A Minnesota man with a need to fuel a gambling habit has pleaded guilty to scheming to cheat Cisco (News - Alert) Systems, Inc., out of about $388,000. According to the U.S. Attorney's office, 46-year-old Brooklyn Park resident Phillip Webb waived his right to indictment and accepted a plea agreement with prosecutors yesterday to be charged with one count of mail fraud.

Webb was manager of network services for Woodbury, Minn.-based Postal Credit Union. Under his plea agreement, Webb admitted that from June 2007 to October 2009 he regularly filed false complaints with Cisco that parts in the credit union's computer systems were faulty. In accordance with the contract the credit union had with Cisco, if a computer part was defective, Cisco was liable to send a new part via Federal Express, and the broken component was returned. Webb discovered that if he falsely reported a malfunctioning part and received a replacement for it in the mail, he could sell the replacement on eBay (News - Alert) and pocket the proceeds.

Webb was able to carry on the deception by sending back scrounged second-hand parts back to Cisco, which had no regular, rigorous system in place to check the returned parts. An examination of the components returned by Webb after the fraud was discovered found that Webb had returned a total of 55 parts, but 42 of those claims were bogus: in only 13 cases were the parts genuinely defective.

All total, Webb's fraud cost Cisco an estimated $388,000 over a two-year period.

Webb's defense attorney blamed his gambling habit for the crime. “He gambled everything away, including every asset the family owned," said Michael Colich said of his client after the hearing. “Every penny went to gambling.”

Webb has yet to be sentenced, though if the judge follows federal guidelines, he could spend to 27 to 33 months in prison.