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UltraCade's David Foley Offers Details On Guilty Plea

Posted On: 1/17/2012

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

SAN JOSE, CA -- Former UltraCade Technologies owner David R. Foley said all counterfeiting charges against him by the U.S. Department of Justice were dropped in exchange for his guilty plea to two lesser counts of conspiracy, contradicting a statement issued by U.S. Attorneys that claimed Foley committed counterfeiting. | SEE STORY

In all, Foley said, some 54 charges were dropped.

He explained that the government's actions against him stemmed from a 2005 business deal that was not consummated, resulting in lengthy civil litigation that was settled in 2009. Before entering that deal, Foley was the owner of UltraCade, a videogame company that used technology he invented. He added that after agreeing to sell the company, only to see the deal fall apart, he sought to enforce the agreement and went bankrupt in the process.

According to Foley, in June 2006 he agreed to liquidate assets of UltraCade Technologies through an assignment for the benefit of creditors (a bankruptcy alternative). After that, Foley claims, he continued to manufacture and sell game packs for the UltraCade platform.

"It was this effort ... to make something from the company no one ever paid him for that led his being indicted on over 50 criminal counts," Foley's attorney said in a statement.

The U.S. ultimately brought two cases against Foley, charging him with a total of 56 felony charges including conspiracy to commit mail and wire fraud, 22 counts of trafficking in counterfeit goods, transportation of stolen goods, theft of trade secrets, conspiracy to commit money laundering and money laundering, and conspiracy to commit bank fraud.

Foley asserted that he maintained from the outset that he had the right to use all of the game pack technology in the UltraCade system. He contended that a simple review of UltraCade's contracts with the developers of that technology made plain that even UltraCade never had the right to prevent others from manufacturing and selling game packs for the UltraCade system.

Foley has also argued that he had the necessary licenses for all of the game packs sold and that the game packs could not be counterfeit because they did not use any registered trademarks, as required by the Federal penal code. (He provided VT with a photocopy of a relevant contract with Jaleco, but said other contracts with SNK and Tecmo were no longer in his possession due to the planned sale of UltraCade.)

According to Foley, he reached a plea agreement with the U.S. on the eve of his scheduled trial, following two weeks of negotiations.

In pleading guilty to two counts of conspiracy, Foley said that he admitted only that he and a codefendant continued to use the name UltraCade in connection with selling game packs manufactured after the assignment (for the benefit of creditors) when Foley was no longer operating the company. In accepting responsibility for his actions, Foley said he pled guilty to one count of conspiracy to commit mail and wire fraud and one count of conspiracy to commit bank fraud.

Regarding charges that he filed false loan applications, Foley repeated his statement that he closed escrow on his home days after changing his employment status, and after informing the mortgage broker of that change.

Foley and the Justice Department both reserved their right to argue the loss amount, which will determine Foley's offense level under U.S. sentencing guidelines, he said. Under the terms of the plea agreement, the U.S. can argue for a prison term of up to 41 months and Foley can argue for no time.