IBM faces lawsuit from partner Devon IT

A Pennsylvania company has sued IBM and four executives, alleging fraud, racketeering and conspiracy over a failed partnership to develop server computers and other products.

Devon IT's lawsuit alleges that IBM officials, including two based at the technology giant's Research Triangle Park campus, misused $12 million that Devon invested in several IBM projects. Devon borrowed that money, defaulted on its loans and has had to lay off 60 employees.

Devon lost its investment in IBM as well as another $20 million on expenses related to the projects. Devon is seeking triple damages, under the federal Racketeer Influenced and Corrupt Organizations Act, totaling more than $100 million.

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

In a prepared statement, IBM wrote that Devon's "overheated claims are without merit" and "filled with outright falsehoods, half-truths and exaggeration."

For months, Devon has been threatening IBM "into paying money that Devon is not properly due or owed."

Devon alleges IBM and its employees "used a substantial portion of Devon's investment money to inflate the earnings" of IBM's Systems and Technology Group, and kept taking Devon's money even after stopping the projects.

The suit names four IBM executives who were part of the alleged scheme, including Thomas Bradicich of Apex and James Gargan of RTP. Bradicich also joined Devon's advisory board, the company wrote.

Both executives still work at IBM's RTP campus, said spokesman Tim Breuer. The company is one of the Triangle's largest private employers, with more than 10,000 workers.

IBM and Devon began collaborating in 2005. IBM pulled the plug on the projects in January 2008 but didn't tell Devon officials until April 2008, Devon claims in the suit.