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Packard Bell settles suit
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October 7, 1998: 6:09 p.m. ET
Computer maker pays U.S. government $3.5 million to settle equipment lawsuit
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LOS ANGELES (CNNfn) - U.S. Attorney Nora M. Manella announced Wednesday that Packard Bell has agreed to pay the U.S. government $3.5 million to resolve allegations that it included used equipment in computers sold as new.
Manella made the announcement after learning that a federal judge had unsealed the lawsuit on Sept. 30.
The complaint, filed in 1995 by a former employee, alleged that Packard Bell - a division of Packard Bell NEC -- had assembled and then sold computers that contained previously used parts to the U.S. military.
Packard Bell also sold these computers to various resellers who, in turn, sold the computers to different agencies of the U.S. government.
The main point in the settlement was that Packard Bell's contract with the U.S. Naval Exchange Commission required that all the computers sold be new.
Packard Bell allegedly refurbished returned computer parts and place them into its general inventory to be used in the assembly of its computers.
The practice ended in 1995 when Packard Bell settled several class action lawsuits filed by consumers. Packard Bell then agreed to certain recycling practices authorized by law.
Compaq and 22 state attorneys general also initiated investigations into Packard Bell's recycling practices.
According to Manella, the $3.5 million compensates the United States for more than double the damages the government estimates it incurred for the sales of Packard Bell's computers to other agencies.
This matter was investigated by the Naval Criminal Investigative Service and the Air Force Office of Special Investigations.
Based in Sacramento, California, privately held Packard Bell NEC is the third-largest supplier of personal computers in the United States and the fifth-largest supplier worldwide. 
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