By RICK SMITH, Local Tech Wire editor

RESEARCH TRIANGLE PARK, N.C. – A Pennsylvania-based information technology partner of IBM (NYSE: IBM) is suing the technology giant for some $100 million, alleging a Ponzi scheme and racketeering.

accused IBM and several senior executives by name in a RICO (Racketeer Influenced and Corrupt Organizations) suit filed in federal court in Pennsylvania. The company says it invested $12 million in two IBM projects and alleges that the money was misused.

Two of the executives named in the suit are based at IBM’s RTP campus, which employs some 10,000 Big Blue workers.

IBM disputed the allegations against the company and its Systems and Technology Group in a strongly worded statement and said it would fight the suit “vigorously.”

“The RICO Defendants are responsible for orchestrating a wide-spread Ponzi scheme, in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) over a period of nearly five years involving the direct solicitation of $12 million in investment money from Devon for two information technology projects that Devon agreed to fund based on the RICO Defendants’ deceptive representations and revenue projections,” Devon said in the 58-page suit.

“As part of their scheme, the RICO Defendants intentionally misrepresented the market potential of the products they touted and continued to demand funding from Devon – an admittedly smaller company with less resources than IBM – even after the RICO Defendants secretly cancelled at least one of the subject development projects.”

Devon, which is based in King of Prussia, Pa., alleged that IBM used the $12 million “to inflate the earnings of STG, to fund other projects with other business partners, or for some purpose other than for the benefit of the projects involving Devon.”

The companies were working together on “blade” servers in a project dating back to 2005, according to Devon. Devon was to receive royalties in exchange for its investment of $4 million. The companies also worked together on another project starting in 2007 involving a “data center remote PC.” Devon said it invested $12 million in that project.

Searchdatacenter.com identifies blade servers this way: “A blade server is a server chassis housing multiple thin, modular electronic circuit boards, known as server blades. Each blade is a server in its own right, often dedicated to a single application. The blades are literally servers on a card, containing processors, memory, integrated network controllers, an optional fiber channel host bus adaptor (HBA) and other input/output (IO) ports.”

IBM plans to defend itself "vigorously"

IBM reacted strongly to Devon’s claims.

“Devon’s overheated claims are without merit,” Tim Breuer, director of external relations for IBM Systems & technology Group, told Local Tech Wire and WRAL.com.

“The complaint, which attempts to dress up its lack of supporting evidence into charges based on ‘information and beliefs,’ is filled with outright falsehoods, half-truths and exaggeration.”

According to Breuer, Devon has been threatening IBM for months.

“There simply are no facts to support the improper and false conclusions that Devon draws,” he said.

“IBM has refused to be intimidated by months of Devon’s threats into paying money that Devon is not properly due or owed.

“IBM will defend the suit vigorously,” he added.

In an e-mail Tuesday morning, Breuer expanded on IBM’s plans.

"IBM will defend the suit vigorously and promptly seek to dismiss the claims," Breuer said.

Four execs included in lawsuit

The suit cites four IBM executives by name. Two of them are based in the Triangle, IBM confirmed.

The four are:

• Thomas Bradicich, who is vice president of Systems Technology, at IBM. He lives in Apex.

• James Gargan, vice president of Demand Programs, who was listed as an Research Triangle Park-based IBM employee.

• Bernard Meyerson, vice president of Innovation, who lives in Yorktown Heights, N.Y.

• Rodney Adkins, IBM’s recently named head of the Systems and Technology Group, who lives in Greenwich, Ct. Adkins replaced Robert Moffatt, who left IBM after being implicated in an insider trading scandal.

The alleged roles played by the IBM executives is detailed at length in the suit,

Devon claims the “scheme” took place in 2008 and 2009 while Moffatt was running STG.

The Pennsylvania firm says it suffered “more than $12 million” in “direct investment” and $20 million in “related development expenses.”

Devon raised its investment money from Claret Capital Blade Limited. It sued Devon in 2009.

The company wants “treble damages” as well as interest, legal costs and other relief from the court.

According to the Philadelphia Inquirer, Devon has defaulted on the loans from Claret.

The entire lawsuit

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