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The U.S. Attorney's Office says that four people were sentenced to prison and required to make $40 million in restitution for a scheme to defraud Microsoft into giving them software discounts by pretending to be academic institutions.

Sentencing was completed Wednesday in U.S. District Court in Oakland, Calif., against the group convicted in November 2006 of 30 counts of conspiracy, mail fraud, wire fraud, and money laundering.

According to a statement Thursday from the U.S. Attorney's Office for the Northern District of California, Mirza Ali, his wife Sameena Ali, both of Fremont, Calif., and Keith Griffen, of Oregon City, Ore., used fraud to enter Microsoft's Authorized Educational Reseller (AER) program, which discounted software for schools, between 1997 and 2001. After losing Microsoft AER status in 1996, the Alis created another corporation under false pretenses to recertify. When Microsoft decided to stop certifying any new corporations for AER in 1999, the Alias and Griffen started buying up other AER companies to perpetuate the scheme.

The trio bought US$29 million worth of software and sold it to nonqualifying buyers for a profit of $5 million, then laundered the money, federal prosecutors said.

A fourth defendant, William Glushenko, was sentenced to one year probation and 100 hours of community service after pleading guilty to misprision of a felony, which means to know about a crime but fail to report it.

The Alis were sentenced to five years in prison, $5.1 million in fines and must pay $20 million in restitution to Microsoft. Griffen was sentenced to 33 months in prison and required to pay Microsoft $20 million.

The convictions are the result of a two-year undercover investigation of software piracy led by the FBI and the Internal Revenue Service called "Operation Cyberstorm."