FBI Seizes Over $80 Million Worth of Counterfeit and Infringing Software in California and Texas

REDMOND, Wash., Sept. 16, 2004 — Microsoft Corp. today applauded the FBI in Los Angeles for its leadership following a two-year investigation undertaken in a significant partnership with Microsoft and other industry investigators that has resulted in the largest seizure of counterfeit Microsoft software and components to date.

The investigation culminated in a federal grand jury returning an indictment against 11 individuals yesterday in Los Angeles. In late August, the FBI executed three search warrants and arrested 11 individuals in California, Washington and Texas. The individuals are allegedly responsible for a wide variety of software piracy operations, including unauthorized media replication, printing of counterfeit documentation and distribution of counterfeit software.

“The FBI’s leadership has forged an unprecedented collaborative partnership between law enforcement and industry that has led to cracking this sophisticated case,” said Rich LaMagna, director of worldwide investigations for the digital integrity group at Microsoft. “We are immensely appreciative of law enforcement’s efforts. With this type of teamwork, we can successfully address cybercrime and fight the 21st-century tactics of today’s criminals.”

During the two-year period, the investigation, now known as Digital Marauder, targeted the counterfeit replication, printing and distribution portions of a sophisticated and highly organized criminal operation. The indicted defendants, including Tobias Grace of Vancouver, Wash., and Sanh Thai of Los Angeles, Calif., were allegedly involved in setting up a counterfeit replication site in the Los Angeles area, where they produced counterfeit Adobe and Symantec CDs. This replication site was raided by the FBI’s Los Angeles office in April 2004, and the equipment was seized.

Grace allegedly worked through Thai to engage the services of a printer in San Francisco, Thanh Tuong, who is accused of printing counterfeit documentation for Microsoft server products and other software products. These documents were then allegedly delivered to a number of customers, including Arnica Grace, Tobias Grace’s sister, in Austin, Texas, for distribution.

The value of the counterfeit and infringing Microsoft products is estimated to be in excess of $80 million, making this the largest criminal seizure of counterfeit Microsoft software and components in history. Microsoft’s 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.

Microsoft has applied anti-piracy technical measures to help consumers ensure that they acquire genuine Microsoft software. All new PCs purchased with genuine Microsoft software preinstalled should have a new Certificate of Authenticity (COA) label attached to the computer; retail versions of Microsoft software products should have a COA label on the retail box. This COA label has an embedded holographic design revealing the words “Microsoft” and “genuine.” In addition, many retail versions of Microsoft software products, including Windows XP, Windows Millennium Edition (Windows Me), Windows 2000, Office XP and Office 2000, include an edge-to-edge hologram that is etched into the entire surface of the CD.

Consumers who unknowingly buy counterfeit software are acquiring products that are not eligible for technical support or valuable product updates. Microsoft is working to educate and protect consumers from the dangers of counterfeit software.

Microsoft has created the How to Tell Web site on the Microsoft piracy site, http://www.microsoft.com/piracy . The site is designed to help consumers better distinguish between genuine and counterfeit Microsoft software, and provides consumers with additional information on piracy.

Customers or resellers in North America who have been sold counterfeit software or who have further questions on what features are included in genuine Microsoft software should contact the Microsoft anti-piracy hot line at (800) RU-LEGIT (785-3448) or send e-mail to piracy@microsoft.com . Microsoft anti-piracy hot lines outside North America can be found at http://www.microsoft.com/piracy/Reporting_out.mspx .

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

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