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11 Indicted in Bootlegged Software Case

September 17, 2004|David Colker | Times Staff Writer

A federal grand jury in Los Angeles has indicted 11 people on charges of conspiring to distribute nearly $31 million worth of bootlegged software programs.

The indictments, handed up Wednesday, stem from a two-year investigation that uncovered a network that replicated more than 10,000 illicit software CDs, licenses and manuals. The defendants allegedly distributed them to warehouses and then processed payments when the counterfeit products were sold, according to the U.S. attorney's office in Los Angeles.

In connection with the case, FBI agents raided two storage areas in Austin, Texas, that contained counterfeit software with a street value of more than $56 million. The CDs were purported to contain legitimate programs from Microsoft Corp., Adobe Systems Inc. and Symantec Corp., according to U.S. attorney's spokesman Thom Mrozek.

Agents also have seized an industrial-strength CD replicator in Anaheim. According to Mrozek, the people arrested in conjunction with the raid said the machine was being used legally to produce music CDs for the Asian community in Orange County.

In addition, sophisticated printing equipment that made fake software licenses and manuals was recovered in San Francisco, investigators said.

According to the indictment, the counterfeit discs and documentation were produced by Sanh Chan Thai of San Gabriel, Hung Trieu Lu of Walnut, Roger Le of Rancho Santa Margarita and Thanh Tuong of San Francisco.

They allegedly delivered those items to Vancouver, Wash., residents Tobias Grace, Tom Polmatier, Shawn Stockford and Arlyn Maldonado and to Arnica Grace and Maxwell McKay of Austin, Texas. The payments were allegedly processed by Victor Solano of Gardena.

All are scheduled to be arraigned Monday.

None of the defendants or their attorneys could be reached for comment.

The software industry has long complained that piracy costs companies billions of dollars annually. A study released this year by the Business Software Alliance, an industry group in Washington said $6.5 billion worth of counterfeit software was installed on computers in the U.S. in 2003.

"Any enforcement action taken against software pirates goes a long way toward setting an example for what could happen to people who steal intellectual property, including software," said business alliance spokeswoman Diane Smiraldo.

The pirated software and licenses mentioned in the indictment include Microsoft's Office 2000 Professional, SQL Server 2000, Windows Server 2003 and Adobe Acrobat. No specific Symantec products were named in the indictment.

The FBI cracked the case with the help of an insider who tipped off investigators when large counterfeit orders were being placed by illicit distributors, Mrozek said.

"He was a middleman at the center of the operation, with connections to both the manufacturing and distribution sides," Mrozek said. "Normally, we get the replicator and some guy running it, or we get the people at the warehouse. In this case, we got both ends."

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