Trio convicted of US$60m software fraud

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Trio convicted of US$60m software fraud

Group resold Microsoft educational products and laundered profits.

The US Department of Justice (DoJ) has won its case against three US individuals accused of defrauding Microsoft of more than US$60m. 

A California couple were convicted on 30 counts of conspiracy, mail fraud, wire fraud and money laundering. An accomplice from Oregon was convicted on nine counts of conspiracy, mail fraud, wire fraud and money laundering.

Each of the conspiracy counts carries a maximum sentence of five years in prison, while the fraud and money laundering counts carry maximum sentences of 20 years, along with maximum fines ranging from US$250,000 to US$500,000 for each count.

According to the DoJ, Mirza and Sameena Ali of Freemont, California, along with Keith Griffen of Oregon City, set up and purchased a number of software distributors between 1997 and 2001 for the purpose of reselling educational software.

The group used the satellite companies to participate in Microsoft's Authorized Education Reseller programme, which allows academic institutions to purchase software at discounted rates.

The software was then resold commercially to non-academic buyers, netting a profit of over US$29m.

The DoJ said that much of the money was then laundered through estate purchases, some made in the name of Ali's son, and over US$300,000 was wired to Pakistan.

Microsoft, which claimed over US$60m in lost revenue from the scheme, praised the outcome in a statement.

"The conviction of these individuals is a significant victory for the software industry, its partners and customers, and all who value fair and ethical business practices," said Microsoft attorney Bonnie MacNaughton.

The group was uncovered during Operation Cyberstorm, an undercover operation aimed at software fraud on the west coast of the US between 2000 and 2002.

The operation led to the arrests of 27 people, and Microsoft estimates that the operation uncovered hundreds of millions of dollars in lost revenue due to fraud.
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