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Press one for scams.
An unassuming couple from a tiny town in Oklahoma have pleaded guilty to running a scam that flooded the world with so many pirated office phone-system licenses stolen from the telecom company Avaya that they nearly cornered the global market for the software.
Federal prosecutors say Brad Pearce, 48, who had been a long-time customer service employee for Avaya, used his access to the company’s systems to generate tens of thousands of unauthorized software licensing codes, which he then sold to distributors at cut-rate prices.
His wife, Dusti Pearce, 45, who also once had worked for Avaya, helped operate the pirate-software business, keeping detailed books and records of licenses that had been sold, prosecutors said.
Over the course of about a decade, prosecutors say the couple, who lived in the town of Tuttle, Okla., sold $88 million worth of Avaya licensing codes to various distributors and resellers around the world.
Messages left with attorneys for the Pearces weren’t immediately returned. A representative for Avaya, which is based in Morristown, N.J., didn’t immediately respond to a message seeking comment.
The bulk of the pirated codes were sold to one distributor, Jason Hines, 43, of Caldwell, N.J., who pleaded guilty to his role in the scam in July, prosecutors said. At one point, Hines was buying so many stolen license codes from the Pearces that he suggested they might “corner the market” for the software, according to court filings.
Prosecutors say the Pearces used a complex array of bank accounts and Paypal profiles to help obscure the scope of the scam, eventually transferring much of the proceeds into cash they hid in safe deposit boxes, gold and silver bars and ingots and collectible coins.
According to court filings, the fraud operated around the way Avaya generates licensing codes for its phone systems, which are largely used by small- and medium-sized businesses. To add features such as voicemail or additional phone lines, a customer would have to purchase a license code. These were typically sold through distributors and resellers.
Prosecutors said Brad Pearce began by sneaking a personal laptop into his office at Avaya in Oklahoma, where he would use his log-in credentials and those he had hijacked from ex-Avaya employees working in India, to generate the codes.
He would then sell them to distributors for anywhere from $100 up to several thousand dollars, according to court documents. He and his wife would accept payment through PayPal accounts they had set up in false names, and would then funnel the money through a multitude of bank accounts to obscure its origins.
As much as 55% of the codes Pearce generated were sold to Hines, prosecutors said. At various times, Avaya would detect that Hines was selling pirated codes and drop him from their authorized dealer list, but he would then form a new company using an alias to sign up again, prosecutors said.
At different times, prosecutors say Hines would use names like Chad Johnson, Justin Albaum and Joe “Canada Joe” Brown to operate his business.
The Pearces pleaded guilty to conspiracy to commit wire fraud and face up to 20 years in prison when they are sentenced. As part of their plea agreement, the couple must forfeit $4 million that was recovered in cash, gold, silver, collectible coins, cryptocurrency, and a vehicle. They also must make full restitution to their victims.
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