UltraCade Founder Pleads Guilty To Conspiracy Charges; Foley Disputes Key Facts In Indictment

by Marcus Webb | additional reporting Nick Montano
Posted On: 1/12/2012

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David R. Foley, Global VR, UltraCade Technologies, UltraCade game software, U.S. Department of Justice, David Foley plea, video game, coin-op video, arcade video game, counterfeit video game, Hyperware, Namco, Nintendo, Taito

SAN FRANCISCO -- David R. Foley, former CTO of Global VR and former owner of UltraCade Technologies, pled guilty on Jan. 9 to conspiracy charges stemming from sales of UltraCade game software several years ago and from making false statements on loan applications, according to the U.S. Department of Justice.

Mail and bank fraud carry maximum penalties of 20 to 30 years in prison and fines of $250,000 to $1 million, respectively.

However, Foley told local press outlets that while he takes responsibility for his actions, some of the government's charges are inaccurate in significant respects.

U.S. Attorney Melinda Haag of the U.S. Attorney's Office for the Northern District of California said Foley, 46, manufactured and sold counterfeit Global VR game software. Foley was also charged with other offenses, including submitting false claims in mortgage applications to secure more than $3 million in financing from Countrywide Home Loans.

According to Haag, in 2006 Foley manufactured thumb drives, known as "game packs," containing videogame software that could be loaded onto arcade video machines made for the home market.

The indictment asserts that Foley illegally produced these products from his home while working as the chief technology officer at Global VR, which had previously acquired all rights to produce and sell games under the UltraCade name.

The indictment charges that 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 as manufactured by UltraCade.

Foley thereafter received payment for purchases of the illegally manufactured game packs by mail and wire, resulting in additional charges of mail and wire fraud, U.S. attorneys said.

Foley told the San Jose Mercury News that although he had pled guilty to conspiracy, the counterfeiting charges were inaccurate. Foley explained that in 2005 while he was CTO for Global VR, 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 told the paper, he continued selling the game packs under the UltraCade name even though UltraCade "technically no longer existed" at the time.

In 2009 following the original indictment, Foley advised VT: "I agreed to sell UltraCade to Global VR, and Global VR after taking over the operations in December 2005, dismantled UltraCade and then purchased only certain assets of UltraCade."

Foley also disputed the accuracy of certain details of additional government charges relating to fraudulent loan applications. According to the Justice Department, Foley admitted that, as charged in a 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, but had been fired from his job by the time the loan applications were submitted, the government said.

Foley told the Mercury-News that he was still employed at Global VR when he submitted the loan applications -- and that when GVR fired him one week before escrow closed, he promptly advised the lender.

Ultracade Technologies was founded by Foley in 2002 to market a multi-game platform running classic arcade games emulated on PC hardware, which Foley had developed in the mid-1990s through his HyperWare company.

According to Wikipedia, in an entry that is consistent with VT reporting at the time, "In June 2006, Global VR acquired some of the assets of UltraCade Technologies, and the nonexclusive rights to some of the code used in the UltraCade platform."

As VT reported at the time, Foley was originally 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 GVR, 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.

A 2009 story on Gamasutra.com reported that personnel at Jaleco, SNK Playmore and Tecmo said they never licensed their games to UltraCade or Foley.

Foley is now free on $100,000 bond and is expected to be sentenced on April 30.