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About POGO's Federal Contractor Misconduct Database (FCMD)
The government awards contracts to companies with histories of misconduct such as contract fraud and environmental, ethics, and labor violations. In the absence of a centralized federal database listing instances of misconduct, the Project On Government Oversight (POGO) is providing such data. We believe that it will lead to improved contracting decisions and public access to information about how the government spends hundreds of billions of taxpayer money each year on goods and services. Report an instance of misconduct »
Ranking: 43
Dell, Inc.
Dell is a multinational information technology company that sells computers and related products and services for consumer, business and government markets. Dell manufactures personal computers, servers, data storage devices, network switches, software and peripherals.
Federal Contract $: $1753.4m
Total Number of Instances: 17
Total Misconduct dollar amount: $ 187.4m
- Annual Report
- Ethics Page
- Hoovers Profile
- Lobbying Information
- Political Activity
- Press Page
- SEC 10K
- Contracting Information
- Website
Instances of Misconduct
1. Misleading Advertisements
“Dell Computer Corp. and Micron Electronics, Inc. have agreed to settle Federal Trade Commission charges that their computer lease advertisements violated federal laws. According to the agency, both Dell and Micron disseminated misleading ads for consumer leases by placing material cost information in inconspicuous or unreadable fine print or omitting such information altogether. The proposed settlements with Dell and Micron would require the companies to provide consumers with clear, readable, and understandable information in their lease advertising… The proposed consent agreements that the FTC negotiated with Dell and Micron would settle the charges and prevent the companies from engaging in similar acts and practices in the future. Under the proposed order, Dell would be prohibited from failing to disclose clearly and conspicuously (in a manner that an ordinary consumer could read [or hear] and comprehend) that any advertised terms pertain to a lease offer. Both Dell and Micron would be prohibited from making any reference to any charge that is part of the total amount due at leasing signing or that no such amount is due, unless the ad also states with equal prominence the total amount due at lease inception. The companies also would be prohibited from running ads that highlight low monthly payments, unless the ads also state, clearly and conspicuously that (1) the advertised transaction is a lease; (2) the total amount due at lease signing; (3) whether or not a security deposit is required; (4) the number, amount, and timing of scheduled payments; and (5) that, for open-end leases, an extra charge may be imposed at the end of the lease term.”... more»
2. Violation of FTC Mail Order Policy
“Dell Computer Corporation, the country's largest direct seller of personal computers, has agreed to settle Federal Trade Commission charges that it violated the FTC's Mail Order Rule when it advertised and sold a "Dell Dimension" computer system bundled with a package of third-party software that was not ready to be shipped. The company, which is based in Round Rock, Texas, has agreed to pay an $800,000 civil penalty -- the largest penalty ever paid by a single defendant for a violation of the Rule… The FTC's complaint detailing the allegations states that Dell violated the Mail Order Rule by: soliciting orders for merchandise, either by mail or phone, when it had no reasonable basis to expect to be able to ship some or all of the merchandise within the time stated in the solicitation, or if no time was stated, within 30 days of receiving a properly completed order; failing to offer the buyer the option of either consenting to a delay in shipping or to cancel the order and receive a prompt refund; and failing to offer the buyer a prepaid means to exercise those options.”... more»
3. Chapman v. Dell (Gender and Age Discrimination)
Four former Dell senior managers (Mildred Chapman, Angela Hopkins, Julia Mahaffey and Bethany Riches) filed a federal discrimination lawsuit against the company. They accuse Dell of engaging in gender discrimination with respect to pay and promotion and disproportionately laying off workers over the age of 40. The lawsuit seeks $500 million in damages. The parties settled in July 2009.... more»
4. Violations of Export Administration Regulations
On June 17, 1997, the Commerce Department's Bureau of Export Administration imposed a $50,000 civil penalty on Dell Computer Corporation for alleged violations of the Export Administration Regulations. “The Department alleged that Dell made three shipments of U.S. origin computer equipment from the United States to Iran without the required U.S. export licenses between March, 1992 and June, 1992. In connection with the exports, the Department also alleged that the company made false and misleading statements of material fact on export control documents.”... more»
5. Accounting Irregularities (Derivative Litigation)
In August 2007, Dell announced it would restate four years of financial results (fiscal years 2003-2006 and the first fiscal quarter of 2007) after an internal audit found that senior executives sought accounting adjustments “motivated by the objective of attaining financial targets.” According to Dell, “a number of these adjustments were improper,” and “[t]he investigation found that sometimes business unit personnel did not provide complete information to corporate headquarters and, in a number of instances, purposefully incorrect or incomplete information about these activities was provided to internal or external auditors.” In September 2009, Dell settled a stockholders’ derivative lawsuit by agreeing to pay $1.75 million in legal costs and implement various corporate governance changes. The Securities and Exchange Commission is also investigating the matter (see related Dell pending instance, “Accounting Irregularities.”)... more»
6. Accounting Irregularities (Securities Litigation)
A consolidated securities class action lawsuit claimed Dell violated the Securities Exchange Act of 1934 by engaging in accounting fraud and making false and misleading disclosures to inflate its revenues by approximately $463 million from fiscal years 2003 to 2007. In October 2008, the court dismissed the lawsuit. During the appeal, both sides negotiated a settlement under which Dell agreed to pay $40 million.... more»
7. New Orleans Surveillance Camera Unfair Competition
A New Orleans state court jury found Dell liable for $12.8 million in damages on unfair competition and conspiracy claims stemming from a lawsuit over contracts to build a crime camera surveillance system for New Orleans. Southern Electronics Supply Inc. and Active Solutions LLC worked on the city's camera program and claimed the system they had developed had been misappropriated by the former New Orleans technology director and others. They also claimed there was a conspiracy with Dell to sell the system. Out of the defendants, the jury determined Dell was 35 percent at fault in the case.... more»
8. Carideo v. Dell (Defective Laptop Computers)
Washington residents who bought Dell Inspiron laptop computers filed a class- action lawsuit alleging that Dell violated state consumer protection law by designing, manufacturing, and selling defective laptop computers beginning in or around July 2003. The alleged defects affect the computers’ cooling systems, power supplies, batteries and motherboards. The parties reached a preliminary settlement in June 2010.... more»
9. Accounting Irregularities
In March 2006, it was reported that Dell's board uncovered evidence of misconduct, including accounting errors and “deficiencies in the financial control environment,” while conducting an ongoing investigation of the company's accounting. The board’s investigation was prompted by a Securities and Exchange Commission inquiry that began in August 2005. In August 2007, Dell announced it would restate four years of financial results (fiscal years 2003-2006 and the first fiscal quarter of 2007) after a separate internal audit found that senior executives sought accounting adjustments “motivated by the objective of attaining financial targets.” According to Dell, “a number of these adjustments were improper,” and “[t]he investigation found that sometimes business unit personnel did not provide complete information to corporate headquarters and, in a number of instances, purposefully incorrect or incomplete information about these activities was provided to internal or external auditors.” In July 2010, Dell agreed to pay $100 million to resolve the SEC investigation. The settlement also resolved allegations that Dell misrepresented aspects of its commercial relationship with Intel Corp. In addition, Dell CEO Michael Dell and former CEO Kevin Rollins each agreed to pay a $4 million civil penalty; former CFO James Schneider agreed to pay a $3 million penalty plus over $121,000 in disgorgement and interest; and former regional vice president of finance Nicholas Dunning agreed to pay a $50,000 penalty. The company and the individual executives settled without admitting or denying SEC’s allegations.... more»
10. Fraud, False Advertising, Deceptive Business Practices
New York Attorney General Andrew Cuomo filed a state lawsuit accusing Dell and Dell Financial Services LP of engaging in fraud, false advertising and deceptive business practices. The lawsuit accuses Dell of luring customers with "bait and switch" advertising with regard to zero percent financing on computer purchases and failing to provide customers with adequate customer service. In May 2008, New York State Supreme Court Judge Joseph Teresi ruled that Dell and Dell Financial Services LP engaged in fraud, false advertising, deceptive business practices, and abusive debt collection practices. In September 2009, Dell and Dell Financial Services agreed to pay $4 million in restitution, penalties and costs. Dell also agreed to make sweeping changes to its advertising, sales and financing practices.... more»
11. International Contract Dispute
According to Dominican media reports, a Santo Domingo court sentenced the local Dell, Inc. subsidiary to pay RD$116.5 million (approximately US$3.6 million) in indemnification to Dominican information technology firm Xolutiva, S.A. The Dominican company sued Dell for RD$300 million for violating its rights as the Dell’s local representative. The Civil and Commercial Chamber ruled against Dell for violating Law 173 on International Representations, holding that Xolutiva represented Dell in the country since 1997, but Dell unilaterally decided not to renew the contract without due compensation. The court ordered Dell to close its operations in the Dominican Republic. In February 2008, a presiding judge in a Santo Domingo Judicial Department court ruled to suspend the sentence pending an appeal filed by Dell.... more»
12. Insider Trading
The Securities and Exchange Commission filed insider trading charges against three Dell, Inc. accountants – Salvador Chavarria, John Nieto and Glenn Leftwich – accusing them of making about $250,000 in illegal profits in 2005 by trading on inside information about Dell's earnings. Chavarria and Nieto settled with the SEC: Chavarria will pay $323,153 in disgorgement, prejudgment interest and civil penalties, and Nieto will pay $35,413. The case against Leftwich is pending in federal court in western Texas.... more»
13. Alcatel-Lucent Patent Infringement
A federal jury in San Diego found that Microsoft Corp. and Dell Inc. infringed patents owned by Alcatel-Lucent SA for touch screen and computer stylus technologies. Microsoft was ordered to pay over $367 million in damages and Dell was ordered to pay $51,000.... more»
14. Norman et al. v. Dell (Wage and Hour Class Action)
David Norman and Walter Romas, Dell customer service employees in Roseburg, Oregon, filed a class-action lawsuit against Dell claiming the company violated federal and state wage and hour laws by failing to record accurately all time worked and failing to pay earned wages and overtime. The lawsuit covers all current and former Dell call center employees in Oregon, Texas, Idaho, Tennessee and Oklahoma from February 8, 2004, to the present, a class that could include as many as 5,000 people. In November 2009, the case was settled out of court. Terms of the agreement were not made public.... more»
15. Hubley v. Dell (Gender Discrimination)
Jill Hubley, a former human resources manager at Dell Inc., filed a federal discrimination class action lawsuit against the company. Hubley, who worked until September 2007 as a senior strategist in the Dell Americas human resources group, accused Dell of engaging in a pattern and practice of gender discrimination with respect to pay, promotion and other aspects of employment. In July 2009, Dell agreed to pay $9.1 million to settle the lawsuit. Under the settlement, Dell admits no wrongdoing and will provide $5.6 million in legal costs and back pay for female employees and former female employees who were in certain job grade level positions between February 2007 and the end of 2008. Dell will also pay another $3.5 million to establish a pay-equity fund for current female employees in certain grade level positions.... more»
16. 'Dual Display' Patent Infringement
Mass Engineered Design, Inc. filed a complaint against Dell and three other companies alleging infringement of its “Dual Display” computer monitor system patent. In November 2008 the jury returned a verdict in favor of Mass Engineered Design. The jury unanimously found infringement and awarded a total of $3 million in damages, $500,000 of which was attributed to Dell. The jury also ruled in favor of Dell on its patent infringement counter-claim against Mass Engineered Design and awarded $120,000 in damages.... more»
17. Misleading Financing and Service Offers
Dell and its Dell Financial Services subsidiary agreed to a legal settlement with 34 states that claimed the company made misleading financing and service offers to computer buyers. The states claimed consumers never received promised rebates, faced unacceptable obstacles obtaining warranty service, and were hit with high interest rates and fees despite being promised zero-percent financing.... more»
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