“Operation Cyberstorm” Defendants Operated Scheme to Obtain Over $29 Million Worth of Discounted Software under False Pretenses
OAKLAND – LAWFUEL – Law News, Law Jobs – United States Attorney Kevin V. Ryan announced that, Mirza Ali, Sameena Ali (husband and wife), and Keith Griffen were convicted on November 28, 2006, following a bench trial, of devising a scheme to defraud Microsoft Corporation by obtaining discounted software under false pretenses. The scheme involved purchasing over $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. Microsoft estimates that it lost in excess of $60 million as a result of defendants’ criminal acts.
U.S. Attorney Kevin V. Ryan stated, “The perpetrators of this scheme abused a program that offered deeply discounted software to academic institutions. These convictions, the result of a collaborative effort by federal and local investigators, show the consequences for engaging in schemes to defraud.”
Mirza Ali, 59 and Sameena Ali, 52, of Fremont, the former owners of Samtech Research Inc., were convicted on 30 counts of conspiracy, mail fraud, wire fraud, and money laundering. Keith Griffen, 55, of Oregon City, Oregon, was convicted on nine counts of conspiracy, mail fraud and wire fraud. According to the evidence, 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 the terms of the licensing agreement, 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. 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.
According to IRS-CI Special Agent in Charge, Roger L. Wirth, “Once again the primary motive in these crimes of illegal trafficking in Microsoft AER program software products is greed and financial gain. The financial expertise of IRS Criminal Investigation special agents in following the money trail and proving the money laundering violations is an integral part of this coordinated effort.”
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.
The sentencing of Mr. and Ms. Ali and Mr. Griffen is scheduled for March 12, 2007, before Judge Claudia Wilken in Oakland. The maximum statutory penalty for each count of conspiracy, in violation of 18 U.S.C. § 371, is 5 years and a fine of $250,000. The maximum statutory penalty for most of the counts of mail fraud and wire fraud in violation of 18 U.S.C. §§ 1341 and 1343 is 20 years imprisonment and a fine of $250,000, plus restitution if appropriate. (However, because one violation of each of the mail fraud and wire fraud statutes is alleged to have occurred prior to passage of the Sarbanes-Oxley Act, the maximum term of imprisonment for each of those counts is only 5 years.) The maximum statutory penalty for most of the counts of money laundering in violation of 18 U.S.C. § 1956(h) (conspiracy), 18 U.S.C § 1956(a)(1)(A)(I) (money laundering – promotion); 18 U.S.C. § 1956(a)(1)(B)(i) (money laundering – concealment); 18 U.S.C. § 1956(a)(2)(B)(I) (money laundering – exportation) is 20 years’ imprisonment, and a maximum fine of $500,000, or twice the value of the property involved in the transaction (whichever is greater). However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
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 Luke Macaulay at (415) 436-6757 or by email at [email protected]List your legal jobs on the LawFuel Network