Update 12/5/06

UKRANIAN SOFTWARE PIRATE SENTENCED TO 35 MONTHS

One of the First Cases of Extradition for Intellectual Property Crimes

Seized Pirated Material Worth at least $50 Million

Background – 21/7/05:

Israelis nabbed in FBI pirate software raid

July 7, 2005

A 20-year-old man (Soldier from Zefat – 4Law) from northern Israel was arrested last Wednesday as part of an international operation in which police forces raided more than 90 houses in various countries across the world. The Operation Site Down targets were suspected of belonging to a ring of hackers that cracked software security systems, pirated the material, and then sold it via the Internet. Many criminal and terrorist organizations raise money by trafficking in pirated software, which they obtain from "first-provider" groups such as the one targeted by Operation Site Down. In the operation, the ring nabbed distributors of all kinds of pirated software, including applications, movies, music and games. The FBI and Interpol presided over the operation. Chief Inspector Meir Hiyun of the Israel Police's Computer Crimes Division said the FBI carefully coordinated the raids so that all would take place "at precisely the same instant. In Israel, we raided the [target] house at 4 P.M.; in the United States, the raid took place at 9 A.M. their time. This was due to lessons learned from previous operations, in which it became clear that within less than two and a half minutes, information about a raid taking place in one part of the world would pass through the servers to all other places in the world, enabling the suspects to erase all [incriminating] material." The Israeli suspect, who has been released subject to certain restrictions, is believed to have assisted the ring in various ways. For instance, in order to cover their tracks, ring members in the U.S. used Israeli servers, while those in Israel used American servers. Among those arrested in the operation were one suspect in Germany, four in the United States and one in Canada. Other participating countries were France, Belgium, Denmark, the Netherlands, the United Kingdom, Portugal and Australia. According to the U.S. Department of Justice, the raiders also dismantled at least eight major online distribution sites for pirated material, and seized pirated material worth at least $50 million.

http://www.haaretz.com/hasen/spages/596833.html

4Law Exclusive – The 4 FBI Affidavits in US

FBI AFFIDAVIT : UNITED STATES OF AMERICA v. WILLIAM VEYNA

FBI AFFIDAVIT : UNITED STATES OF AMERICA v. CHIRAYU PATEL

FBI AFFIDAVIT : UNITED STATES OF AMERICA v. NATE LOVELL

FBI AFFIDAVIT : UNITED STATES OF AMERICA v. DAVID FISH

THURSDAY, JUNE 30, 2005

JUSTICE DEPARTMENT ANNOUNCES INTERNATIONAL INTERNET PIRACY SWEEP

‘Operation Site Down’ Attacks Organized Piracy Networks In 10 Countries

WASHINGTON, D.C. - Attorney General Alberto R. Gonzales, Acting Assistant Attorney General John C. Richter of the Criminal Division and FBI Cyber Division Assistant Director Louis M. Reigel today announced another far-reaching and aggressive international enforcement action against criminal organizations involved in the illegal online distribution of copyrighted material.

Beginning yesterday morning, the FBI and law enforcement from 10 other countries conducted over 90 searches worldwide as part of “Operation Site Down,” designed to disrupt and dismantle many of the leading criminal organizations that illegally distribute and trade in copyrighted software, movies, music, and games on the Internet.

“By dismantling these networks, the Department is striking at the top of the copyright piracy supply chain - a distribution chain that provides the vast majority of the illegal digital content now available online,” said Attorney General Gonzales. “And by penetrating this illegal world of high-technology and intellectual property theft, we have shown that law enforcement can and will find - and we will prosecute - those who try to use the Internet to create piracy networks beyond the reach of law enforcement.”

Operation Site Down is the culmination of three separate undercover investigations conducted by the FBI. In the past 24 hours, more than 70 searches were executed in the United States, and more than 20 overseas. Four individuals were arrested in the United States, and searches and/or arrests occurred in the following 10 countries: Canada, Israel, France, Belgium, Denmark, the Netherlands, United Kingdom, Germany, Portugal and Australia. At least eight major online distribution sites were dismantled, preventing tens of millions of further losses to the content industry. More than 120 leading members of the organized online piracy underground were identified by the investigation to date, and as the investigations continue, additional targets will be identified and pursued.

“The theft of this property strikes at the heart of America’s economy,” said FBI Assistant Director Louis M. Reigel. “It deprives many Americans and others around the globe of their right to be paid for their labor and enjoy the value of their hard work.”

In addition to attacking piracy globally, Operation Site Down struck at all facets of the illegal software, game, movie, and music trade online, which is commonly referred to as the "warez scene." The investigations focused on individuals and organizations that were the “first-providers” of copyrighted works to the warez underground - the so-called “release” groups that operated as the original sources for a majority of the pirated works distributed and downloaded via the Internet. Once a warez release group prepares a stolen work for distribution, the material is distributed in minutes to secure, top-level warez servers throughout the world. From there, within a matter of hours, the pirated works are distributed globally, filtering down to peer-to-peer and other public file sharing networks accessible to anyone with Internet access.

The release groups targeted by Site Down specialize in the distribution of all types of pirated works including utility and application software, movies, music, and games. Among the warez groups hit yesterday are: RiSCISO, Myth, TDA, LND, Goodfellaz, Hoodlum, Vengeance, Centropy, Wasted Time, Paranoid, Corrupt, Gamerz, AdmitONE, Hellbound, KGS, BBX, KHG, NOX, NFR, CDZ, TUN, and BHP. These groups alone are allegedly responsible for stealing, cracking and distributing hundreds of well-known titles, such as Autodesk’s Autocad 2006, Adobe’s Photoshop, and the movies “Star Wars Episode III: Revenge of the Sith” and “Mr. and Mrs. Smith.” Operation Site Down is expected to dismantle many of these international warez syndicates and significantly disrupt the illicit operations of others.

Conservative estimates of the value of pirated works seized in yesterday’s action exceed $50 million, which is only a fraction of the losses attributable to the online distribution hubs also seized in this operation. Top-level release groups like those targeted in the operation are primary suppliers to the for-profit criminal distribution networks that cost the copyright industry billions of dollars each year. Illegal warez copies of titles such as Autocad 2006 and “Mr. and Mrs. Smith” are easily and cheaply converted to optical discs and distributed throughout the world from factories in Asia and elsewhere. Spammers regularly advertise cheap software that can be downloaded from websites or shipped from overseas, usually bearing the signature mark of the warez group that released it.

Operation Site Down comprises three separate FBI undercover investigations run by the FBI field divisions in Charlotte, North Carolina; Chicago, Illinois; and San Francisco, California. The U.S. Attorney’s Offices in San Francisco, Charlotte and Chicago assisted in the investigations and a majority of the domestic targets will be prosecuted in those districts. The Justice Department’s Computer Crime and Intellectual Property Section also assisted in the investigations and led the coordination of foreign enforcement actions in 10 countries.

Operation Site Down is the latest in a series of actions taken by the Department of Justice to crack down on illegal online piracy. In the past four years, beginning with Operation Buccaneer in 2001 through Operation Fastlink in 2004, the Department has prosecuted a number of international investigations into these top piracy organizations.

In March 2004, as part of the Administration’s Strategy Targeting Organized Piracy (STOP!) Initiative, the Department established the Task Force on Intellectual Property to address the increasing problem of intellectual property theft. The Task Force examined how the Department protects intellectual property through criminal, civil and antitrust enforcement, legislative proposals, international coordination, and prevention. A report issued by the Task Force in October 2004 recommended comprehensive improvements in the Department’s overall efforts, many of which have already been implemented. One of those recommendations was to continue the Department’s strategy of dismantling and prosecuting multi-district and international criminal organizations that commit intellectual property crimes. Operation Site Down represents the Department’s continued effort to pursue this strategy.

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June 30, 2005

4 ARRESTS AND NEARLY 40 SEARCHES IN MASSIVE INTERNET ANTI-PIRACY

OPERATION LED BY FBI AND U.S. ATTORNEY'S OFFICE

Undercover Investigation Targeted Online "Warez" Groups Illegally

Distributing Newly-Released Movies, Music and Software

"Star Wars: Episode III - Revenge of the Sith," "Batman Begins," and "Bewitched" Allegedly Distributed on Sites

The United States Attorney's Office for the Northern District of California announced the arrests of four individuals in the United States and searches of approximately 40 locations around the country yesterday in "Operation Copycat," the largest and local part of the coordinated international law enforcement action known as "Operation Site Down," designed to combat online piracy of copyrighted movies, music and software. Undercover operations were simultaneously concluded yesterday in three U.S. Attorney Offices, including San Jose, Chicago and Charlotte. Collectively, the three investigations are referred to as "Operation Site Down." Details concerning the broader "Operation Site Down" action are available from the Department of Justice at www.usdoj.gov, which issued a press release and conducted a press conference today with U.S. Attorney General Alberto R. Gonzalez.

United States Attorney Kevin V. Ryan, a member of the Justice Department's Intellectual Property Task Force stated: "The Computer Hacking and Intellectual Property Unit in San Jose was the first computer crime fighting unit of its kind in the nation, and by today's enforcement action, we continue to lead the country in the protection of its intellectual property. Individuals participating in these "warez" groups should take note that distributing pirated movies, games and software is a crime and perpetrators face federal prosecution."

"Operation Copycat" Background

"Operation Copycat" is a two-year long undercover investigation into "warez groups," which are online organizations engaged in the illegal uploading, copying and distribution of copyrighted works. The investigation was led by the Computer Hacking and Intellectual Property ("CHIP") Unit of the United States Attorney's Office and the Federal Bureau of Investigation.

"Warez groups" are the "first-providers" of copyrighted works to the warez underground - the so-called "release" groups that operate as the original sources for a majority of the pirated works distributed and downloaded via the Internet. Once a warez release group prepares a stolen work for distribution, the material is distributed in minutes to secure, top-level warez servers throughout the world. From there, within a matter of hours, the pirated works are distributed globally, filtering down to peer-to-peer and other public file sharing networks accessible to anyone with Internet access.

To gather evidence in this investigation, the FBI utilized two original undercover computer servers that were used by members of the warez groups to store pirated works for illegal distribution. Some of the warez members added additional servers to the undercover site. Higher level members of the warez groups, known as site operators or "SiteOps," controlled access to the site by use of security measures such as usernames and passwords. Lower level members included suppliers, "cammers" (those making unauthorized camcorder recordings in movie theaters), couriers, and "encoders" or "crackers" (those defeating copy protection devices).

Directory lists from the undercover "warez" servers in Operation Copycat showed that more than 750 copyrighted movies were uploaded to the site, including new releases such as "Star Wars: Episode III - Revenge of the Sith," "Batman Begins," and "Bewitched." Some of these titles were available on the site within hours of the movie's theatrical release. Directory lists also showed that over 1,250 copyrighted titles of computer games were available on the site, and over 180 titles of software applications, including those by makers such as Adobe, Apple, Autodesk, Microsoft, and Symantec. Conservative estimates of the value of pirated works seized in yesterday's Operation Site Down action exceed $50 million.

Four searches were conducted within the Northern District of California with the other searches conducted in districts across the country.

FBI Arrests

United States Magistrate Judge Richard Seeborg in San Jose, issued four arrest warrants based on the undercover investigation.

The FBI arrested four individuals yesterday: WILLIAM VEYNA, 34, of Chatworth, California; CHIRAYU PATEL, 23, of Fremont, California; NATE LOVELL, 22, of Boulder, Colorado; and DAVID FISH, 24, of Watertown, Connecticut. Each of the defendants were arrested pursuant to criminal complaints charging, among other violations, violations of 18 U.S.C. § 2319 (criminal copyright infringement), 18 U.S.C. § 371 (conspiracy to commit criminal copyright infringement), and 18 U.S.C. § 2 (aiding and abetting).

According to the affidavits in support of the criminal complaints, Mr. VEYNA acted as a "SiteOp" for one of the servers, and was active on the site since January 2005; Mr. PATEL acted a "SiteOp" for an undercover server, and was active on the site since May 2004; Mr. FISH acted as a "SiteOp" and a "ripper" for one of the undercover servers since March 2004; and Mr. LOVELL provided equipment to the "warez group" and was able to download an unlimited amount of media.

Mr. PATEL appeared yesterday before Chief U.S. Magistrate Judge Patricia V. Trumbull in federal court in San Jose, and was released on $100,000 bond; Mr. FISH appeared yesterday before United States Magistrate Judge Joan Margolis in Connecticut, and was also released on $100,000 bond. Mr. VEYNA appeared yesterday before United States Magistrate Judge Robert N. Block in Los Angeles and was released on a $50,000 bond. Mr. LOVELL is in custody and will appear in court on Friday in Colorado.

All defendants have been ordered to appear on July 14, 2005, at 9:30 a.m. before United States Magistrate Judge Howard R. Lloyd in San Jose.

The maximum penalties under 18 U.S.C. §§ 2319, 371, and 2 are 5 years imprisonment, $250,000 fine, 3 years supervised release, and a $100 special assessment. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. A criminal complaint only contains allegations and these defendants, as with all defendants, must be presumed innocent unless and until convicted.

Mark L. Krotoski is the Assistant U.S. Attorney from the CHIP Unit who is prosecuting the case.

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