US defendant asks court to throw out Digicel fraud case

A US company being sued for alleged fraud by Denis O'Brien's telecoms company Digicel has asked a US court to throw out the case.

UPM Telecom, which is based in Oregon, is being sued in the US by Digicel Haiti, which vies with Digicel Jamaica as the largest unit by revenue within the Digicel group.

Digicel has accused UPM of facilitating so-called “bypass fraud”, whereby a telco avoids paying mandatory fees to connect calls to another telco’s network by using an allegedly illicit system of electronic boxes and Sim cards.

In essence, a company that engages in alleged bypass fraud is able to offer cheaper international call rates to customers by avoiding network costs that other operators are obliged to pay.

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Digicel says it uncovered the alleged fraud in 2014 and 2015 after it enlisted the help of the Haitian police and private investigators from Jamaica.

Some of the alleged “co-conspirators” of UPM were arrested at gunpoint in Haiti, recent court documents reveal.

Digicel claims some of the people arrested, including local hotel workers and visitors to Haiti, were recruited to procure local Sim cards and oversee the equipment necessary to perpetrate the alleged fraud.

Treble damages

Digicel is seeking treble damages against UPM under so-called Rico racketeering laws, which were originally brought in to fight organised crime. It calculates that it has been defrauded of 23 cents for every minute of calls to its network facilitated by UPM, running into the millions of dollars. UPM has denied all accusations against it.

Mr O’Brien’s telco group is fiercely defensive in relation to alleged incursions on to its network, and the company has hired a high-powered legal team in Oregon to prosecute its case.

In recent days, UPM filed a detailed plea to a judge in an Oregon court, asking him to throw out the Digicel case on the basis that Digicel’s complaint is based on Haitian government rules. UPM says that Digicel has not established that these rules should apply to the case in the US. It also says Digicel “cannot ignore innocent explanations” offered for UPM’s use of signalling boxes and Sim cards.

UPM has asked the judge to throw out the case, in response to an amended complaint from Digicel Haiti in recent weeks.

Digicel declined to comment on the case, which continues in Oregon.