Trio accused of selling $88m of pirated Avaya licenses
Rogue insider generated keys, resold them to blow the cash on gold, crypto, and more, prosecutors say
Three people accused of selling pirate software licenses worth more than $88 million have been charged with fraud.
The software in question is built and sold by US-based Avaya, which provides, among other things, a telephone system called IP Office to small and medium-sized businesses. To add phones and enable features such as voicemail, customers buy the necessary software licenses from an Avaya reseller or distributor. These licenses are generated by the vendor, and once installed, the features are activated.
In charges unsealed on Tuesday, it is alleged Brad Pearce, a 46-year-old long-time Avaya customer service worker, used his system administrator access to generate license keys tens of millions of dollars without permission. Each license could sell for $100 to thousands of dollars.
Pearce, of Oklahoma, then sold those licenses to Jason Hines, 42, of New Jersey, and others who sold them onto resellers and customers worldwide, prosecutors claimed. Pearce's wife, Dusti, 44, is accused of handling the finances and accounting in this alleged criminal caper.
On top of this, Pearce is accused of using his admin privileges to get into internal accounts of former Avaya workers to generate more software keys. He allegedly covered up his tracks by altering information in the accounts over many years.
Pearce also spun up side businesses operating under various names, including DBSI and Atlas, in collaboration with his wife and Hines to sell the pirate licenses, according to a separate civil lawsuit [PDF] brought by Avaya in northern California.
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Hines purchased Avaya's software from the Pearces using aliases including Joe Brown, Chad Johnson, and Justin Albaum, and resold the packages to customers. "Hines was the Pearces' largest customer and significantly influenced how the scheme operated. Hines also received help from Brad Pearce to resell the stolen software licenses. Hines was allegedly one of the biggest users of the [Avaya] license system in the world," according to Oklahoma prosecutors this week.
Together the trio worked to undercut Avaya, selling the software below market price, it was alleged. The alleged ill-gotten gains were funneled through a PayPal account under a false name into various bank accounts. The FBI was able to track the funds to numerous other investment accounts and bank accounts, which were used to purchase all manner of stuff from gold and cryptocurrency to real estate, it is claimed.
A grand jury charged the Pearces and Hines with conspiracy to commit wire fraud and 13 counts of wire fraud. The Pearces were additionally charged with one count of conspiracy to commit money laundering and money laundering. ®