In a major international scheme that involved the sale of pirated business telephone system software licenses, a computer system administrator and his spouse have pled guilty. The operation reportedly resulted in the sale of software licenses valued at over $88 million.
According to the U.S. Department of Justice, Brad Pearce, 48, and Dusti O. Pearce, 45, of Tuttle, Oklahoma, collaborated with Jason M. Hines, also known as Joe Brown, Chad Johnson, and Justin Albaum, 43, of Caldwell, New Jersey, to commit wire fraud. The scheme centered around the creation and sale of fake Avaya Direct International (ADI) software licenses.
The ADI software licenses were used to unlock the capabilities of a widely-used telephone system utilized by thousands of businesses worldwide. However, the ADI software licensing system has since been shut down.
Avaya Holdings Corporation, a corporate communications firm based in California, sold its IP Office product, which was employed by numerous midrange and small enterprises globally. To access additional features of IP Office, such as voicemail or telephones, customers were required to purchase software licenses from authorized Avaya distributors or resellers.
The software license keys provided by Avaya were designed to restrict access to their copyrighted software, ensuring that only paying customers could utilize it. However, in this scheme, long-time Avaya customer service employee Brad Pearce took advantage of his system administrator rights to create tens of thousands of ADI software license keys. These pirated licenses were then sold to Hines and other clients, who subsequently sold them to resellers and end-users worldwide.
Each Avaya software license had a selling value ranging from less than $100 to thousands of dollars. Dusti Pearce was responsible for handling the accounting for the illegal business. Hines, who purchased the majority of the stolen licenses, had a significant influence on the operation.
Brad Pearce also utilized his system administrator rights to access former Avaya employees’ accounts and steal their license keys for the ADI software. He altered the account information to hide the fact that he was generating ADI license keys, preventing Avaya from detecting the fraud for several years.
To conceal the nature and source of their funds, the Pearces transferred their illicit profits from various bank accounts to multiple investment and bank accounts using a PayPal account registered under a fictitious name. Additionally, they invested in a significant amount of gold bullion and other expensive items.
Dusti and Brad Pearce have both pleaded guilty to conspiring to commit wire fraud. They each face a maximum sentence of 20 years in jail. As part of their plea deal, they are required to surrender a car, cash, gold, silver, rare coins, cryptocurrencies, and a monetary judgment of at least $4 million. They are also obligated to fully compensate their victims.
This case serves as a reminder of the importance of software licensing compliance and the potential consequences of engaging in fraudulent schemes. Avaya’s IP Office product is widely used, and the sale of counterfeit software licenses not only undermines the company’s intellectual property rights but also poses significant risks to businesses relying on legitimate software.
As the investigation continues, authorities aim to identify and hold accountable all individuals involved in this massive scheme. It serves as a warning to individuals contemplating similar fraudulent activities that they will be pursued and prosecuted to the fullest extent of the law.
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