One of the most significant cases of copyright infringement ever uncovered was dismantled Tuesday with a guilty plea by a Chinese national to charges of conspiracy to commit criminal copyright infringement and wire fraud in the distribution of more than $100 million of pirated software around the world.
Xiang Li, 36, of Chengdu, China, will be sentenced May 3 by U.S. District Judge Leonard P. Stark in Delaware following his guilty plea. He faces 25 years in prison, a $250,000 fine and three years of supervised release.
The guilty plea was announced at a news conference Tuesday in Wilmington, Del., by U.S. Attorney Charles M. Oberly III and Immigration and Customs Enforcement Director John Morton.
According to statements made at the plea hearing and documents filed in court, ICE agents identified Li as the operator of the website Crack99.com that was advertising thousands of software titles at a fraction of their retail value.
The investigation showed that Li used the website to distribute pirated or "cracked" software to customers all over the world. Software is cracked when its digital license files and access control features have been disabled or circumvented.
Through emails sent to customers of his website, ICE agents said Li described himself as being part of "an international organization created to crack" software. In a November 2008 email, ICE agents said Li indicated he would charge $1,000 to obtain a cracked version of a particular program. When the customer wrote, "Yes ok tell me who do this." Li replied, "Experts crack, Chinese people Sorry can not reveal more."
From April 2008 to June 2011, ICE agents said, Li engaged in more than 500 transactions, distributing approximately 550 copyrighted software titles to at least 325 purchasers in 28 states and 60 foreign countries. The software products were owned by 200 manufacturers and worth more than $100 million.
The software is used in a wide range of applications including defense, engineering, manufacturing, space exploration, aerospace simulation and design, mathematics and explosive simulation.
More than one-third of the unlawful purchases were made by people in the U.S., including small-business owners, government contractors, students, inventors and engineers. ICE agents said some of Li's biggest American customers held significant engineering positions with government agencies and government contractors.
From January 2010 to June 2011, undercover ICE agents made a series of purchases of pirated software worth hundreds of thousands of dollars from Crack99.com. The investigation culminated in a face-to-face meeting between Li and undercover agents in Saipan in June 2011.
Agents said Li agreed to travel from China to Saipan to deliver pirated software, design packaging and 20 gigabytes of proprietary data from a U.S. software company to the agents posing as U.S. businessmen.
The undercover agents arrested Li after he gave them stolen intellectual property at a Saipan hotel. Li has been in custody in Delaware since June 2011.
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