- The Washington Times - Thursday, December 12, 2002

Federal agents have shut down a music-piracy operation in New York capable of producing $90 million worth of illegal compact discs a year in the largest seizure ever of equipment to illegally copy music.
The U.S. Secret Service arrested three persons in connection with the piracy setup.
"The significance of the seizure is being measured not only by the unprecedented amount of CDs and DVDs recovered, but by the approximately $100 million in revenues that the industry could have lost," said Steve Carey, the U.S. Secret Service's special agent in charge of the New York field office.
Agents on Monday seized 35,000 compact discs, 10,000 digital video discs (DVDs) and 156 CD burners with the capacity to copy compact discs 40 times faster than standard CD burners available on personal computers. Before the raid, the largest seizure of equipment to pirate music had netted 150 CD burners.
The reputed pirates had enough equipment to produce 6 million pirated discs each year, said Frank Creighton, executive vice president and director of the anti-piracy unit of the Recording Industry Association of America.
Suspects identified as Zhong Rong Chen, Angel Ivan Espinoza and Mario Perez Flores face charges of trafficking in counterfeit labels, criminal copyright infringement and trademark counterfeiting. The Secret Service did not release their ages or home addresses.
The RIAA, which represents the major music labels, assisted the Secret Service in the investigation and seizure of equipment.
The suspected pirates were arrested in Queens after a two-month investigation. They operated for up to a year and were the largest supplier of illegally copied music to retailers along Manhattan's Canal Street, Mr. Creighton said.
According to records seized in the raid, the suspects made copies of legitimate compact discs 24 hours a day, six days a week using high-speed burners. They reputedly sold the discs to a range of stores including small music retailers, gas stations and flea markets throughout the Northeast Corridor and in the Midwest.
The illegal discs were available as far south as the Carolinas, but Mr. Creighton declined to identify all the states where the discs were available.
About 25 percent of the compact discs were copied versions of Latin music CDs.
No retailers have been charged in connection with the theft.
Consumers probably had little idea they were buying copies of authentic compact discs, Mr. Creighton said. "Unfortunately, they look very authentic to the consumer who isn't trained to look for" the signs, he said.
Officials also seized eight Rimage Imprinters which stamp a disc with graphics, including illustrations and label information one high-end color copier valued at $75,000, and other equipment and materials used to make the discs.
The RIAA estimates that music piracy costs the record industry $300 million a year in the United States alone and $4.2 billion worldwide annually. But that doesn't include the cost of music downloaded from file-sharing services like Kazaa.
The software industry lost $11 billion worldwide last year from piracy.
Piracy "is a problem that is still in search of a solution," said Bob Kruger, vice president of enforcement at the Business Software Alliance, a Washington trade group.
The RIAA has vigorously pursued music pirates and file-sharing services this year out of concern that both are responsible for a slump in music sales. Internet research firm ComScore Networks said in October online music sales through the third quarter reached $545 million, down 25 percent from the $730 million spent over the comparable period last year.
A U.S. District Court judge issued a temporary restraining order last week against peer-to-peer network Aimster that will keep the song-swapping service shut down at least until Dec. 22, pending the outcome of a copyright-infringement lawsuit against it filed by the RIAA.
The RIAA also began an effort in October to persuade colleges and universities to end students' use of file-sharing services, sending letters to 2,300 schools to urge them to combat online music piracy.
In September, Kazaa, one of the leading file-sharing services, had 9.4 million average monthly U.S. home users, according to ComScore. That was up from 4.6 million in June 2001.

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