The two faces of Foundstone: software piracy problems

Monday, 9 June 2003, 3:54 PM EST

Foundstone, a privately owned $20-million-a-year company in Mission Viejo, Calif., is in trouble. It has been accused of widespread software piracy by a leading industry trade group, FORTUNE has learned--charges corroborated by current and former Foundstone employees and by computer printouts obtained by the magazine.

The trade group, the Software & Information Industry Association, informed Kurtz by letter in May that it intended to pursue copyright-infringement charges against Foundstone. It acted after a confidential source alleged that McClure and Gary Bahadur, Foundstone's chief information officer, routinely spread unlicensed software to the company's 125-member workforce; that Kurtz was aware of that practice; and that in early April the CEO ordered his staff to delete unlicensed software from their computers. "They're gambling with their reputation," says Keith Kupferschmid, head of the association's antipiracy unit, which investigated and found the allegations credible. "That's not a smart thing to do."

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