Former Chief Technology Officer of San Jose Video Arcade Gaming Software Company Pleads Guilty to Conspiracy to Commit Mail and Wire Fraud, Conspiracy to Commit Bank Fraud

Manufactured and Sold Counterfeit Global VR Game Packs, Submitted False Information in Mortgage Applications To Secure More Than $3 Million in Loans From Countrywide Home Loans

SAN JOSE, CA—The former chief technology officer of Santa Clara, Calif., video game developer Global VR, and the former owner of NexTune Corporation, d/b/a UltraCade Technologies, pleaded guilty Friday to conspiracy to commit mail and wire fraud, and conspiracy to commit bank fraud, U.S. Attorney Melinda Haag announced. The charges were contained in separate indictments but consolidated for the guilty pleas.

David Foley, 46, of Los Gatos, Calif., admitted that, as charged in the first indictment, he manufactured thumb drives, known as “game packs,” containing video gaming software that could be loaded onto arcade video game machines made for the home market. Foley illegally produced the products from his home while working as the chief technology officer of Global VR, which had previously acquired all rights to produce and sell games under the UltraCade name. After producing the game packs, Foley sold the products to a co-defendant located in Milford, Conn., and agreed to sell the game packs to the public using packaging and advertisements that falsely represented the goods to have been genuinely manufactured by UltraCade. Foley thereafter received payment for the illegally manufactured game packs by mail and wire.

Foley further admitted that, as charged in the second indictment, he defrauded Countrywide Home Loans (now owned and operated by Bank of America) of mortgage and home equity line of credit loans in the amounts of $2,624,475 and $374,925. He did this by falsely claiming that he was still employed at Global VR. Foley had been fired from his job by the time the loan applications were submitted. Foley admitted that he instructed a co-defendant to contact Countrywide Home Loans to falsely confirm his continued employment, after his employment had been terminated and prior to receiving the funds.

United States District Court Judge Edward J. Davila allowed Foley’s continued release on a $100,000 bond and ordered him to return to court on April 30, 2011, at 9 a.m. for sentencing.

The maximum statutory penalty for conspiracy to commit mail fraud in violation of 18 U.S.C. § 1349 is 20 years in prison and a fine of $250,000 or twice the gross gain or loss, a mandatory special assessment and restitution. The maximum statutory penalty for conspiracy to commit bank fraud in violation of 18 U.S.C. §1349 is 30 years in prison, a mandatory special assessment, and a fine of $1 million and restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Richard C. Cheng of the Computer Hacking and Intellectual Property (CHIP) Unit is prosecuting the case with the assistance of legal assistant Tracey Andersen. The prosecution is the result of a lengthy investigation by the Federal Bureau of Investigation.