CDW Engaged in Extortion, Civil Conspiracy, Racketeering, Says Complaint

Computer reseller CDW “demands compliance with several forms of extortion from its business partners,” alleged a fraud complaint Monday in U.S. District Court for Northern Illinois in Chicago (docket 1:23-cv-00868).

Plaintiff Omnireps of Libertyville, Illinois, alleges CDW and other defendants engaged in civil conspiracy, tortious interference with contractual relations, corporate espionage, misappropriation of trade secrets and trademark, trade libel and racketeering.

Omnireps is seeking compensatory damages of $250 million for each count, plus statutory and punitive damages, attorneys’ fees and costs. It also seeks an injunction restraining CDW and its affiliates from the use of the trademarked term Mindshare and from disparaging Omnireps and its owner, Todd Ferguson.

CDW employees executed a “scheme to fraud Ferguson” by conspiring with his business partner, Matt McCormick, CEO of AddOn Networks, also named as a defendant, to “mutiny and steal” Ferguson’s company, trademark and Mindshare software, which Ferguson developed over 20 years, alleged the complaint.

CDW employees John Coleman and Matt Troka used CDW’s power in the industry to “coerce” Ferguson’s business partners to cut ties with Ferguson and his company so it could profit from his trademark and software and “monopolize the computer resell industry,” alleged the complaint. As a result of the defendants’ defamation, Ferguson was “blacklisted” in the industry, it said.

Coleman and Troka “poached” Ferguson’s business partners, including Redwave, 3M, Liquid PC and AB Distributing, made “false statements” to interfere with Omnireps’ contractual relationships and "threatened to blackball” the companies from doing business with CDW if they continued working with “any company associated with Ferguson,” the complaint said. The four companies subsequently terminated their contractual relationships with Omnireps, it said.

Ferguson had an exclusive relationship with CDW for his Proline brand, which had $11 million in sales in 2010, he said. Coleman “manipulated” a CDW code to “take credit” for Proline in August 2011, making the brand an official vendor of CDW, it said. AddOn recently sold the Proline brand as part of a $715 million package to Amphenol that included Mindshare software, the complaint said. Ferguson claims Coleman invited a competitive brand of optics, Redwave, to CDW to compete with Proline due to his dislike for Ferguson.

Mindshare is “blatantly misused” by CDW account managers “in their pattern and practice of lies and deceit” to customers about the Proline brand, the complaint said. It cited CDW's alleged “kickback” practice: If a business partner doesn’t “pay to play” with marketing spend, there’s a “threat” that CDW will “elevate another competitor,” demote the company to a performance level with reduced benefits or reduce the vendor’s inventory levels, said the complaint. CDW “extorted hundreds of thousands of dollars” from Omnireps to maintain a place “in the levels,” it said.

Ferguson was also “pressured to ‘donate’” to The Center for Enriched Living, a favored charity of CDW founder Michael Krasny, he said. He was “forced to sponsor numerous egregiously expensive” golf events, plus commit to a three-year pledge to donate to CEL, it said. “Vendor success at CDW is tied to donations to CEL calculated on projected income from CDW,” the complaint said.

The plaintiff also claimed defendants “colluded to steal” the Proline trademark, which he owned, to “force Ferguson out of the industry as CDW was the only reseller of the Proline brand.” CDW didn't comment Tuesday.