Guilty Pleas in Multi-Million Dollar Software Piracy Scheme
In a significant legal development, a computer system administrator and his spouse have pleaded guilty to their involvement in an expansive international scheme aimed at generating millions of dollars through the sale of pirated business telephone system software licenses.
This illicit operation, which spanned international borders, ultimately resulted in the sale of software licenses with a retail value exceeding $88 million.
Conspiracy and Key Players
The individuals in question, Raymond Bradley Pearce, known as Brad Pearce, aged 48, and Dusti O. Pearce, aged 45, residents of Tuttle, Oklahoma, played pivotal roles in this criminal endeavor.
They conspired with Jason M. Hines, also known as Joe Brown, Chad Johnson, and Justin Albaum, aged 43, from Caldwell, New Jersey.
Together, they orchestrated a wire fraud scheme focused on generating and selling unauthorized Avaya Direct International (ADI) software licenses.
Unveiling the ADI Software Licenses
The ADI software licenses were instrumental in unlocking additional functionalities of the IP Office, a popular telephone system used by numerous midsize and small businesses across the globe.
To access these functionalities, customers were required to purchase software licenses, which were typically obtained through authorized Avaya distributors or resellers.
These licenses were protected by software license keys, ensuring that only paying customers could use the software.
Each license had to be linked to the system’s Avaya Secure Digital (SD) card, a unique flash memory card with a serial number that end users had to possess to utilize the licenses.
Abuse of System Administrator Privileges
Brad Pearce, who had an extensive history as a customer service employee at Avaya, exploited his system administrator privileges to generate tens of thousands of ADI software license keys.
He subsequently sold these keys to Hines and other customers, who then distributed them to resellers and end users worldwide.
These licenses ranged in retail value from under $100 to several thousand dollars.
Involvement of Dusti Pearce and Jason Hines
Dusti Pearce played a significant role in managing the accounting aspects of this illegal operation. Jason Hines, on the other hand, emerged as the primary customer for the Pearces, purchasing more than half of the stolen licenses.
Hines operated Direct Business Services International (DBSI), an Avaya reseller that had lost its authorized status.
Additional Misuse of Privileges
Brad Pearce did not stop at generating unauthorized license keys; he also misused his system administrator privileges to compromise the accounts of former Avaya employees.
This manipulation extended to altering account information to conceal the creation of ADI license keys, effectively hiding the fraudulent scheme from Avaya for an extended period.
Implications for Avaya and the Market
The illicit activities of the Pearces and Hines not only deprived Avaya of revenues from its intellectual property but also disrupted the global market for Avaya ADI software licenses.
The stolen licenses were sold at prices significantly below wholesale, influencing the competitive landscape. Hines even suggested collaborating with Brad Pearce to monopolize the market.
Substantial Gains and Money Laundering
The Pearces and Hines reaped substantial profits from this illegal venture, concealing the source of their earnings through various means.
They funneled the illicit gains through a PayPal account created under a false identity, transferring funds to multiple bank accounts and investing in assets like gold bullion and valuable items.
Guilty Pleas and Penalties
Both Brad Pearce and Dusti Pearce have pleaded guilty to conspiracy to commit wire fraud. They face a maximum prison sentence of 20 years.
Under their plea agreement, they are required to forfeit at least $4 million, in addition to assets like cash, gold, silver, collectible coins, cryptocurrency, and a vehicle.
Restitution to victims is also mandated, with the ultimate sentence to be determined by a federal district court judge.
Investigation and Prosecution
The FBI is actively investigating this case, with the prosecution led by Senior Counsel Matthew A. Lamberti of the Criminal Division’s Computer Crime and Intellectual Property Section, along with Assistant U.S.
Attorneys Julia E. Barry and William Farrior for the Western District of Oklahoma. Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division and U.S. Attorney Robert J. Troester for the Western District of Oklahoma announced the guilty pleas.
Special Agent in Charge Edward J. Gray of the FBI Oklahoma City Field Office also played a key role in the case.
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