A man from New Jersey has pleaded guilty to a role in the mass selling of bogus Avaya licenses.
Those licenses had an overall value of over $88MN, each allegedly produced and internationally shopped by Brad Pearce, a long-time systems administrator who worked for Avaya.
The news follows an announcement from the US Department of Justice, which identified Jason M. Hines as the operator of Direct Business Services International (DBSI) last week.
DBSI was an authorized Avaya partner, which allegedly purchased a surplus of Avaya Direct International (ADI) license keys from Pearce.
Describing Pearce in a press release, the Department of Justice noted:
[He is] a long-time customer service employee at Avaya [who] allegedly used his system administrator privileges to generate those keys without authorization, creating tens of thousands of them that he sold to Hines and other customers.
To do so, Pearce reportedly utilized his admin privileges to take control of accounts left by former employees of Avaya.
From there, Pearce would change details on the accounts to hide the generation of pirated licenses – in a scheme that went on “for many years”.
According to the Department of Justice, Hines purchased 55 percent of Pearce’s dodgy goods – meaning that they both made millions from the fraudulent arrangement.
Acting under the aliases Joe Brown, Chad Johnson, and Justin Albaum, Hines resold the licenses, which ranged from $100 to thousands of dollars in price.
In doing so, the Department of Justice noted:
Hines was one of the biggest users of the ADI license system in the world.
Meanwhile, Pearce enrolled his wife Dusti to manage the books as part of the operation. As a result, both now face money laundering charges – according to The Register.
Hines will likely escape with a reduced punishment by admitting to wire fraud as part of a plea deal.
Upon the deal’s signing, the Federal Reserve Police agreed to advocate for a maximum of five years in prison for Hines.
However, he will also have to pay $2MN and give complete restitution to his victims.
These guidelines – alongside statutory considerations – will help the judge determine his sentence as the FBI continues to investigate the case.
What Does This Mean for Avaya?
Through his fraud scheme, Pearce diverted millions of prospective deals away from Avaya and into his illegal business.
He – alongside Hines and Dusti Pearce – was first indicted in June 2022, just months before the vendor tumbled into its second bankruptcy in six years.
Of course, the scheme was only one factor in Avaya’s decline. Yet, it likely put a thorn in the side of the vendor’s international growth.
Although, some may ask why the scheme lasted for as long as it did and how the DBSI earned partner authorization in the first instance.
Such questions will likely irk Avaya’s new c-suite, as it fights for a new future.
Yet, the chain of events also provides a timely lesson for tech providers about the importance of close relationships with reliable partners.
After all, many are currently striving to expand their partner programs and open up more routes to market, with rising competition across the SaaS space.
Nonetheless, they must remain diligent to protect their reputation and safeguard their business against such costly incidences.
