Three defendants charged in software license piracy scheme | Takeover bid

Today, the Western District of Oklahoma released an indictment charging three people with violating federal wire fraud and money laundering laws in connection with a sale of more than $88 million in stolen Avaya Direct International (ADI) software licenses, which were used to unlock features of a popular phone system used by thousands of businesses around the world.

The grand jury charged the following defendants with conspiracy to commit wire fraud and 13 counts of wire fraud: Raymond Bradley Pearce, alias Brad Pearce, 46, of Tuttle, Oklahoma; Dusti O. Pearce, 44, of Tuttle, Oklahoma; and Jason M. Hines, aka Joe Brown, aka Chad Johnson, aka Justin Albaum, 42, of Caldwell, New Jersey. Additionally, the grand jury charged Brad Pearce and Dusti Pearce with one count of conspiracy to commit money laundering and money laundering.

According to the indictment, Avaya Holdings Corporation, a multinational business communications company headquartered in California, sold a product called IP Office, a telephone system used by many small and medium-sized businesses in the United States. and abroad. To enable additional IP Office features such as voicemail or more phones, customers had to purchase software licenses, generated by Avaya, from an authorized Avaya distributor or reseller. Avaya has used software license keys to control access to Avaya’s copyrighted software and to ensure that only customers who have paid for the software can use it. Additionally, Avaya required each software license on an IP Office system to be associated with the system’s Avaya Secure Digital (SD) card – a small flash memory card with a unique serial number that connects to the IP Office manager’s computer. – that the end user had to keep in his possession in order to be able to use the licenses.

According to the indictment, Brad Pearce, a longtime Avaya customer service employee, allegedly used his system administrator privileges to generate tens of millions of dollars worth of ADI software license keys which he sold to Hines and other customers, who in turn sold them. to resellers and end users around the world. The retail value of each Avaya software license ranged from less than $100 to thousands of dollars.

As stated in the indictment, Brad Pearce also allegedly used his system administrator privileges to hijack the accounts of former Avaya employees to generate additional ADI software license keys. Furthermore, he allegedly used these privileges to alter account information to conceal the fact that he was generating ADI license keys, preventing Avaya from uncovering the fraudulent scheme for many years. Brad Pearce’s wife, Dusti Pearce, allegedly handled the accounting and helped run the financial side of the illegal business. Hines operated Direct Business Services International (DBSI), an unauthorized Avaya reseller, in New Jersey. He allegedly purchased software licenses from the Pearces under his own name and also using a pseudonym, Joe Brown. Hines was the Pearces’ largest client and had a significant influence on the operation of the program. Hines also received help from Brad Pearce in reselling stolen software licenses. Hines was reportedly one of the biggest users of the ADI licensing system in the world.

According to the indictment, the Pearces and Hines operation not only prevented Avaya from making money on its stolen intellectual property, but also undermined the global market for Avaya ADI software licenses because the Pearces and Hines were selling licenses at a price well below the wholesale price. In fact, Brad Pearce allegedly told Hines that the Pearces’ customers couldn’t get same-day ADI software licenses from anyone else for anything even close to the Pearces’ prices, and Hines suggested that he and Brad Pearce are working together to “corner” the licensing market. In total, the Pearces and Hines allegedly reaped millions of dollars through fraud. Additionally, to hide the nature and source of the money, the Pearces allegedly routed their illegal earnings through a PayPal account set up under a false name to several bank accounts, then transferred the money to numerous other investment accounts and banking. They also allegedly purchased large amounts of gold bars and other valuables. The indictment lists numerous assets that could be confiscated, including cash, gold, silver, collectibles, cryptocurrencies and real estate.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Robert J. Troester for the Western District of Oklahoma, and Special Agent in Charge Edward J. Gray of the Field Office of the FBI in Oklahoma City made the announcement.

The FBI investigated.

Lead Attorney Matthew A. Lamberti of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Julia E. Barry and William Farrior for the Western District of Oklahoma are prosecuting the case.

An indictment is only an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt by a court.