Avaya Hit in Piracy Scheme

By Greg Tavarez, TMCnet Editor  |  July 12, 2022

Avaya’s (News - Alert) IP Office phone system, used by businesses globally for their communications needs, uses software license keys to control access to its copyright-protected software. The idea, of course, is to ensure that only customers who paid for the software can use it. An additional protection is a requirement that each software license on an IP Office system be associated with the system’s Avaya SD card which the end user had to keep in its possession to use the licenses.

However, there are clearly ways to circumvent the system – illegally. Three individuals were indicted on a charge of violating federal wire fraud and money laundering statutes in connection with an operation to sell over $88 million of stolen Avaya Direct International software licenses.

The Western District of Oklahoma grand jury charged the following defendants with conspiracy to commit wire fraud and 13 counts of wire fraud: Raymond Bradley Pearce, 46, of Tuttle, Oklahoma; Dusti O. Pearce, 44, of Tuttle, Oklahoma; and Jason M. Hines, 42, of Caldwell, New Jersey. Brad Pearce and Dusti Pearce were also charged one count of conspiracy to commit money laundering and money laundering.

Brad was a customer service employee at Avaya and allegedly used his system administrator privileges to generate tens of millions of dollars of ADI software license keys that he sold to Hines and other customers, who in turn sold them to resellers and end users worldwide, according to the indictment. The retail value of each Avaya license ranged from under $100 to thousands of dollars.

Brad also allegedly employed 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 information about the accounts to conceal he was generating ADI license keys, preventing Avaya from discovering the fraud scheme for many years.

Dusti allegedly handled accounting and helped run the financial side of the illegal business.

Hines operated Direct Business Services Int., a de-authorized Avaya reseller, in New Jersey. He allegedly bought software licenses from the Pearces under his name and also using an alias, Joe Brown, according to the indictment.

The illegal operation prevented Avaya from making any money on its stolen intellectual property and undercut the global market in Avaya ADI software licenses because the Pearces and Hines sold licenses at significantly below the wholesale price, according to the indictment.

The Pearces allegedly funneled profits from the scheme through a PayPal (News - Alert) account created under a false name to multiple bank accounts, and then transferred money to numerous other investment and bank accounts. They also allegedly purchased large quantities of gold bullion and other valuable items.

The indictment lists numerous assets subject to forfeiture including cash, gold, silver, collectible coins, cryptocurrency and real property.

Edited by Erik Linask