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Software theft nets 12-year prison term

Chinese national caught

- The Washington Times - Wednesday, June 12, 2013

A Chinese national was sentenced Wednesday to 12 years in prison for conspiracy to commit wire fraud and criminal copyright infringement in connection with operating a website to distribute more than $100 million in pirated software around the world.

The case is one of the most significant copyright-infringement plots ever uncovered — and dismantled — by U.S. Immigration and Customs Enforcement.

John P. Kelleghan, special agent in charge of ICE's Homeland Security Investigations division in Philadelphia, said the theft and piracy perpetuated by Xiang Li, 36, of Chengdu, China, included industrial-grade software and confidential data stolen from the internal server of a cleared defense contractor. He said Li will be deported to China after he completes his federal sentence.

"Xiang Li mistakenly thought he was safe from the long arm of HSI, hiding halfway around the world in cyberspace anonymity," Mr. Kelleghan said. "Fast forward to today, where he has been sentenced for illegally stealing, distributing and ultimately exploiting American ingenuity and creativity. Counterfeiting and intellectual property theft is one of the most serious threats this century to U.S. businesses and innovation."

Mr. Kelleghan said in this one case alone, Li was responsible for more than $100 million in lost revenue to American companies.

According to court documents, Li was identified as the operator of a website in December 2009 that was advertising thousands of pirated software titles at a fraction of their retail value. An investigation revealed that Li used the website to distribute pirated or cracked software to customers all over the world, including the United States. Software is "cracked" when its digital license files and access control features have been disabled or circumvented.

Between April 2008 and June 2011, the documents show, Li engaged in more than 700 transactions through which he distributed more than $100 million of pirated software to more than 400 customers in at least 28 states and 60 foreign countries. These software products were owned by approximately 200 different American software manufacturers, ranging from large corporations to small businesses. The documents show that Li also sold 20 gigabytes of confidential and proprietary data obtained from the internal computer network of at least one cleared defense contractor.

Mr. Kelleghan said the tightly controlled and valuable software products that Li sold and distributed online were industrial-grade digital tools used to design myriad products essential to the daily life, health and safety of the public, and to U.S. national security.

Li's customers included those in embargoed countries in the Middle East, employees of foreign governments and federal government employees and contractors holding security clearances in the U.S. More than one-third of the unlawful purchases were made by persons within the U.S., including small business owners, government contractors, students, inventors and engineers.

Between January 2010 and June 2011, Mr. Kelleghan said undercover ICE agents made a series of purchases of pirated software worth hundreds of thousands of dollars from Li's website. The investigation culminated in a face-to-face meeting between Li and undercover agents on Saipan island in June 2011, when Li agreed to travel there from China to deliver pirated software, design packaging and 20 gigabytes of proprietary data from a U.S. software company to undercover agents posing as U.S. businessmen.

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