DXC Technology’s Fraud Claims Are ‘A Bunch Of Nonsense,’ Lawyer Says

‘DXC owes Atlas and Smart IMS a lot of money. These are litigation tactics designed to deflect from their own complicity,’ says lawyer Katheryn Hatfield, who represents Atlas Communications Technology and Smart IMS.

A lawyer for the companies that DXC Technology accused of facilitating a $12.2 million fraud scheme called the claims “a bunch of nonsense,” saying her clients worked solely at the direction of a DXC employee the entire time they had the account.

“He was in charge of the account,” Katheryn Hatfield with the Weiner Law Group told CRN on Wednesday. “There was no one other than him.”

Hatfield is representing Atlas Communications Technology and Smart IMS, two New Jersey companies who share ownership, but operate independently. She said one of the companies that DXC said participated in that fraud never worked on the account.

“Smart IMS didn’t have anything to do with the Citibank account,” Hatfield said. “They weren’t involved in that at all. They had no relationship with DXC on the Citibank account … DXC owes Atlas and Smart IMS a lot of money. These are litigation tactics designed to deflect from their own complicity.”

The fight stems from an October lawsuit that Atlas filed in U.S. District Court in New Jersey in which Atlas said DXC has failed to pay $3 million in invoices for work the company performed while subcontracted to work on DXC’s Citibank account.

In a response filed Jan. 6, Tysons, Va.-based DXC said it failed to pay the invoices in order to offset the $12.2 million it was owed by Atlas and Smart IMS after the companies circumvented its employment process to hire workers for no-show jobs, billed the workers at between $400 and $600 an hour, and inflated expenses by 10 percent for years.

“Atlas received payment for phantom services allegedly provided by friends and family of the ex-DXC employee, and also received a 10% markup on millions of dollars in fraudulent expenses incurred by the friends and family of the ex-DXC employee, which were funneled through Atlas, processed by employees of Smart IMS, and sent to DXC for payment,” DXC stated in its court filings.

A lawyer for DXC did not return a call and email on Wednesday for comment.

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Hatfield disputed the counter claim, saying the ex-DXC employee, Mark Angarola, was the manager of the Citibank account and directed all the activities of its subcontractors. She pointed out that DXC discovered the fraud during an internal investigation in February 2019, but Atlas and Smart IMS were both still working as subcontractors for DXC months later.

“Probably until September or October,” she said. “Atlas stopped doing work for DXC when DXC hired all of their employees away. That’s how the relationship ended. There wasn’t any formal notice to Atlas that they were terminating the contract. What they did is they just hired all of the employees.”

That too is mentioned in the suit. Atlas claims DXC violated the scope of work by hiring their employees away from them, while DXC said they were outside of the 90-day window that would have forbidden the hiring.

Hatfield said Smart IMS was not a party to work on the Citibank account, only Atlas. She denied DXC’s claim that Smart IMS processed payments for Atlas’ work on the Citibank account.

DXC said separate from the Citi account, Smart IMS ran a scheme in which it billed DXC in U.S. dollars for employees it said were in Florida, but the workers were based in India. DXC stated in court filings that Smart IMS paid the employees in rupees, then “pocketed” the difference in the exchange rate. Hatfied denied that as well, adding that she has “hundreds of pages of documents” that show otherwise.

“Smart IMS and DXC had a business relationship with regard to other end users. That’s when they bring in the whole thing about the employees from India, which is a bunch of nonsense,” she said. “We have hundreds of pages of documents that show DXC was well aware of the location of these employees and in fact DXC went to India to interview some of these employees. So, like I said, it is a litigation tactic on their part to try to bring in Smart IMS, but Smart IMS had absolutely nothing to do with the Citibank account.”