- The Washington Times - Wednesday, March 4, 2009


Organized criminal gangs are muscling in on the lucrative movie-piracy trade, attracted by the prospect of high profits and relatively light penalties, a new report has found.

The Rand Corp. report says crime syndicates have added film piracy to their traditional portfolio of illegal activities, such as drug trafficking, money laundering, extortion and human smuggling.

“Given the enormous profit margins, it’s no surprise that organized crime has moved into film piracy,” said Gregory F. Treverton, the report’s lead author and director of the Center for Global Risk and Security at Rand. “The profits are high, and penalties for being caught are relatively low.”

The report says that though researchers found no evidence of widespread involvement of terror groups in the movie-piracy trade, there were isolated cases of militant organizations receiving funds from the crime.

“If you buy pirated DVDs, there is a good chance that at least part of the money will go to organized crime, and those proceeds fund more dangerous criminal activities, possibly terrorism,” Mr. Treverton said.

The Rand researchers detailed 14 case studies of film piracy that the group said provided “compelling evidence of a broad, geographically dispersed and continuing connection between piracy and organized crime.”

Cases involved gangs in North America, Europe, South America, Russia and many parts of Asia. The research was based upon 2,000 pages of documents and interviews with more than 120 law enforcement and intelligence agents from more than 20 countries.

The report says that in some cases, film piracy is more profitable than drug trafficking, and it cites one example of a pirated DVD manufactured in Malaysia for 70 cents, which later was sold in London for around $9, a markup of more than 1,000 percent.

The profit margin was more than three times higher than the markup for heroin from Iran and higher than the profit for Colombian cocaine, according to the report, which was supported by a grant from the Motion Picture Association of America.

Penalties for people found guilty of selling pirated goods was found to be comparatively light, and many authorities declined to prosecute the offense, the report says.

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