Axact’s Dangerous Legacy: How Pakistan’s ‘Diploma Factory’ Led to Trademark Scam Epidemic

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  • Pakistani IT companies Abtach and Digitonics Labs allegedly defrauded
  • Includes USPTO identity theft and overcharging for branded services
  • Expert claims such widespread fraud in Pakistan is due to precedent set by notorious “diploma factory” Axact

After a year marked by fraud targeting brand owners, Pakistani issues expert says WTR how a notorious IT company called Axact, which went out of business following a large-scale criminal investigation, directly led to ongoing scam operations. Further research reveals that dozens of senior employees at IT companies Abtach and Digitonics Labs, both of whom have been accused of operating fraudulent brand agencies, previously worked for Axact.

Since February 2021, WTR raised concerns with low-cost depositories, including Trademark Terminal, Trademark Axis, Trademark Falcon, Trademark Regal, and USPTO Trademarks. They had been the subject of criticism following a series of customer complaints and unusual activity identified out of thousands of trademark applications filed with the USPTO. In May, WTR revealed how websites spend thousands of dollars per month on Google ads.

Also in February, we reported “the biggest money laundering case in Pakistan’s history,” which saw local authorities arrest a number of individuals from a computer company called Digitonics Labs. The company had been accused of operating over 200 fraudulent websites, including a number of low-cost trademark filing platforms such as the aforementioned “USPTO Trademarks”. In July, further investigation revealed that Trademark Terminal (and its sister sites) appeared to be operated by Karachi-based IT company Abtach. Earlier this month, the USPTO – in one of the largest anti-fraud crackdowns in its history – issued a heavily worded show cause order to Abtach and outlined shocking details of its filing fraud activity.

A key question from the start of our report has been why so much of the reported trademark fraud appears to come from Pakistan. A Pakistani expert (who agreed to speak anonymously out of fear for his safety) said there were “two main reasons” why so much recent fraudulent activity is happening in Pakistan.

“First, law and order,” they explain. “The law is weak in Pakistan, and it’s easy to bribe law enforcement or do things behind their backs. On top of that, there is a desperate young population ready to make quick money because there is a lack of jobs. Earlier this year, Abtach himself was accused of bribing a representative of Pakistan’s Federal Investigation Agency (FIA), who was investigating him for alleged money laundering.

The second reason given by the expert is an entity called Axact. “He operated on an insane scale and carried out all kinds of fraudulent activity and offered bogus degrees,” they claim. “Axact pioneered the art of trademark fraud. “

Axact was founded in 1997 in Karachi with less than 10 employees, but in 2013 it claimed 5,200 employees and called itself “the world’s leading IT company”. In 2015, The New York Times published an investigation claiming that Axact operated more than 350 bogus diploma and diploma websites. While noting that the company also sells software services (mostly related to website design and smartphone apps), the article claimed that its “core business” was “to take the age-old scam of selling fake college degrees and turn it into the Internet. -st plan on a global scale ”.

Initially, Axact denied the allegations, but a subsequent investigation by the Federal Investigative Agency raided Axact’s offices in Karachi and uncovered blank diplomas and fake U.S. government letterheads. A report, published in April 2016, claimed the scandal was “bigger than initially imagined”, with allegations that Axact took money from more than 215,000 people in 197 countries. To do this, it was claimed that Axact’s sales agents used “threats and false promises” and pretended to be government officials to take money from customers. In 2018, Axact CEO Shoaib Shaikh and 22 others involved in the case were sentenced to 20 years in prison.

The conviction of 23 Axact employees could be seen as a major anti-fraud victory. However, according to the expert we spoke to, this led to many of the problems we see today. “Yes, Operation Axact was dismantled and the leaders were arrested, but the base was never stopped, so they all dispersed in the Pakistani software market,” he explains. “These people knew the skills of the fraud business, as they learned at Axact, and they presented these frauds to CEOs of small businesses. Axact is dead, but he left his cancerous fraud seeds all over the country. “

Further research by WTR find dozens of high-ranking Abtach employees on LinkedIn who list their previous jobs at Axact. These are Abtach employees with job titles such as Assistant Vice President, Senior Director of Business Development, Senior Vice President of Operations, Director of Quality Assurance, Vice President, Head of Customer Support ( international sales), senior director, senior quality assurance executive, senior executive (web development), team coordinator, president (general management), senior vice president and project manager. We also discovered on LinkedIn some executives from Digitonics Labs who list Axact as a former employer, such as those whose job titles include Interim General Manager, Business Unit Manager, Director, Deputy Director, Vice President (International Sales) , Senior Front-End Engineer, Senior Associate Vice President and Brand Manager.

According to the expert, the most common fraud activities carried out by former Axact employees relate to fake diplomas, logo design, ghostwriting, website design and filing of brands. As WTR reported that Digitonics Labs and Abtach operated hundreds of websites offering such services (for example, in July, WTR investigated a $ 150,000 scam that started with a logo design, developed for web design, and then led to exorbitant fees related to patents and trademarks).

A key question is whether Abtach and Digitonics Labs – both of which are under investigation by Pakistan’s FIA but still appear to be in business – are the only IT companies in Pakistan that have allegedly committed mass fraud at this scale. According to the expert, there are more. “It’s so sad that our talented young people are involved in such projects,” he concedes. “These companies increase your IT income, but one day this whole sandcastle will collapse, the world will find out and Pakistan will be mocked and ridiculed again, there will be more sanctions against us and doing business will become more difficult. . “

An FIA representative agrees, telling local media earlier this year: “The impact of these scams is not only contributing to an increase in the crime rate, but it will also damage Pakistan’s reputation in the world. .

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