High-Tech Heist

Hapless Computer Crook Will Spend Christmas (and the Next 25 Years) in Jail

Randy Pierce, with girlfriend Kelly Lough
Randy Pierce, with girlfriend Kelly Lough (By Doug Potter)

Randy Pierce had bills piling up. The IRS was hounding him for $15,000. The state of Texas said he owed $5,000 in delinquent property taxes on the house he'd just bought in Georgetown, where he served as chief information officer for a company called Power Computing. To get some quick cash, Pierce fiddled with Power Computing's accounting software and stole two large shipments of memory modules, the long thin sticks that provide a computer's random-access memory, or RAM. A buddy in Fort Worth unloaded the modules in short order. Pierce's take on the deal: $5,500. He paid off a loan he'd taken out for the $5,000 in property taxes and blew the change. But he still owed $15,000 to the feds, and his luck was getting browner all the time. On top of his money problems, he now worried about getting caught for the theft. Months went by, then almost a year, and Pierce finally started to relax. Then one of the several parts dealers who bought the stolen memory modules tried to sell them back to Power Computing, and Pierce's secret quickly unraveled.

Pierce was charged with a Felony-1 Theft in June 1998. His attorney, a Georgetown local named Steve Copenhaver, assured him that with no prior offenses, he'd likely draw five or 10 years probation. Pierce feared otherwise. He'd learned over the past couple of years that Georgetown was, as an aggressively small town, the kind of place where people never forgot your transgressions. Then as now, officials in Georgetown liked to advertise their sunnily low crime rate, and they intended to keep it low.

Pierce was in an especially tough spot with the locals because he was a computer criminal. The neighborhood couldn't be courting Apple and Samsung with one hand while slapping cybercrooks on the wrist with the other. Copenhaver told Pierce that the Williamson County district attorney wasn't offering any deals. But if Pierce pleaded before the open court and made nice, he'd probably walk. The judge would take Pierce's cooperation and remorse into account, and it was, after all, his first offense.

At sentencing this past June, District Court Judge John Carter had other ideas. "Twenty-five years in the Texas State Correctional Facility," Carter barked. Pierce thought, "My life is over."


Not Your Average Con Man

Pierce is a big Texas man: 6'3" and flabby at 240 pounds. He's 43 years old, with a steep, rocky hillside of a face. He speaks in a hum, forcing you to lean into his comments, and he can seem distracted, even when he's telling the sad-sack tale of his life in crime. Of course, he's got a lot on his mind.

For his first appearance before Judge Carter, when he pleaded guilty back in April 1999, Pierce wore green denim pants and a printed Western shirt. His boots, once charcoal, were scuffed and dusty. His stiff posture and slicked-back hair reminded one how much small-town courtrooms look like churches. The doomed congregants faced forward, all skittish and dry-mouthed, while prosecutors and defense attorneys milled around like deacons passing the plate, and Judge Miller mounted the dais in his black robes, reciting the Texas Code by rote. The eerie effect is a holdover from the days when citizens made the churchhouse serve extra duty as town hall and judiciary. Bench-style seating that looks like pews enhance the courtroom's religious aura.

This was the scene of Pierce's nightmare, the place he never expected to end up. Pierce was a high-tech success story. Some 25 years ago, he started assembling machines for Texas Instruments. He had a high school diploma and plenty of stamina for turning double shifts, and he learned fast. He quickly moved into supervisory positions and eventually taught himself several programming languages. When Power Computing owner Steve Kang named Pierce the company's chief information officer in 1995, Pierce felt his career had finally hit cruising altitude. He moved from Fort Worth and bought a house just outside Georgetown. Power Computing assembled and sold Macintosh clones, and was bruited as a hot young company, especially by the Apple Corporation, which hoped that Kang and entrepreneurs like him would expand the Macintosh market. Then as now, only about 5% or 6% of computer users were buying Macs, but Apple's marketing department felt they could change those numbers by generating some artificial competition with Mac clones.

Nothing at Power Computing went as planned, not for Pierce nor for the company. Pierce was bounced from CIO into several other positions, then moved back into the CIO slot after an outsider failed at the job. He felt like he was getting screwed around. Kang made a lot of promises. Then the company itself failed. After several years of backing clone makers, Apple had realized that the knockoffs weren't attracting any new users to their operating system. And their own customers were defecting to Power Computing because they offered cheaper prices than Apple, their products were more reliable, and they actually served customers' needs.

In early 1997, Apple announced that it was buying back Power Computing's license to the Mac operating system -- and the company's remaining assets -- for $100 million. By this time, Pierce had been holding off the IRS a couple of years for a debt he continued to dispute. Now he was going to lose his job. Company rumors said Power Computing would file for bankruptcy by the end of 1997.

A friend of Pierce's named Larry Reeves, whom Pierce had known since the Seventies, kept bringing up the bankruptcy in their phone conversations. They'd worked assembly lines together at TI and Honeywell. They'd seen each other through divorces and several jobs. These days, Reeves was a dealer in computer parts, buying up surplus and secondhand merchandise and reselling the equipment at a profit. When Pierce told Reeves he was being hounded for property taxes on the house he'd just bought in Georgetown, Reeves offered him a $5,000 loan.

But Reeves began badgering Pierce to pay back the loan almost immediately. If you don't have the cash, he suggested, why don't you get me some merchandise that I can sell? As Power Computing's CIO, Pierce had super-user status on the mainframe. He could manipulate the company's system at will. Reeves pointed out that lots of materials get lost during a big move; no one was going to miss a few spare parts. So, with a few keystrokes, Pierce sent out 500 memory modules.

Thanks to the magic of computers, he never touched the pilfered merchandise. First, he created a phony company in the accounting software, gave the company $1 million in credit, and arranged for the sale of 500 memory modules. The shipping department was automatically issued an order to send the modules to a mail drop in Fort Worth, held under an alias by Reeves. Once the pieces were shipped, Pierce returned to the accounting software and set the bogus company's credit line to zero, which caused the sale to be denied. The system issued an order denying the sale, but Pierce used his super-user status to cancel the callback.

The package of memory modules left Power Computing's shipping dock without a hitch. No questions were asked, no flags were raised. Pierce was home free. Reeves called back two weeks later. The modules had brought in $11,000. Pierce agreed that $5,000 of his half would pay off the money Reeves had loaned him. For all his worry and risk, Pierce cleared $500 on the heist.

Reeves said if Pierce could get more merchandise, they could turn some real cash. So Pierce coaxed Power Computing's ridiculously lax accounting system into airmailing 500 more memory modules to Reeves. For the next few months, Pierce heard sporadically from his friend, who claimed the second shipment wasn't moving at all. Then Reeves stopped calling altogether.

Pierce shrugged it off, glad for each day between him and his foray into grand larceny. Things started looking better. He was sharing a home with a woman named Kelly Lough, whom he'd met at his last job and who currently worked for Power Computing. Lough and her two sons, Justin and Jamie, replaced the family Pierce had lost during a bitter divorce years earlier. After Power Computing folded, Lough and the boys moved with Pierce back to Fort Worth. Pierce thought it was just fine not to hear from Reeves, even if it meant getting stiffed on the deal. He was happy just being alive and free.


Tracing the Loot

The detective working this case for the Austin Police Department's high-tech unit -- who said he'd endanger his undercover work if he gave his name -- called the Pierce affair "a Skylab case. It just fell on us. Some parts dealer called Power Computing and offered to sell a buyer there, a man named Gary Connelly, some memory modules. But Connelly knew they hardly ever sold off surplus pieces like that -- there was no reason those parts would've been floating around. So Connelly called me." (The APD's special high-tech unit investigated the case on behalf of Williamson County.)

The detective backtracked the memory modules as they were passed from dealer to dealer. In this gray market, dealers don't ask each other where parts come from; they ask, "How much?" and, "When can you get them here?" The first dealer the detective talked to, who had bought 100 modules, had paid $175 for each one. At each exchange, the modules were broken into smaller lots of 50 and 100, sort of like heroin dealers splitting their product into smaller packages as they move from kilos to street-level sales.

Five dealers back, the detective found the man who first bought the Power Computing memory sticks from Reeves. The man described Reeves as an African-American in his mid-40s, of medium build, usually wearing a thin mustache. He remembered Reeves' saggy, puppy-dog eyes. The dealer told the detective he'd paid $102 each for the memory modules, and easily sold the batch in two lots for $120 apiece. Reeves had made $51,000 on the deal, though he'd told Pierce he only got $11,000.

The parts dealer sent the detective to Reeves' mother, who convinced her son to call him and answer some questions about the memory he'd sold. There proceeded lots of hemming and hawing, and a fake invoice calling the parts "surplus." Suffice it to say that Reeves didn't cooperate. Although Reeves had no criminal record, the detective noted that he had settled a civil complaint in which he'd been charged with failing to deliver a batch of computers he'd already taken payment for.

It seemed clear that Reeves had help in the heist, someone on the inside. Since the detective had a phone number for Reeves, he checked phone records to see if Reeves had made any calls to Power Computing. He had. The detective slapped his computer upside its monitor when his search revealed that Reeves had called just one Power Computing employee: the chief information officer, Randy Pierce.

Once they were charged, Pierce and Reeves acted very differently. Pierce immediately confessed to the detective, and agreed to drive to Georgetown from Fort Worth. He made the same confession to Bill Torry, the then-Williamson Co. district attorney. Pierce was shocked to hear that Reeves had stiffed him for $5,500 on a $51,000 deal. He told Torry everything he'd done and everything he knew. Oh, and Pierce did all this completely alone: no attorney present, no friend or adviser at his side. At this point, he hadn't even told Lough or her two children about the trouble.

Reeves, meanwhile, disappeared. A couple of months later, in November 1998, he was pulled over for running a red light in Duncanville, Texas. He would spend the next nine months in the Williamson County lockup, awaiting trial.

In the meantime, Pierce hired Copenhaver as his attorney. Copenhaver promised nothing and, in the end, delivered. Pierce also appeared in an anti-crime video produced by the Austin-based Association of Certified Fraud Examiners.

During the video interview, Pierce said he'd just heard from the IRS -- the agent explained that he'd made a mistake in analyzing Pierce's return. On closer inspection, and after three years of hassle, Pierce didn't owe a dime. In fact, he was due a $2,000 refund, which the agent had already routed to the mail department.


Justice, Georgetown Style

There's no question Pierce was guilty. He said so from the start, whereas a canny operator would have kept his mouth shut. And no doubt, Texas regularly spawns far more shocking stories of criminal injustice. Lacresha Murray, the 11-year-old girl who was cajoled by police into a murder confession, is one. There are hundreds, probably thousands, of others: Alexander "Rusty" Windle, featured in these pages recently after he hooked a friend up with a half-ounce bag of pot and was subsequently shot dead by the Hays County Drug Task Force during a pre-dawn raid; or the man whose attorney slept through his trial for capital murder, after which an appeals judge ruled that an unconscious attorney is not necessarily an inadequate one; or the man in West Texas, too poor to post bail, who was jailed for six months while waiting to be assigned a public defender, and who was subsequently found not guilty of the $100 theft of which he was accused.

Still, even if this case isn't as egregious as some others, it's hard to see how justice is being served here.

For one thing, it's costing Texas citizens $42 a day to hold Pierce behind bars. Based on figures from the Criminal Justice Policy Institute, which advises the Texas Legislature on penal issues, the average larcenist is sentenced to eight years and serves between a year and two years' actual time. At that rate, Pierce could walk in four to six years.

That may sound like a bargain, especially since many of us are used to hearing TV prosecutors haggle over five-year prison increments like they were buying a leather satchel in Laredo. But it will cost around $100,000 in taxpayer money to make those four to six years happen.

Joseph Wells, who founded the Certified Fraud Examiners some 12 years ago, argues that white-collar criminals like Pierce and Reeves shouldn't be imprisoned at all. Neither man poses a physical danger. Neither has ever been charged with another felony crime. Both men committed economic crimes, Wells says. "There's no point in putting these guys in a cage. They're not a danger, except as they affect the economic system."

Wells has lobbied the federal government to institute what he calls minimum wage sentencing. The idea is to punish economic criminals economically. Under minimum wage sentencing, white-collar offenders would remain in society, and be allowed to work at their professions -- but, for a duration of time determined by the court, the convicts would receive only minimum wage as compensation. All the offenders' remaining earnings would be devoted to paying back their victims and to funding antifraud efforts.

Under this scenario, Wells boasts, "Michael Milken, who was accused of causing over $1 billion in losses, would draw a life sentence. He'd still be doing business, and teaching at Harvard, and all the nice things he's done since he served his time in federal prison, but he'd be living in a furnished garage apartment, and driving a Pinto -- from now on."

Pierce would love to fold his massive frame behind the wheel of that Pinto. But he'll be busy for the next few years scrubbing toilets and hoping he gets a trip to the library this week (see "Letter From Prison," below). His court-appointed lawyer has withdrawn from the case, finding no grounds for appeal.

In early November, Judge Carter reviewed a motion for a reduction in sentence which Pierce filed with the help of his fellow inmates. He denied the motion. Neither Judge Carter nor Williamson County DA Ken Anderson would discuss Pierce's case with the Chronicle.

(Interestingly, though, Anderson has until recently featured Pierce's case on his office's Web site -- perhaps to keep all those Samsung executives informed about the state of justice in Georgetown. In the site's lead story, Anderson wrote that "given the amount of the theft [some $300,000, according to Power Computing's insurance company] and evident lack of remorse, these sentences were entirely appropriate." He added, "White collar criminals aren't going to avoid prison just because they used a mouse instead of a gun.")

The press has also remained silent. The Austin American-Statesman, which ran a prominent article about the investigation and charges in June 1998, declined to print even a police-blotter follow-up this summer, when the 25-year sentence came down. Perhaps it's true, as M. Emmet Walsh whined in the opening moments of the legendary film Blood Simple: "In Texas, you're on your own." end story


Austin writer Brett Holloway-Reeves also writes true crime stories for the Texas Fraud Examiners Association.

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