read the story, this man isn't guilty of embezzlement, but rather bribery, meaning that while Fry's was certainly hurt by his actions, the actual monies in question were not stolen, but simply payments made to him by other firms.


.
By Xenoterranos on 12/26/2008 10:46:08 AM , Rating: 2
He payed the casinos 17 million? He friggin' SUCKS at gambling!

Hey, maybe now that they've got this ass hat out of the way, they can get around to building a Fry's in San Antonio already?!




By phxfreddy on 12/26/2008 12:55:07 PM , Rating: 2
If you have ever shopped at Frys ( which I love ) all the really good deals come with a manufacturers rebate. I guess he got the master-rebate!




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