GE Capital Leasing Corp., a financial firm based in Japan, is suing Needham software company Parametric Technology Corp. for $47 million in US District Court, alleging that PTC and others falsely represented purchases and deliveries of software.
The saga allegedly began in 2003, when GE Capital Leasing agreed to finance electronics company Toshiba's purchase of software made by a company called Japan Novel, according to the complaint. An employee at Toshiba returned the software and used the money to pay for an earlier software purchase from PTC that had been made without his company's approval, the complaint said. Fraudulent transactions allegedly occurred 10 other times, ending in April 2006.
"For more than three years PTC participated in a scheme to defraud GELC by faking numerous large sales and deliveries of its CAD software to Toshiba while knowing and concealing from GELC that Toshiba had not authorized any of these large purchases," the lawsuit stated.
GE Capital Leasing advanced over $62 million to fund software purchases over the three-year span, and approximately $21 million was paid back, according to the complaint. The suit says the damages being sought, $47 million, should be tripled to $141 million and include legal fees.
"We tried very hard to resolve this matter peacefully; we've been trying to do that for a long time. It didn't work, so we're forced to go to court -- which, by the way, is not where GE likes to be," said John Markham, lawyer for GE Capital Leasing.
The complaint alleges that PTC committed fraud, made negligent misrepresentations, and violated the Racketeer Influenced and Corrupt Organizations Act.
A PTC spokeswoman said the company, which received the complaint yesterday and was reviewing it, had no comment.
"PTC pretended to sell a lot of valuable equipment to Toshiba and induced GE to send the money for it," Markham said. "It turns out many of these supposed sales -- according to the complaint -- were not actually made, but GE paid the money."
Carolyn Y. Johnson can be reached at email@example.com.