Digicel set for April fraud case against rival in front of a US jury

Denis O’Brien’s Digicel telecoms group is set for a 10-day jury trial in April in the US in a case it has taken against a rival for allegedly defrauding it out of millions of dollars on international calls.

Digicel in Haiti, one of the group's most lucrative markets, has received the go-ahead from a US judge to go to trial with fraud charges against UPM Technology, an Oregon company that used technology to trick Digicel's network into charging local rates for calls made to home from Haitian expats in the US. The company also has the go-ahead to go to trial with allegations of fraud against UPM's chief executive, Bruce Tran.

The court battle scheduled for April is the culmination of an increasingly complex and bitter seven-year legal wrangle in the US court between Digicel Haiti and UPM, which has launched a $60 million series of counterclaims against Mr O’Brien’s company. Digicel had been privately investigating the issue for years even before it launched the case in 2015, enlisting the help of the Haitian police, who arrested several men in Haiti suspected of helping in UPM’s alleged fraud.

A judge in the Oregon District Court last week decided to let the case proceed to trial on charges of fraud by “active concealment” but he said UPM’s counterclaims should be siphoned off into a separate case to be heard after the April jury trial.

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On the cheap

At the heart of the case is an allegation by Digicel that UPM perpetrated “bypass fraud”, where one telecommunications company uses technology to override the protocols of another company’s network to essentially get calls on the cheap. UPM has admitted it engaged in the practice but denies it is fraud.

UPM enlisted Haitian citizens to bulk-buy Digicel sim cards, which it then inserted into servers in Oregon, and some into equipment that was exported to Haiti labelled as DVD players on customs documents. Utilising a complex combination of technological tricks, the end result was that when Haitian expats in the US called home using one of the sims, Digicel’s network believed it was a local call and UPM profited on the saving.

Documents filed over the seven-year legal battle show that Haitian police arrested scores of local people that Digicel alleged were involved. These included a hotel receptionist arrested in 2014, who while in police custody said he received a commission of 89 cent for every Digicel sim he bought at local market stalls. When his home was raided by police, they found 553 sim cards in his room.

In its counterclaims, UPM alleged Digicel was illegally interfering with its “economic advantage” and was also in breach of the US Communications Act, which Mr O’Brien’s company denies. Digicel accused its rival of using “shock and awe” legal tactics and of “victim shaming” it.