Acting United States Attorney Dennis R. Holmes announced that a Box Elder, South Dakota, man and a Rapid City, South Dakota, man convicted of Unauthorized Access to a Protected Computer to Defraud were sentenced by U.S. District Judge Karen E. Schreier.
Bryan Bernhold, Box Elder, age 26, was sentenced on July 29, 2021, to 1 year probation, 100 hours of community service, restitution to Microsoft, Inc. in the amount of $22,264.98, a $2,000 fine, and a special assessment to the Federal Crime Victims Fund in the amount of $100.
Jacob Sheldon LaFlash, Rapid City, age 26, was sentenced on July 30, 2021, to 2 years of probation, 100 hours of community service, 6 months of home confinement, restitution to Microsoft, Inc. in the amount of $83,652.69, and a special assessment to the Federal Crime Victims Fund in the amount of $100.
LaFlash and Bernhold were indicted by a federal grand jury on January 22, 2020. LaFlash pled guilty on April 23, 2021, and Bernhold pled guilty on May 7, 2021.
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.
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.
This case was investigated by Homeland Security Investigations. Assistant U.S. Attorney Jeffrey C. Clapper prosecuted the case.