SAN JOSE, CA -- UltraCade Technologies' founder was sentenced to two years in federal prison for secretly making and selling arcade videogame software for his own profit after selling the rights to those games to Global VR, a coin-op videogame company based here. David R. Foley of Los Gatos, CA, who was also Global VR's chief technology officer at one time, pleaded guilty in January 2012 to conspiracy to defraud the two game companies and a bank.
The sentence was handed down on Jan. 21 by U.S. District Judge Edward Davila of San Jose who also imposed a $5,000 fine.
Mail and bank fraud usually carry maximum penalties of 20 to 30 years in prison and fines of $250,000 to $1 million, respectively. After pleading guilty two years ago, Foley, 48, said some of the government's charges were inaccurate in significant respects. He challenged the accuracy of charges relating to software counterfeiting and fraudulent loan applications, among others.
Regarding the counterfeiting charges, Foley explained that in 2005, while he was Global VR's chief tech officer, his employer had originally agreed to buy nonexclusive rights to UltraCade's name and assets for $1.4 million, but had backed out of the deal in January 2006. Accordingly, Foley said he continued selling the game packs under the UltraCade name even though UltraCade "technically no longer existed" at the time.
Foley was first indicted on July 1, 2009, at which time he pled not guilty. The original indictment charged that after he was fired from Global VR, Foley kept proprietary code and trade secrets owned by Global VR, clandestinely made games and sold them. Stolen codes allegedly included games for Namco, Nintendo and Taito properties, which ran on Global VR's arcade gaming systems.
Later in his plea agreement, Foley admitted that he manufactured thumb drives, known as "game packs," containing videogame software that could be loaded onto MAME-type arcade game cabinets designed for the home market, federal prosecutors said. Foley illegally produced the products from his home while serving as the chief tech officer of Global VR, which had previously acquired the rights to produce and sell games under the UltraCade name.
After producing the game packs, Foley sold the products to a codefendant located in Milford, CT, 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, prosecutors reported. Foley thereafter received payment for the illegally manufactured game packs by mail and wire.
Foley further admitted that 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, prosecutors said. Foley had been fired from his job by the time the loan applications were submitted. Foley admitted that he instructed the codefendant to contact Countrywide Home Loans to falsely confirm his continued employment after his employment had been terminated and prior to receiving the funds.
UltraCade Technologies was founded in 2002 to market a multi-game platform that Foley developed in the mid-1990s. The gaming system featured multiple classic arcade games emulated on PC hardware running a proprietary operating system and emulation code.
Department of Justice