Twelve Arrested for the Manufacture and Distribution of Counterfeit Microsoft Software

REDMOND, Wash., Feb. 14, 2000 — Microsoft Corp. officials today applauded the actions of the Los Angeles Sheriff ‘s Office Computer Crimes Unit and the Federal Bureau of Investigation’s New York field office for the Thursday, Feb. 10, arrest of 12 alleged criminal software counterfeiters in the Los Angeles area. The arrests are the culmination of an extensive, long-term investigation by local and federal law enforcement officials. An investigation by the FBI’s New York field office was closely linked to the Los Angeles raids. Several of the defendants in the Feb. 10 raids are tied to counterfeiting cases on the East Coast.

More than 100 law enforcement officials were involved in yesterday’s series of 12 raids on various Los Angeles-area businesses, residences, storage lockers and, with the assistance of the United States Postal Service, a post office box. Twelve warrants were issued in total. Law enforcement officials confiscated a machine for shrink wrapping and more than 12,000 counterfeit copies of software including Microsoft Ò Office 2000, Office 97, Microsoft Windows Ò 98, Windows 95 and Windows NT Ò Server valued at over $5 million. The Los Angeles Police Department also assisted in the raids and seized approximately $1 million of the counterfeit software.

“We applaud the dedication and outstanding cooperation of all of the law enforcement agencies involved in yesterday’s raids. Their hard work uncovered a large, well-organized counterfeiting operation linked to previous raids and criminal counterfeiting activity across the nation and around the world,”
said Rich LaMagna, senior manager of Worldwide Investigations at Microsoft.
“With potential links to Asian organized crime, connected specifically to the Taiwanese community, these arrests will not only prevent many customers from being duped into giving good money for fake goods, but will take some serious criminals off our streets.”

Counterfeiting cases typically involve both copyright and trademark infringements. Under federal trademark law, criminal penalties include fines of up to $2 million and 10 years in jail per infringement; federal copyright laws include fines of up to $250,000 and five years in jail per violation.

To recognize and help combat the escalating problem of intellectual property theft, the Department of Justice launched the National Intellectual Property Initiative in July 1999. The involvement of the FBI’s New York field office in yesterday’s raids is part of that initiative.

“Together with the FBI, the Los Angeles Police Department and the U.S. Postal Service, we took a step forward yesterday in the fight to combat criminal counterfeiting in the United States,”
said Detective John P. Colbert of the Los Angeles Sheriff ‘s Office.
“We will continue to be aggressive in our pursuit of those involved in organized criminal counterfeiting operations.”

Software counterfeiting is generally a sophisticated criminal activity, increasingly dominated by organized crime rings that use counterfeiting revenues to fund and launder profits from other criminal activities. Even sophisticated consumers are often unable to distinguish legitimate software from counterfeit.

The United States is a leading manufacturer and exporter of counterfeit software, with major counterfeiting rings based in California, Texas, Florida and New York. These counterfeiting operations have produced hundreds of millions of software units per year. Between June 1998 and June 1999 alone, authorities seized 4.3 million units of counterfeit Microsoft software.

Unlike previous versions of Microsoft products that have been heavily counterfeited, Microsoft believes that with upcoming versions of Office 2000 and Windows 2000, counterfeiting will have significantly less impact. With the dedicated efforts of law enforcement officials, a focus on anti-piracy education and innovative security features like the edge-to-edge CD-ROM hologram announced last week, positive steps have been taken toward combating software piracy.

Microsoft encourages consumers to become familiar with the warning signs that can help them identify counterfeit or illegal software:

  • Prices that are
    “too good to be true”

  • Suspicious methods of delivery and/or payment

  • Retail products distributed in jewel cases only, rather than in full-color retail boxes.

  • Products marked with a phrase, such as
    “For distribution with a new PC only”
    or
    “Special CD for licensed customers only,”
    that does not describe the transaction. These phrases are often used to dupe customers into purchasing counterfeit software.

Customers or resellers with questions about the legitimacy of Microsoft software should contact the Microsoft anti-piracy hot line, toll free, at (800) RU-LEGIT (785-3448) or send e-mail to piracy@microsoft.com. Consumers can obtain more information about software piracy by calling the Business Software Alliance anti-piracy hot line at (888) NO-PIRACY (667-4722) or by sending e-mail to software@bsa.org.

About Microsoft

Founded in 1975, Microsoft (Nasdaq
“MSFT”
) is the worldwide leader in software for personal and business computing. The company offers a wide range of products and services designed to empower people through great software — any time, any place and on any device.

Software values based on estimated retail prices.

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