Ausaf Umar Siddiqui complaint that alleges he was involved in a "secret kickback scheme to defraud Fry's Electronics of millions of dollars.''

Ausaf Umar Siddiqui, 42,who goes by "Omar" and has been Fry's vice president of merchandising and operations, appeared in federal court today, where prosecutors filed a complaint that alleges he was involved in a "secret kickback scheme to defraud Fry's Electronics of millions of dollars.'' Fry's executives didn't know about the illegal kickbacks, the federal complaint states. The alleged scheme occurred from 2005 until mid-October when a Fry's high-level employee walked into Siddiqui's office at 600 E. Brokaw Road and saw confidential spreadsheets, letters and extraordinarily high commission amounts on Siddiqui's desk. Siddiqui is expected to be formally charged in U.S. District Court on Jan. 15, on counts of money-laundering and wire fraud.According to the complaint, which was unsealed today, Siddiqui convinced Fry's that the company should eliminate sales representatives on his accounts, and instead, he'd act as a middleman between vendors and Fry's. He promised that he'd save Fry's a lot of money that way. But instead, the complaint alleges, he ended up charging exorbitant commissions — up to 31 percent, or ten times the normal amount — to the

vendors, which he funneled to his own "straw'' company PC International. Vendors were guaranteed steady business, so Siddiqui would have a steady cash flow to pay off casinos. Siddiqui spent $162 million in three years at just two of his favorites, the MGM Grand Casino and Las Vegas Sands Casino, according to his bank statements detailed in the complaint written by IRS Agent Andres Gonzalez.

The complaint says Siddiqui made "secret, backroom sales contracts to vendors, and in return, vendors gave him a kickback.''
"It was his responsibility to find Fry's the best price,'' said IRS spokeswoman Arlette Lee. "He was allegedly causing Fry's to overpay millions on merchandise.'' None of the vendors are household names.After seeing the documents on Siddiqui's desk, the Fry's employee called the Internal Revenue Service. Federal agents swarmed Fry's corporate headquarters Friday and arrested Siddiqui, taking him away in handcuffs. Stunned co-workers watched as he was taken away.
Siddiqui was a "longtime friend" of John Fry, said Fry's spokesman Manuel Valerio. The reaction of employees and management to Siddiqui's arrest, he said, "is one of surprise and shock — and that's an understatement."He made it clear, however, that "anything that may have taken place that may have been wrongful, Fry's as a company has not been financially harmed nor have any of our customers been harmed through the purchase of products," he said.For his part, a clean-shaven Siddiqui appeared worried and serious in court today. He stood mostly silent, wearing the standard bright orange shirt of the Santa Clara County jail, where he was held over the weekend. Through his criminal attorney, Sam Polverino, he declined comment.
U.S. District Court Judge Richard Seeborg altered Siddiqui's no-bail conditions today, allowing him to post $300,000 bond and be monitored with an electronic bracelet. The judge also ordered Siddiqui to stay away from Las Vegas, and was assured through Siddiqui's lawyers that he wouldn't be flying there anymore to on the Fry's corporate jet, or casino-paid jets, which he apparently has done before.
"I know you do a great deal of travel to Las Vegas,'' Seeborg said. "That's not allowed anymore. Nevada is off limits.''Before setting his lowered bail, Assistant U.S. Attorney Thomas Moore and defense attorneys discussed how much Siddiqui is worth; revealing that he owns a $1 million Palo Alto condominium and a Ferrari.
A woman who appeared in court on Siddiqui's behalf declined comment. During the court hearing, conversations in court also revealed that Siddiqui has no close family; he is "estranged" from his siblings and his parents are deceased. He has no wife or children, and according to his civil attorney, who appeared as a "friend of the court,'' Siddiqui has several casinos after him to pay off gambling debts.