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Bernd D. Appleby TERiX CEO Gets 2 Years for Oracle IP Fraud

April 09, 2018

The co-owner and CEO of TERiX Computer Company, Inc. was sentenced in U.S. District Court today for his role in fraudulently obtaining more than $10 million worth of intellectual property. Bernd D. Appleby, 66, of San Jose, Calif., was sentenced to 24 months in prison and two years of supervised release and ordered to pay a $100,000 fine.

TERiX – located in Sunnyvale, Calif. and Dublin, Ohio – used the intellectual property belonging to Sun Microsystems, Inc. and Oracle Corporation to support its customers nationwide and internationally.

U.S. Attorney Benjamin C. Glassman of the Southern District of Ohio and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division, announced the sentence imposed today by Senior U.S. District Judge James L. Graham.

Appleby was one of four TERiX executives who pleaded guilty in August 2017 to one count of conspiracy to commit wire fraud. The others have also been sentenced and include:

•TERiX co-owner and COO James A. Olding, 52, of Dublin, Ohio, who was sentenced to 12 months and one day in prison, three years of supervised release and a $50,000 fine;

•Director of Sales Lawrence E. Quinn, Jr., 58, of Hilliard, Ohio, who was sentenced to one day in prison, two years of supervised release and a $5,000 fine; and

•Director of Technical Services Jason T. Joyce. 47, of Dublin, Ohio, who was sentenced to 24 months of probation and a $5,000 fine.

According to court documents, the four conspired to set up three fake companies using aliases – which they supported using bogus email addresses and addresses, pre-paid telephones and pre-paid credit cards – to enter into service support contracts with Sun and Oracle for a single server.

The support contracts gave the four defendants credentials for Sun’s and Oracle’s databases, and allowed them to download Sun’s and Oracle’s intellectual property without detection. The intellectual property included firmware patches and updates for various Sun or Oracle hardware products, or operating system patches and updates for various versions of Sun’s and Oracle’s Solaris operating system.

The four used the fraudulently obtained intellectual property to support at least 500 TERiX customers, who did not know about the fraud. A statement of facts filed with the plea agreements cites more than 2,700 separate downloaded pieces of intellectual property between 2010 and 2014.

The primary purpose of the conspiracy was to fraudulently obtain intellectual property worth millions of dollars and then use the intellectual property to support unwitting TERiX customers, and for their own personal benefit.

“As the head of TERiX’s executive management team and 70 percent co-owner of the company, Appleby was responsible for all aspects of the business,” U.S. Attorney Glassman said. “He designed the conspiracy and its evolution over almost 10 years, and understood and directed all aspects of the criminal activity. As the scheme was uncovered, he instructed other company employees to devise ways to avoid detection.”

Glassman commended the investigation by the FBI and Assistant United States Attorney Jessica H. Kim who is representing the United States in the case.

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