Man admits to $88m Avaya piracy scheme

A New Jersey man accused of helping to run an $88m telecoms software piracy scheme has plead guilty.

The US Department of Justice said 43 year-old Jason Hines entered the plea on one count of conspiracy to commit wire fraud for his role in a years-long scheme to sell businesses illegitimate licenses for Avaya communications products.

According to the US Attorney's office, Hines was one of three people who ran the ring to generate and sell illegal software licenses that would allow users to operate the Avaya hardware.

It was alleged that co-defendant Brad Pearce, who at the time was working in customer service for Avaya, used his administrator access to generate new software keys for Avaya's IP Office line.

The case centers around the software keys that are required to link up the IP office features with Avaya's communications hardware. While the keys are normally generated and sold to customers alongside the device, some administrators and service reps are able to generate replacement keys.

Attorneys believed that, over the course of several years, Brad Pearce used his access to generate thousands of new keys and then cover up his tracks on the licensing platform.

Those keys, it is charged, were then handed over to Hines, either directly or via an alias, who in turn sold them both to resellers and directly to Avaya customers. A third defendant, Dusti Pearce, is accused of handling the accounting for the scheme.

"The Pearces and Hines' operation not only prevented Avaya from making any money on its stolen intellectual property but also undercut the global market in Avaya ADI software licenses because the Pearces and Hines were selling licenses for significantly below the wholesale price," prosecutors said when first announcing the charges.

"Brad Pearce allegedly told Hines that the Pearces' customers could not obtain same-day ADI software licenses from anyone else for anything even close to the Pearces’ prices, and Hines suggested that he and Brad Pearce work together to 'corner' the market in licenses."

Prosecutors noted that while Hines and his company Direct Business Services International were not the only customer for Pearce's pilfered license keys, he was by far the largest, accounting for some 55 percent of purchases and was said to have "significantly influenced the operation."

"In fact, Hines was one of the biggest users of the ADI license system in the world," the prosecutors said.

"As a result, Hines reaped millions of dollars from the fraud."

Hines faces a maximum of five years in prison for the charge. He must also pay restitution to the victims and a $2m forfeiture.

Avaya, meanwhile, has since discontinued the software licensing system that was exploited in the scheme.