“Operation Cyberstorm” Defendants Operated Scheme to Obtain Over $29 Million Worth of Discounted Software under False Pretenses
OAKLAND – LAWFUEL – The Legal Newswire – United States Attorney Scott N. Schools announced that defendants Mirza Ali and Sameena Ali, husband and wife, and defendants Keith Griffen and William Glushenko, were sentenced yesterday for their role in devising a scheme to defraud Microsoft Corporation by obtaining discounted software under false pretenses. The scheme involved purchasing more than $29 million worth of software that was steeply discounted for academic institutions, and selling it to non-academic entities, in violation of the Microsoft agreement.
United States District Court Judge, Claudia Wilken sentenced Mirza Ali, 60, of Fremont and Sameena Ali, 53, also of Fremont, to 60 months imprisonment, forfeiture in the amount of $5,105,977, restitution to Microsoft Corporation in the amount of $20,000,000, 3 years of supervised release, and $3,000 in special assessments. Keith Griffen, 56, of Oregon City, Oregon, was sentenced to 33 months of imprisonment, restitution to Microsoft Corporation in the amount of $20,000,000, 3 years of supervised release, and $900 in special assessments. William Glushenko, 66, was sentenced to 1 year probation and 100 hours of community service after pleading guilty to misprision of a felony.
The Alis, former owners of Samtech Research Inc., were convicted on November 28, 2006, of 30 counts of conspiracy, mail fraud, wire fraud, and money laundering. Mr. Griffen, was convicted of nine counts of conspiracy, mail fraud, and wire fraud. According to the evidence presented in a stipulated bench trial, from January 1997 through January 2001, the Alis and Mr. Griffen formed several nominee corporations and purchased existing corporations holding Microsoft licensing agreements for the purpose of participating in Microsoft’s Authorized Education Reseller (AER) program, a program that provides Microsoft software at steeply discounted prices for resale to academic institutions only. In 1996, after the Alis were audited by Microsoft and removed from the AER program for failure to comply with its terms, the Alis formed new corporations in the names of others to disguise their identity from Microsoft and reenter the AER program. In 1999, when Microsoft stopped accepting AER applications from new corporations, the Alis and Mr. Griffen, in the names of others, bought small companies throughout the United States that held Microsoft AER licensing agreements and thereafter continued to purchase academic software products. Using these nominee entities, the Alis and their co-conspirators purchased more than $29 million worth of AER software from Microsoft and sold this software to non-academic entities, in violation of the Microsoft agreement, for a profit of more than $5 million. The Alis were also convicted of laundering the proceeds of this scheme, including purchasing real property in the name of their college age son and wiring more than $300,000 of the proceeds from the illegal sales of the Microsoft educational software to Pakistan.
These convictions resulted from “Operation Cyberstorm,” a two-year undercover investigation into software piracy and related crimes conducted by agents from Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigation, and REACT Task Force. Doug Wilson, Brian Stretch, and Stephen G. Corrigan are the Assistant U.S. Attorneys who prosecuted this case with the assistance of Kathleen Glynn, Cynthia Daniel and Noble Hughes.
Case #: CR-02-40081CW
A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.
Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.
All press inquiries to the U.S. Attorney’s Office should be directed to Natalya LaBauve at (415) 436-7055 or by email at [email protected]