That’s what led to the founder’s ousting, fines and a deferred prosecution agreement.
The US Department of Justice says:
One J.P. Morgan Chase executive received 25,000 FalconStor stock options and 40,000 restricted FalconStor shares, both fraudulently granted in the name of the executive’s brother. FalconStor also authorized a $240,000 bonus to be paid to one of its salespeople directing that $100,000 be deposited into a gambling account in Las Vegas, Nevada, for the benefit of the same J.P. Morgan Chase executive.
FalconStor falsely recorded this expenditure as “compensation to an advisor” or as “employment bonuses.” The bank execs worked in J P Morgan Chase’s Global Technology Infrastructure division, responsible for purchasing the bank’s IT storage products.
The bribes resulted in “three contracts for the licensing of FalconStor’s storage software and related maintenance services. The contracts totaled $12.2 million and represented approximately 7 per cent of FalconStor’s revenue during the period 2008-2009.”