MSP Charged With Extortion After Cutting IT Services for Non-Payment

I hope he sues them into next year.

Edited: Seems more likely the guy is in the wrong so I take it back.
 
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The Camber of Commence is not a government agency, it's a lobbying group. So you can't beat that dead horse.

If he has a valid contract for his services and in it, there was a cause for early termination and nonpayment. Then and only then, maybe.

I am willing to bet that the chamber paid for the Office365 subscription which would mean he did not own them and barring the chamber from accessing their property is not legal.

To me, this is no different than having installed structured cabling, having a maintenance contract and then going in and pulling it out when they terminate the maintenance part.

He really has no right to cut them off since he is only the managed service provider (MSP) and they only owe him what is in his contract regarding the early termination.

Remember the employee that wanted $240K for the password to the company's Google accounts after he was let go. He too was brought up on charges.
 
i saw this - See the way i see it if you dont pay for something it gets suspended, cancelled, reposessed. Your electricity company will cut your power if you dont pay your bills, You car loan, if you dont pay the loan repayments your car gets reposessed. If you dont pay your webhosting bill your domain becomes suspended, if you dont renew your domain it expires. ect ect
So for me if you dont pay for your managed serives, email hosting ect it will get suspended.

However i do see when your managing other people's businesses stopping their business from running is probably not the best way to go about things. If this scenario came across my business (havent had it yet) i would be arranging a meeting to come out and discuss the issue with the client and advise they did sign a contract and have some type of clause in this contract that would make them pay out the contact (usually 30 days notice to leave). Then go to debt collectors to chase money if not paid.

However i am yet to have this situation happen yet. I always sit down and discuss terms and conditions of contract and clients is aware of terms. I also ensure regular meetings with them to discuss IT issues and ensure it doesnt get to situations like this.
 
Mercenary Roadie said:
He really has no right to cut them off since he is only the managed service provider (MSP) and they only owe him what is in his contract regarding the early termination.
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That depends on who is providing the service. I resell Office 365 so they are dealing with ME, not Microsoft. I bill monthly. If you don't pay the bill I can cut you off, just like TXU can turn off my lights if I don't pay my electric bill.

Now if they pay someone else and he is just abusing his admin access then yes you are correct he needs to be in jail.
 
Would love to know more facts. While I agree that an IT/MSP company has the right to "stop" services after a period of non-payment, a Chamber is a 501C, meaning non-profit. This client should have been on one of Microsofts Office 365 for non-profits plans. The client has to sign up with Microsoft directly for this, it is not a service that can be resold, even by CSP. If that is the case, this guy in the story had absolutely no right to go in and do whatever he did to kill the service (likely just change passwords).

But if he ripped off the chamber and was reselling them standard O365 packages (not non-profit)..like through a CSP program, sure, he has the right to halt that service after a period of non-payment. As it ends up costing him money each month to pay the wholesale rates of the O365 licenses. Sucks for him though, the publicity through the chamber is all negative, even if in this case he was "in the right" to do this. And the chamber will bad-mouth him to lots of other businesses.

The story also mentions a server that was taken offline...I wonder what they meant by that. Did this guy go pull the file shares and change passwords, rendering the server useless? He had no right to do that. If a client isn't paying for services like offsite backup, antivirus, stuff like that..sure, stop/remove that. But hand over the existing backup files.
 
This hits pretty close to home as we have clients in the subject area, which is in north Metro Atlanta. I suppose at this point it is all up to a judge to decide who is at fault. I have always made a point to handle client situations like this with a gentle hand for this reason alone. One thing none of us need is to become the latest hot news topic but in a negative way. Regardless if he is in the right or not, its a guarantee he will bleed some clients over this. It will be interesting to follow and see the outcome of the case. Probably something we should all pay attention to and learn from.
 
Yeah, I think a little more detail is needed to properly understand things. Another thought is what about the new IT company? Did they not have the brains to ask the customer, in advance, how things were setup? Look over invoices and contracts? Credentials? I know every time I'm in a situation where I am replacing someone else I make sure I have a complete understanding of the environment so I can create a bullet proof action plan.
 
Had a business approach me in a panic. Their domain name, email servers, etc were being 'held ransom' - Big red flag. Told me they weren't happy with their previous provider, and wanted to move away from the company. They asked me to help them get back up and running, but really needed that domain name back at minimum.

Because of the 'held ransom' comment, I called the other company. I asked if they would facilitate a migration. He explained to me that the other company expected to be offered a discount AND a refund about 6 months prior to renewal of the domain. Their logic? "GoDaddy offers hosting much cheaper." They refused to pay their bills until the price 'matched' GoDaddy's AND refunded all the way back to their start years prior. Apparently the guy left the service up, billing monthly. At the 5 month point, sent a letter through lawyer saying if they don't pay all their bills within the next 4 weeks, that the domain would lapse, and eventually go back to available. He also stated that they could transfer the domain within the next 4 weeks away from him and he wouldn't hold it up, but still would expect to be paid and would pursue further actions.

So the company, stuck to their guns, and said they weren't going to pay until he fixed the pricing. He said fine, whatever, and started filing small claims. He sent final notice that the domain was about to expire. As soon as the domain went down, he started getting nasty phonecalls saying they would sue him, blah blah. He indicated the letter he had sent, and they said that they weren't going to pay him another dime ever, but he had to fix the issue. He ignored them after a point, going back to notarized and certified letters. He sent a notice that the domain was suspended; then that it was in redemption and the increased cost in getting it out of redemption; and then it was about to leave redemption into open market. He got notice that they were counter-suing for losses and outside small claims. He lawyered up.

This is where I came in. I talked to the business, saying there was nothing I could do. The domain was now owned by someone else, and if they wanted the domain back, they would have to go through legal channels to get it back, but because they had not trademarked their name, I wasn't sure if they could. I informed them that they should contact a lawyer regarding the domain. They started ranting at me, how I'm inept. Pretty much hung up on them.

They ACTUALLY sent a letter to me THREATENING to sue if I didn't help them... I had my lawyer send back a letter...

I never heard back from them, but did hear rumblings that they were calling me inept to others. I shrugged it off since it was heresay. I never did follow up on the lawsuits however.

People are dicks. Just sometimes, us as providers, may not react accordingly. If the guy just shut their O365 off when it wasn't his to begin with, he deserves to rot. If he was footing the bill and he shut it off, that Chamber needs to be hammered for False Statements and sued into the ground. Unfortunately, as that the chamber and how it is, likely going to be an uphill battle for that guy even if he was in the right.
 
I re-read that news again. Two HUGE things jump out at me:

“All of the files on our server were secured and there were no breaches of personal information, credit card numbers, etc.,” chamber president and CEO James McCoy is quoted as telling the newspaper. “In fact, the server was taken offline immediately until we were certain it could be secured.”
Click to expand...

Two things here:
  • Is this Chamber not in PCL compliance? Why would they even mention credit card numbers, if they weren't storing them in an easy-to-access format?
  • I find it difficult to believe that the guy, if he was being malicious, wouldn't have locked them out of their server too... But this is just a random though
Then:

“We made improvements to ensure that if any changes to ownership of accounts with Microsoft Office 365 or any of our IT accounts or our domain are made in the future, that we are notified,” McCoy said. “And we will conduct regular audits of those accounts.”
Click to expand...

This statement... He either took over the accounts AND domain, or they didn't realize that he had that kind of control over their accounts and domain, and regret it now. This does lean me to thinking that he was likely paying for O365, and then they realized they could buy it directly. But the domain bit... If they were on the ownership in the first place, they would have received notification of and permission to transfer domain ownership (Unless, of course, he circumvented it and went into the email of the domain holder and did that... But if that's the case, how can they ensure that he didn't breech other private information?)

You guys are right; We do need more information. But there are specific things said by McCoy here which paints suspicion here.
 
Another vote here for more detail - I would love to know the fine details and see the contract. I had an issue last year where a client refused to pay for a service but were still using it and it still had 6 months to run. The best approach I felt was to take them to small claims court for payment in full and to continue providing the service until the end of the contract period.

The Judge invited the client to pay in full which they did that day and the client then had 6 months within which to move their service elsewhere. What this also means is that when your client forgets to move their service, and consequently everything stops working in six months time, that you are completely in the clear because there is a documented court case in which they are clearly aware that they have 6 months left to run.

Of course this is a timely reminder to make sure that your quotes and contracts have very clear terms and cover the eventuality of early termination and what constitutes a breach of contract.

It would also in my opinion be most professional to send a polite notice of termination two weeks before turning it off.
 
Would there be a reason why a non profit organization would not sign up directly with Microsoft for 365?

Of course, now that I think of it, many of these organizations are not exactly tech savvy, so they become scared when dealing with "tech stuff" and prefer someone else do it. There are a range of non profit groups, and it depends how well structured a group is and what kind of culture they have.

I recall doing odd jobs for one back in the day when I was working at a computer shop mainly because they literally 2 blocks from my apartment. I had setup a small NAS for them and even configured the machines to sync when logged in (Microsoft had this Sync Toy back then). I can't recall how long after I was called in to find out why it wasn't working anymore. I could tell by the attitude the one guy was giving me (you know that "we are non profit, you set it up, so you fix it cause it has to be your fault") that he had no intention of paying for any work I did. So anyways, I verified the unit was online, but not sharing anything over the LAN. So I told him I would have to take the NAS back to the shop and check it out.

Now back then there were some cheap consumer NAS boxes that had dual interfaces, so you could hook it up via USB or LAN. This was one of those units. I removed the HDD, put it in my tech station and it fired up and showed me a volume, newly formatted in NTFS. Well, these cheap NAS boxes didn't support NTFS, only FAT32. So I sent an e-mail with snapshots of the creation stamp that was on the new volume and politely informed him that someone had formatted the disk and that if we were to try and recovery data or to re-setup the backup system, there would be appropriate charges, and what would he like to do. He advised me to return the unit as is. I suspect he knew what happened and tried to con us into re-doing the setup.

To this day I kinda get squeamish anytime I have to work on a PC that is for a non profit organization because you never know what to expect. I know funds are short, but that just means you have to be smart with your money and what you buy with it.
 
NviGate Systems said:
Would there be a reason why a non profit organization would not sign up directly with Microsoft for 365?

To this day I kinda get squeamish anytime I have to work on a PC that is for a non profit organization because you never know what to expect. I know funds are short, but that just means you have to be smart with your money and what you buy with it.
Click to expand...

It is supposed to be the applicant that applies for the non-profit status. Sometimes an IT consultant will "hold the clients hand"....during the sign up process. But the non-profit plans are (by the terms of service) supposed to be direct to the client, billing the client direct. It's not a program that is eligible for the CSP reseller or even advisor programs for IT guys to turn around and resell.

While may non-profits are tight on funds, not all are, quite a few can have a very hefty budget. I have a few non-profit clients that get the best of the best, high end servers, high end network equipment, top notch fully loaded workstations, Datto backup, good MSP plans, etc etc.
 
Non-profit does not mean not-for-profit. Many of these organizations (Chambers ESPECIALLY) end up raking in large amounts of cash. Many people do get rather wealthy from non-profits. I'm not sure down there, but up here, a Chamber can still have a net profit at the end of the year, so long as there is a clear purpose to it (Future expansion, product, or banked for bad times) and someone can't directly pocket it (Dividends, etc).

But these groups do tend to get this 'non-profit' chips on their shoulders.
 
Just as an update, "The March 10th hearing did not happen as there has been no indictment. All I can say for now is my attorney is still working the case still. We are waiting for a new hearing date, but that will be contingent upon a Grand Jury indictment."
 
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