Three individuals have been sentenced for participating in an international scheme involving the sale of tens of thousands of pirated business telephone system software licences with a retail value of over $88 million.
Raymond Bradley ‘Brad’ Pearce, 48, of Tuttle, Oklahoma, a computer system administrator, was sentenced to four years in prison and ordered to forfeit $4 million. In June, Dusti O. Pearce, 46, also of Tuttle, was sentenced to one year and a day in prison and ordered to forfeit $4 million. In July, Jason M. Hines, 44, of Caldwell, New Jersey, was sentenced to one year and six months in prison and an additional 18 months of home confinement and ordered to forfeit $2 million.
In addition, the three defendants have agreed to pay restitution—specifically, $17 million for Brad Pearce, $10 million for Dusti Pearce, and more than $5 million for Hines. The court will hold a separate restitution hearing in a few weeks to determine the details of the restitution order.
According to court documents, Brad and Dusti Pearce conspired with Hines to commit wire fraud in a scheme that involved generating and then selling unauthorised Avaya Direct International (ADI) software licenses. The ADI software licenses were used to unlock features and functionalities of a popular telephone system product called ‘IP Office’ used by thousands of companies around the world. The ADI software licensing system has since been decommissioned.
Avaya Holdings Corporation, a multinational business communications company headquartered in California, sold IP Office to many midsize and small businesses in the United States and abroad. To unlock features and functionalities of IP Office, such as voicemail or telephones, customers had to purchase software licenses generated by Avaya from an authorized Avaya distributor or reseller.
Avaya used software licence keys to control access to Avaya’s copyright-protected software and to ensure that only customers who paid for the software could use it. Moreover, Avaya required that each software license on an IP Office system be associated with a proprietary memory card with a unique serial number that the end user had to keep in its possession to use the licenses.
Brad Pearce, a long-time customer service employee at Avaya, used his system administrator privileges to generate tens of thousands of ADI software license keys that 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 under $100 to thousands of dollars.
Brad Pearce also employed his system administrator privileges to hijack the accounts of former Avaya employees to generate additional ADI software license keys. Pearce concealed the fraud scheme for many years by using these privileges to alter information about the accounts, which helped hide his creation of unauthorized license keys. Dusti Pearce handled accounting for the illegal business.
Hines operated Direct Business Services International (DBSI), formerly known as Dedicated Business Systems International, a New Jersey-based business communications systems provider and a de-authorized Avaya reseller. He bought ADI software license keys from Brad and Dusti Pearce and then sold them to resellers and end users around the world for significantly below the wholesale price.
Hines was by far the Pearces’ largest customer and significantly influenced how the scheme operated. Hines was one of the biggest users of the ADI license system in the world.
Altogether, the Pearces and Hines reaped millions of dollars from the scheme. To hide the nature and source of the money, the Pearces funnelled their illegal gains through a PayPal account created under a false name to multiple bank accounts and then transferred the money to investment and bank accounts. They also purchased large quantities of gold bullion and other valuable items.
In July 2023, Hines pleaded guilty to conspiracy to commit wire fraud. In September 2023, the Pearces also pleaded guilty to conspiracy to commit wire fraud.
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