FBI-Led Operation Takes Down Criminal Conspiracy

REDMOND, Wash., April 19, 2002 — Microsoft Corp. officials congratulate the Federal Bureau of Investigation and the San Jose, Calif., Police Department for their leadership following a historic two-year undercover investigation that was undertaken in partnership with the Internal Revenue Service, the U.S. Customs Service, the Fremont, Calif., Police Department, the U.S. Attorney’s office of Santa Clara, Calif., and members of the Rapid Enforcement Allied Computer Team Task Force (REACT Task Force). Operation Cyberstorm culminated Thursday with the execution of close to a dozen warrants and the arrest of 27 individuals in Northern California, Washington and Oregon. The individuals are allegedly responsible for the largest criminal conspiracy in the history of the software industry involving the distribution of counterfeit and infringing software. FBI Director Robert Mueller made the announcement today at a press conference in San Jose.

During the two-year investigation, the FBI directed the efforts and resources of 14 federal, state and local law enforcement agencies in what is now known as Operation Cyberstorm. The complex investigation routed out the activities of a highly organized criminal conspiracy involved in the alleged sale and distribution of counterfeit and infringing software, money laundering, credit card fraud and fraud against the academic community. The conspiracy used genuine Microsoft®
software to provide cover for a host of other illegal activities including a complex counterfeit software and component distribution operation.

“We are immensely appreciative of the collective efforts of law enforcement in breaking this case,” said Rich LaMagna, manager of worldwide investigations for Microsoft. “At a time when our nation’s economy is struggling, steps to protect intellectual property have perhaps never been more critical. The FBI’s leadership and the hard work of all the federal, state and local law enforcement agencies is a testament to what can be accomplished when there are talented and dedicated professionals working as a team to stop a highly organized criminal conspiracy.”

The total financial impact has not yet been confirmed; the losses to Microsoft alone are estimated to be several hundred million dollars. These losses represent a small fraction of the negative impact that software piracy has on the economy as a result of the loss of retail sales, state and federal taxes, and jobs.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and Internet technologies 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.

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