WACO MAN PLEADS GUILTY TO HURRICANE KATRINA FRAUD
WASHINGTON, D.C. - Elpida Memory
Inc. (Elpida), a Japanese manufacturer of dynamic random access memory (DRAM),
has agreed to plead guilty and to pay an $84 million fine for participating
in an international conspiracy to fix prices in the DRAM market, the Department
of Justice announced.
Including today's charge, four companies and five individuals have been charged
resulting in more than $730 million in fines from the Department's ongoing antitrust
investigation into price fixing in the DRAM industry.
According to the two-count felony charge filed today in the U.S. District Court
in San Francisco, from April 1, 1999 to June 15, 2002, Elpida conspired with
unnamed DRAM manufacturers to fix the prices of DRAM sold to certain computer
and server manufacturers. The customers directly affected by the price-fixing
conspiracy were: Dell Inc., Compaq Computer Corporation, Hewlett-Packard Company,
Apple Computer Inc., International Business Machines Corporation, and Gateway
Inc. In addition, Elpida conspired with an unnamed DRAM manufacturer to rig a
bid for a lot sold to Sun Microsystems Inc. in March 2002. Under the plea agreement,
which must be approved by the court, Elpida has agreed to cooperate with the
government in its ongoing investigation of other DRAM producers. Upon entry of
the plea agreement with Elpida, the Department will also enter into Cooperation
and Non-Prosecution Agreements with Elpida's corporate predecessors, NEC Corporation
and Hitachi Ltd.
"Today's charge demonstrates our continuing commitment to prosecute and
deter cartels that harm American consumers," said Thomas O. Barnett, Acting
Assistant Attorney General in charge of the Department's Antitrust Division. "We
are gratified to bring to justice another member of the DRAM cartel, which is
one of the largest cartels ever discovered."
DRAM is the most commonly used semiconductor memory product, providing high-speed
storage and retrieval of electronic information for a wide variety of computer,
telecommunication, and consumer electronic products. DRAM is used in personal
computers, laptops, workstations, servers, printers, hard disk drives, personal
digital assistants (PDAs), modems, mobile phones, telecommunication hubs and
routers, digital cameras, video recorders and TVs, digital set top boxes, game
consoles, and digital music players. There were approximately $7.7 billion in
DRAM sales in the United States in 2004. Elpida is the world's fifth-largest
DRAM manufacturer.
Elpida is charged with carrying out the price-fixing conspiracy by:
* Participating in meetings, conversations, and communications in the United
States and elsewhere with competitors to discuss the prices of DRAM to be sold
to certain customers;
* Agreeing, during those meetings, conversations, and communications, to charge
prices of DRAM at certain levels to be sold to certain customers;
* Issuing price quotations in accordance with the agreements reached; and
* Exchanging information on sales of DRAM to certain customers, for the purpose
of monitoring and enforcing adherence to the agreed-upon prices.
Elpida is charged with carrying out the bid-rigging conspiracy by:
* Participating in meetings, conversations, and communications in the United
States and elsewhere to discuss allocating (i.e., dividing up) a bid offered
by Sun among themselves;
* Agreeing, during those meetings, conversations, and communications, to allocate
a bid offered by Sun;
* Allocating, in accordance with the agreements reached, a bid offered by Sun
among themselves, denying Sun a competitive price;
* Participating in meetings, conversations, and communications to discuss the
submission of prospective bids for a bid offered by Sun to purchase one lot of
a particular DRAM product;
* Agreeing, during those meetings, conversations, and communications, to submit
complementary bids to ensure the success of their agreement; and
* Submitting complementary bids for one lot of a particular DRAM product, denying
Sun a competitive price.
"Elpida is the fourth company to agree to plead guilty to price-fixing charges
in our investigation of antitrust violations in the DRAM industry," said
Scott D. Hammond, the Antitrust Division's Deputy Assistant Attorney General
for Criminal Enforcement. "Elpida will provide valuable assistance in our
continuing investigation of the DRAM industry."
In October 2004, German manufacturer Infineon Technologies AG pleaded guilty
and was sentenced to pay a $160 million criminal fine for its role in the DRAM
conspiracy. In May 2005, Korean manufacturer Hynix Semiconductor Inc. pleaded
guilty and was sentenced to pay a $185 million criminal fine. In November 2005,
Korean manufacturer Samsung Semiconductor Inc. and its parent company Samsung
Electronics Company Ltd. pleaded guilty and were sentenced to pay a $300 million
criminal fine.
Four Infineon executives, T. Rudd Corwin, Peter Schaefer, Gunter Hefner, and
Heinrich Florian, pleaded guilty to the DRAM price-fixing conspiracy in December
2004. The Infineon employees served jail terms ranging from four to six months
and each has paid a fine of $250,000. Three of the charged Infineon employees
are German citizens.
In December 2003, the Department charged Alfred P. Censullo, a Regional Sales
Manager for Micron Technology, Inc., with obstruction of justice. Censullo pleaded
guilty to the charge and admitted to having withheld and altered documents responsive
to a grand jury subpoena served on Micron in June 2002. Censullo was sentenced
to serve six months of home detention.
Today's charge is the result of an ongoing investigation being conducted by the
Antitrust Division's San Francisco Field Office and the Federal Bureau of Investigation
in San Francisco.
Anyone with information concerning price fixing in the DRAM industry should contact
the San Francisco Field Office of the Antitrust Division at (415) 436-6660 or
the San Francisco Division of the FBI at (415) 553-7400.
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