IBM has been accused of racketeering by a channel partner in a lawsuit filed this week. 

Pennsylvania-based thin client firm Devon IT claims that it supplied IBM’s System and Technology Group with around $12 million in co-development funds over five years for use in two virtualisation projects. Devon alleges in the lawsuit that IBM did not use the funds for these purposes, but instead simply added it to its revenue.

If true, this would place the company in violation of the US’s Racketeer Influenced and Corrupt Organisations Act.

“[IBM] were responsible for orchestrating a widespread Ponzi scheme… over a period of nearly five years involving the direct solicitation of $12 million in investment money from Devon,” the complaint reads.

The suit claims that “the practices … are believed to be part of a pattern of deceptive practice” in which IBM “enter[s] into development agreements with serial investment partners with no real intention of completing the development of the projects”.

In response to the allegations, IBM filed the following statement: "Devon’s overheated claims are without merit. The complaint, which attempts to dress up its lack of supporting evidence into charges based on ‘information and belief,’ is filled with outright falsehoods, half-truths, and exaggeration. There simply are no facts to support the improper and false conclusions that Devon draws.”

IBM added that it would “defend the suit vigorously and promptly seek to dismiss the claims”.