Authorities arrest 27 people who allegedly pirated software, distributed products in United States

Saturday, April 20th 2002, 12:00 am
By: News On 6

SAN JOSE, Calif. (AP) _ Law enforcement officers led by the FBI arrested 27 people in a suspected software piracy ring that cost Microsoft Corp. and other companies hundreds of millions of dollars in lost sales.

FBI Director Robert Mueller said ``Operation Cyberstorm'' was one of several active federal investigations into software piracy. Software companies claim the problem is so widespread it costs the industry $12 billion a year.

Officials said the arrests followed a two-year investigation in which undercover officers, posing as distributors, purchased several million dollars worth of counterfeit software.

``It is one of the largest takedowns I think we have seen around the country,'' Mueller said Friday.

The 27 were arrested Thursday on a variety of charges, including money laundering, copyright infringement and trafficking in counterfeit goods, according to court filings. Those charges carry penalties of five to 20 years in prison.

Many of the suspects allegedly were part of a sophisticated network that reverse-engineered or made illegal copies of such popular software as Microsoft's Windows Office 2000, Photoshop by Adobe Systems Inc. and virus-detecting programs by Symantec Corp. The legitimate versions of some such programs can cost more than $500 in retail stores.

The counterfeit versions, apparently made in Asia, were sold at huge discounts over the Internet and in stores around the world by distributors connected to the counterfeiters, investigators said. Undercover agents bought $5.5 million worth of the fake software.

The packaging for the counterfeit software was generally so realistic that few consumers could tell they weren't buying the real thing. In fact, Microsoft investigators have found counterfeit software in police departments, government agencies and large corporations, said Richard LaMagna, the company's director of piracy investigation.