Four people sentenced
for $29 million scheme against Microsoft

By Jeff Shuttleworth

October 26, 2007

Four people have been sentenced for defrauding Microsoft Corp. out of more than $29 million by obtaining discounted software under false pretenses, the U.S. Attorney's office said Thursday.

Prosecutors say the scheme involved buying 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.

Mirza Ali, 60, and his wife, 53-year-old Sameena Ali, 52, both of Fremont, the former owners of Samtech Research Inc., were convicted in a non-jury trial that ended last Nov. 28 of 30 counts of conspiracy, mail fraud, wire fraud, and money laundering.

They were each sentenced on Wednesday by U.S. District Court Judge Claudia Wilken to five years in federal prison and ordered to forfeit $5.1 million and pay $20 million in restitution to Microsoft.

Keith Griffen, 56, of Oregon City, Ore., who was convicted of nine counts of conspiracy, mail fraud and wire fraud, was sentenced to 33 months in prison and ordered to pay Microsoft $20 million.

William Glushenko, 66, was sentenced to one year of probation and 100 hours of community service after pleading guilty to misprision of a felony, which is failing to report knowledge of a felony to authorities.

According to the evidence in the case, the Alis and Griffen, in the names of others, bought small companies throughout the U.S. that held Microsoft Authorized Education Reseller (AER) licensing agreements and then continued to buy academic software products.

The AER program provides Microsoft software at steeply discounted prices for resale to academic institutions only.

Using the nominee entities, the Alis and their co-conspirators purchased more than $29 million worth of AER software from Microsoft and sold it to non-academic entities, in violation of their Microsoft agreement, prosecutors said.

The Alis were also convicted of laundering the proceeds of the scheme, including buying 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 the U.S. Attorney's office.

The convictions resulted from "Operation Cyberstorm," a two-year undercover investigation into software piracy and related crimes conducted by agents from Federal Bureau of Investigation, the Internal Revenue Service's criminal investigation unit and the REACT Task Force.

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