SuccessFactors Alleges Covert Scheme By Competitor

SuccessFactors is alleging that rival human-resources-software vendor Halogen Software concocted a fraudulent and covert scheme in order to obtain competitive information from it, according to a lawsuit filed in U.S. District Court for the Northern District of California.

By Chris Kanaracus
Fri, February 11, 2011

IDG News Service — SuccessFactors is alleging that rival human-resources-software vendor Halogen Software concocted a fraudulent and covert scheme in order to obtain competitive information from it, according to a lawsuit filed in U.S. District Court for the Northern District of California.

Halogen, based in Ottawa, Canada, set up "a bogus 'mid-sized' company -- The Magnus Group -- replete with purportedly more than 500 employees and a sham website specially designed by an Ottawa design firm that has also worked with Halogen," according to SuccessFactors' complaint, which was filed in December.

Using the fake company as cover, one or more Halogen workers "falsely represented they were a legitimate sales prospect wishing to purchase software services from SuccessFactors," it adds.

An "intensive sales effort" by SuccessFactors, including a number of product demonstrations, ensued over several weeks in mid-2010, according to the complaint.

But on Sept. 16, the Magnus Group representatives abruptly said they were no longer interested, it states.

The Magnus-Group.com website listed an address in Valparaiso, Indiana, but SuccessFactors "believes that no company named Magnus Group has ever been at this property," which apparently once served as headquarters for a convenience store chain, according to the complaint.

SuccessFactors was contacted in July 2010 by a woman claiming to be Anna Rodriguez, the human resources director for Magnus Group, it states. The Magnus Group website described it as a consulting firm offering business process management and other services, according to SuccessFactors. The site was not accessible on Friday.

Communications continued between Rodriguez and a SuccessFactors sales staffer, ultimately leading to a roughly three-hour-long Web meeting between the salesperson, Rodriguez and another purported Magnus Group employee named "Judy," the complaint states.

More meetings were held at Rodriguez's request, during which she obtained "non-public information about pricing" as well as details on SuccessFactors' implementation processes and track records, it adds.

In September, Rodriguez was given pricing information about SuccessFactors' Cubetree software, which it had just acquired. The data was accompanied by a warning stating that the information was confidential and proprietary and not to be shared with third parties without permission, according to the complaint.

Days later, Rodriguez e-mailed the sales manager and told him Magnus Group was no longer interested in purchasing the software, "based on her understanding that SuccessFactors does not offer an integrated payroll and benefits system, which in fact SuccessFactors does offer," the complaint states.

Subsequent attempts to reach Rodriguez and the Magnus Group were unsuccessful, according to the complaint.

SuccessFactors then discovered that the Magnus Group address and contact information listed on its site were invalid, it adds. The salesperson contacted the site's design firm, Creative Equilibrium, which told him the work had been done for an Ottawa company, it states.

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