S.D. men sentenced for defrauding Microsoft

Capitol News Bureau

PIERRE, S.D. (KELO) — Two South Dakotans who pleaded guilty in federal court to illegally selling Microsoft computer software worth many thousands of dollars have been sentenced.

Bryan Bernhold, 26, of Box Elder received one year of probation, was fined $2,000 and ordered by the judge to perform 100 hours of community service. Bernhold also must make $22,264.98 in restitution to Microsoft and pay a $100 special assessment.

Jacob Sheldon LaFlash, 26, of Rapid City, age 26, received six months of home confinement, two years of probation and 100 hours of community service. LaFlash also was ordered to make $83,652.69 in restitution to the company and pay a $100 special assessment.

According to a statement from the acting South Dakota U.S. attorney, Dennis Holmes, “The convictions stemmed from incidents between October 27, 2017, and May 1, 2018, when both LaFlash and Bernhold knowingly and with intent to defraud accessed a protected computer without authorization to further their intended fraud and thereby obtain the benefits of Microsoft 0365.”

A federal grand jury indicted LaFlash and Bernhold on January 22, 2020. LaFlash pleaded guilty on April 23, 2021, and Berhhold pleaded guilty on May 7, 2021, to charges of unauthorized access to a protected computer to defraud.

U.S. District Judge Karen Schreier sentenced Berhnold on July 29 and LaFlash on July 30. Assistant U.S. Attorney Jeffrey C. Clapper prosecuted the case.

The statement from acting U.S. Attorney Holmes continued:

“Microsoft Office 365 (“O365”) was the brand name that Microsoft used for
proprietary software and related services. O365 was sold in yearly subscriptions for
home and business users and allowed users to access the services of that software from
anywhere, anytime, on any device. O365 was typically sold for $99 for a one-year
subscription, which included upgrades during the subscription period.

“LaFlash and Bernhold discovered a means of gaining access to O365 on the
Microsoft computers without paying for it. After they established a seller account on
eBay, they advertised for sale ‘Microsoft Office 365 Lifetime License’ on eBay for $8.99
and $9.99. LaFlash and Bernhold also established a PayPal account to receive money
for the sale of O365. However, they were not authorized by Microsoft to sell any
software or other services for any length of time. Between October 26, 2017, and May 1,
2018, LaFlash sold 4,592 fraudulent O365 user accounts and received $71,129.59 from
the unauthorized and fraudulent sale of O365 on eBay. Bernhold sold 2,787 fraudulent
O365 user accounts and received $22,264.98 from the unauthorized and fraudulent
sale of O365 on eBay.

“LaFlash and Bernhold accessed the Microsoft protected computers on different
dates and in so doing, created more than 7,000 fraudulent O365 user accounts through
wire signals that affected interstate and foreign commerce.”

The federal office of Homeland Security Investigations was involved in the case.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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