Man Who Sold $100 Million Worth of Pirated Software Gets 12 Years In Prison

An anonymous reader sends this quote from Bloomberg: "A Chinese national was sentenced to 12 years in a U.S. prison for selling more than $100 million worth of software pirated from American companies, including Agilent Technologies Inc., from his home in China. Li and his wife, of Chengdu, China, were accused of running a website called 'Crack 99' that sold copies of software for which 'access-control mechanisms had been circumvented, the U.S. said in an unsealed 46-count indictment. The pair was charged with distributing more than 500 copyrighted works to more than 300 buyers in the U.S. and overseas from April 2008 to June 2011. The retail value of the products was more than $100 million, the government said. Li is the first Chinese citizen to be 'apprehended and prosecuted in the U.S. for cybercrimes he engaged in entirely from China,' prosecutors said in court filings."

Comments

His mistake is obvious

[TrollstonButterbeans]

He should have done the transactions in bitcoin.

Re:His mistake is obvious

[Steve_Ussler]

she should have stayed in china and avoided jail.

Re:His mistake is obvious

[Reschekle]

Incorrect.

http://en.wikipedia.org/wiki/Extradition_law_in_the_United_States#Countries_with_diplomatic_relations_but_no_extradition_treaty

Good

[gigaherz]

THIS is proper use of the copyright laws.

Re:Good

[Krneki]

Is it ?

I'm don't know about copyright laws in China, but unless you breach your country law, the US can fuck off.

Re:Good

[TrollstonButterbeans]

He sold to US buyers establishing jurisdiction. If he did not sell to US buyers and to only -- as an example --- Chinese buyers, US courts would likely not have jurisdiction ....

.... Although in this "new post-Megaupload Wikileaks kill people with drones NSA monitors all" world maybe the US government has no limits any longer as the US courts no longer are willing to rule that such limits exist.

Re:Good

[ranulf]

He was on US soil, so he can be arrested for actions illegal under US law. This is a fairly common precedent when the law was broken in the US but they have since left. This is newsworthy because the crimes occurred outside the US but he was still considered to have broken US law.

Re:Good

[Anonymous Coward]

I think with all the drone strikes in the world you would realize the US has jurisdiction where ever it fucking feels like.

Re:Good

[Malc]

He went to Saipan where he tried to sell software and data to US agents pretending to be business men. Isn't Saipan US territory? Perhaps you should try RTFA before sounding of like a dickhead.

Re:Good

[xelah]

An interesting parallel would be people in the US who allow seditious comments harmful to public order in China (or so they'll say) to be posted on their websites, which are then accessed by Chinese people. Will China now feel a whole lot happier about arresting Americans for this should they go anywhere where China has enough influence, or have their flights diverted? Or, indeed, just accuse Americans of stuff to keep them out or stop them selling stuff there.

Re:Good

[Anonymous Coward]

So if I sell to Chinese buyers I'm bound by Chinese law? You don't see how that might be a very bad thing?

Can't have it both ways. If Chinese citizens are bound by US law then US citizens must be bound by Chinese law. For China to agree to extradite without tit for tat would make them very stupid.

Re:Good

[mrbester]

I like how he got less than someone who *doesn't* sell what they pirate can get. There's a lesson there...

Re:Good

[bloodhawk]

If you are trading with chinese citizens on chinese soil then then yes you are bound by chinese laws for those dealings, actually in most circumstances you are bound by the laws of both countries. It is one of the reasons many of the big multinationals need so many friggen lawyers as every countries laws are slightly different and they are regularly bound by multiple countries laws when trading and selling goods.

Re:Good

[thebigmacd]

You have no idea what entrapment is, do you? Entrapment by nature cannot be performed by undercover police pretending to be something else.

Entrapment is when a police officer *who identifies themselves as a police officer* orders or asks someone to do something illegal and the person complies *because they are a police officer*. They then proceed to arrest the person for committing a crime they told them to do. THAT is entrapment.

Police have the authority to direct you to do something illegal such as drive the wrong way down a one-way street, if the situation warrants. If they arrest you for doing what they said, they have entrapped you.

Re:Good

[Anonymous Coward]

I really have trouble understanding your mindset and others like you that believe it is A-OK for someone to illegally acquire commercial software (or movies or music or books) and sell it. These "resellers" are not taking expensive software and giving it away in the spirit of communal sharing, they are taking that software and selling it to make a profit for themselves. They made no contributions to the development of the software, they have no stake in the company that hires staff and takes financial risk to produce said software. These people are parasites. It is disheartening that you believe it is worthwhile to defend them.

I defend them when the accusers claim that their retail value is $200,000 dollars a copy and the penalty for copying some CDs is 12 years. Rapists and murderers rarely get 12 years. If you can't see that the motivation behind this is pure greed - as opposed to actual justice - then I pity you.

Re:Good

[julesh]

Depends where the servers were located, if they were in China, then the only one to blame are the US citizens that bought the goods.

It's the same if you go to a foreign country and buy drugs not allowed in your country. The seller there can't be persecuted.

Your argument makes good logical sense. Unfortunately, it is not the approach courts have taken to deciding questions of this kind. The courts have instead asked where the was customer when he made the purchase, and used this as the basis of deciding what laws apply to the sale. The original reason for this was to make things easier for consumers, who shouldn't be expected to have to know the laws of the countries of sellers they deal with (particularly as they may not even have any way of knowing where the seller is), but it has been extended since then into areas where this justification makes no sense.

Re:Good

[pantaril]

You don't know the meaning of the word "entrap", you stupid fuck.

And you obviously lack few slaps from your parents which would tech you good manners.

Re:Good

[loonycyborg]

Really? 12 years in prison just for possibly decreasing someone's profits? That's definitely cruel and unusual punishment.Such terms should be reserved for murderers and what-not.

Re:Good

[Anonymous Coward]

Not entirely correct. Your description matches one of two tests, but is narrower.

from Wiki

Two competing tests exist for determining whether entrapment has taken place, known as the "subjective" and "objective" tests. The "subjective" test looks at the defendant's state of mind; entrapment can be claimed if the defendant had no "predisposition" to commit the crime. The "objective" test looks instead at the government's conduct; entrapment occurs when the actions of government officers would have caused a normally law-abiding person to commit a crime.

A non-uniformed government agent can indeed entrap someone. Asking if you'll sell them pot isn't entrapment. Haranguing them until the finally agree to sell you pot is.

Re:Good

[Savage-Rabbit]

I really have trouble understanding your mindset and others like you that believe it is A-OK for someone to illegally acquire commercial software (or movies or music or books) and sell it. These "resellers" are not taking expensive software and giving it away in the spirit of communal sharing, they are taking that software and selling it to make a profit for themselves. They made no contributions to the development of the software, they have no stake in the company that hires staff and takes financial risk to produce said software. These people are parasites. It is disheartening that you believe it is worthwhile to defend them.

I defend them when the accusers claim that their retail value is $200,000 dollars a copy and the penalty for copying some CDs is 12 years. Rapists and murderers rarely get 12 years. If you can't see that the motivation behind this is pure greed - as opposed to actual justice - then I pity you.

That price tag has less to do with any real belief that a CD is worth 200 grand a copy and a lot more to do with the unshakable American belief in the effectiveness of the brand of 'come down on them like a ton-o-bricks' justice that has filled your jails with hoards of people doing rediculously long mandatory minimum sentences for things that are misdemeanours in most other countries.

Re:Good

[L4t3r4lu5]

They can damn well try! I'm behind seven proxi###&4%f2a664#NO CARRIER

Re:Good

[Sponge Bath]

...and then there were no remaining AOL users.

Re:Good

[Anonymous Coward]

However, you need to have committed a crime in that country before you can lure them into your country.

You cannot, for example, lure someone on to your land then shoot them for trespassing.

Re:Good

[devman]

You'd have to be selling to someone in Germany.

Re:Good

[devman]

This happened in Thailand not to long ago. Some dude (from the UK I believe) made fun of the king of thailand on his blog, went on vacation to Thailand months later and was arrested for it.

Re:Good

[sribe]

You have no idea what entrapment is, do you? Entrapment by nature cannot be performed by undercover police pretending to be something else.

That is simply not true. Current definition of entrapment is greatly influenced by John DeLorean's case (where he agreed to deal drugs because undercover FBI officers threatened his life and his family).

Re:Good

[Warhawke]

You are mistaken.

The legal definition of entrapment varies from country to country, but the basic definition is that entrapment occurs when a law enforcement agent induces a person to commit a crime that he or she otherwise would not have committed. Knowledge that the person is a law enforcement officer is not required. See, e.g. Jacobson v. United States, 503 U.S. 540 (1992). What is required is some form of but-for causation -- that but for the law enforcement officer's conduct, the defendant would not have committed the crime. Whether the defendant knows the officer is a law enforcement agent goes to objective / subjective state of mind standards regarding whether the defendant was likely to commit the crime -- i.e. inducement is harder to prove if the defendant did not know the facilitator was a figure of legal authority, because there is less of an indication of compulsion. In Jacobson, the government targeted the defendant with a child pornography mail subscription and arrested him upon his receipt and opening. The Supreme Court overturned his conviction on the grounds that the defendant did not have a predisposition towards purchasing child pornography (as no other child pornography was found in his home), and therefore but for the post office inspectors' actions, Jacobson would not have committed a crime.

What you may be referring to is entrapment by estoppel. That "applies when, acting with actual or apparent authority, a government official affirmatively assures the defendant that certain conduct is legal and the defendant reasonably believes that official." United States v. Howell 37 F.3d 1197, 1204 (7th Cir. 1994).

Re:Good

[1s44c]

I think with all the drone strikes in the world you would realize the US has jurisdiction where ever it fucking feels like.

The US has less legal constants outside the US than inside it. The US can imprison, torture, or kill without legal comeback in most of the world, but can't even detain people without trail in the US. That's the reason Gitmo is in Cuba not Texas.

Re:Good

[Cassini2]

The US will arrest people on US territory or in international waters using whatever methods they can. For instance, in Operation Goldenrod a suspect was lured onto a yacht, and then taken to international waters. He was interrogated aboard US Navy ships, and returned to the US via an aircraft carrier.

Additionally, under the Ker-Frisbie doctrine people can be prosecuted regardless of the legality of the method of their extradition. For example, the DEA hired Trent Tompkins (a private citizen) to kidnap Alvarez-Machain in Mexico and return him to the United States, where he was later tried over Mexico's objections.

Finally, state police can act outside of their home state to arrest someone and bring them to trial. In the case of Shirley Collins, the accused was kidnapped in Chicago (illegally) by Michigan police, brought to trial and convicted.

Re:Good

[1s44c]

Unless I'm thinking of the wrong person China didn't extradite. US agents lied about some huge deal to get the guy to go to a US territory of his own free will. Once there he was arrested.

But generally speaking the US considers US law to be global but everyone else's law to be local to them.

Re:Good

[Main Gauche]

Yes, he was entrapped in Saipan, and prosecuted for crimes he didn't commit while in the US.

2. Promptly escape through the Los Angeles underground.
3. Work as soldier of fortune.
4. Profit!

Re:Good

[Known Nutter]

NO CARRIER

It won't be too much longer now before there is no one left who gets this joke.

Re:Good

[dcollins]

"The US... can't even detain people without trail in the US."

NDAA-2013, signed into law the first of this year, says otherwise.

http://www.huffingtonpost.com/2013/01/03/ndaa-obama-indefinite-detention_n_2402601.html

Re:Good

[rahvin112]

There have been several arrested in China. The Chinese tend to limit these arrests to those you speak and write in a Chinese dialect though which is frequently expat's. I believe there is an American expat doing 10 years in hard labor right now for comments he posted while in America.

Nuber not that impressive

[mysidia]

500 copyrighted works to more than 300 buyers in the U.S. and overseas

The retail value of the products was more than $100 million, the government said.

In other words... on average ~$200,000 per product, and ~$333 thousand per buyer

This makes sense, when you are talking about companies like Agilent that sell overpriced products, that retail for probably approximately $500,000

That's why the "pirated $100 million in software" is neither impressive, nor indicating a particularly outrageous pirate.

The outrage, should be the pricing of Enterprise software, not the" inflated retail price " as some sort of metric of the pirate's activity.

Obviously, the buyers weren't willing to pay the price the maker wanted to sell the software at. Therefore, those sales by definition were not worth the retail price.

In simple economic terms... the high price places their product out of demand.

By definition, they're worth what the buyer was willing to pay the pirate for the procureent.

If you're selling a $500,000 software product; going after pirates is not a winning business strategy -- it's figuring out, why the heck you can't pitch your product to legal buyers, and make your desired revenue there. Either the pricing is all wrong, or your marketing or product targetting is all wrong.

Re:Nuber not that impressive

[Pubstar]

If you read TFA, you would have realized that most of the sales were to counties that have US trade embargoes imposed.

Re:Nuber not that impressive

[ranulf]

I wanted to make this point, but more so. The guy sold copyrighted material to 300 people. Let's say $100 a pop, which sounds high for someone to fork over for known pirated material. That's $30,000 which is by my reckoning about 4 months salary for the typical person in the US. But this was actually over a 3 year period.

Piracy is bad, and I don't agree with it, and even more so because my livelihood comes from software development of things that are typical targets of piracy, but the punishment here seems massively out of proportion to the crime. 12 years in prison is in the same ballpark as a murder.

Re:Nuber not that impressive

[stanIyb]

I'm not saying this is right, but I know too many photoshop thieves

If you know a lot of people who steal other people's copies of photoshop, you're probably hanging out with the wrong crowd.

Re:Nuber not that impressive

[Anonymous Coward]

...If you're selling a $500,000 software product; going after pirates is not a winning business strategy -- it's figuring out, why the heck you can't pitch your product to legal buyers, and make your desired revenue there. Either the pricing is all wrong, or your marketing or product targetting is all wrong.

Legal trade embargoes obviously cast aside for a moment, I'd say you truly don't understand how difficult it might be to price certain types of software. A product used in engineering and design that costs $100,000 and $10,000 per person per year to maintain sounds like it might be priced fairly when talking about using it to design our next-generation communication satellites or Mars space rover. That investment in design might make you the preferred vendor generating millions in revenue.

But the instant you start talking about that same $100,000 software package being used to design the perfect rubber dildo or fake vomit, suddenly it's a complete rip-off, and should be priced cheaper? Why, because ironically they ended up designing and selling the #1 sex toy in multiple countries and made twice as much revenue as the guy making satellites and space rovers?

I'm not arguing that some software packages are overpriced. They are. However, it's quite easy to see based on the application of certain software packages it becomes very difficult to pin an appropriate price tag on it.

Re:Nuber not that impressive

[Registered Coward v2]

500 copyrighted works to more than 300 buyers in the U.S. and overseas

The retail value of the products was more than $100 million, the government said.

In other words... on average ~$200,000 per product, and ~$333 thousand per buyer

This makes sense, when you are talking about companies like Agilent that sell overpriced products, that retail for probably approximately $500,000

That's why the "pirated $100 million in software" is neither impressive, nor indicating a particularly outrageous pirate.

The outrage, should be the pricing of Enterprise software, not the" inflated retail price " as some sort of metric of the pirate's activity.

Obviously, the buyers weren't willing to pay the price the maker wanted to sell the software at. Therefore, those sales by definition were not worth the retail price.

In simple economic terms... the high price places their product out of demand.

By definition, they're worth what the buyer was willing to pay the pirate for the procureent.

If you're selling a $500,000 software product; going after pirates is not a winning business strategy -- it's figuring out, why the heck you can't pitch your product to legal buyers, and make your desired revenue there. Either the pricing is all wrong, or your marketing or product targetting is all wrong.

Not really. While i you are correct about pricing a d demand your conclusions aren't. The software vendors chose to forgo more sales in favor of higher prices; probably figuring the margins were better since there would be fewer users to support and the higher price justified the required level of support. That's their choice and does not mean someone else has the right to pirate and sell at a lower price point. The buyers were simply not target customers despite their desire to have the software.

Re:Nuber not that impressive

[king neckbeard]

So, the Chinese citizen is Prometheus and the US government is Zeus? Didn't they have anything better to do, like turn into swans and rape young women?

So, an action only in one country is a crime ...

[magic maverick]

Let's pretend I host a website that allows you to download hundreds of novels and other works. These are all still under copyright in the USA. But I, and my website, are located in a place where all these works are in the public domain (e.g. Australia, and Russia).
If I then (perhaps I'm a masochist) visit the USA, can I be arrested and charged? Probably not actually.

But, if I suddenly allow you to download novels etc. that are not in the public domain in the country I operate in, I suddenly can be charged in the USA? Even though I never visited that country, nor had any dealings there?

Why the fuck do countries have laws that allow them to prosecute people who are did their criminal activity in another jurisdiction?

Moral of the story...

[Wickedpygmy]

Don't travel to U.S territories if you're wanted for U.S crimes.

Re:It is, however, definitely appropriate.

[stanIyb]

If you made $100M (really that, not RIAA funny-math $100M, mind) then that is $100M that the original owners could have made.

Except when you consider that the prices official sources charge are usually much more. People most likely bought software from him because he was selling it at a cheaper price. Would they have bought it otherwise? Who knows? But why should we assume they would have?

Hmmm

[Anonymous Coward]

100 million for 12 years in prison... Might be worth it...

Read the article....

[FilmedInNoir]

He was arrested in June 2011 by U.S. agents when they lured him to a meeting in Saipan where he believed he was delivering 20 gigabytes of data to the representatives of U.S. businessmen. Saipan, an island in the middle of the Pacific Ocean, is part of the Commonwealth of the Northern Mariana Islands and like the Atlantic island of Puerto Rico is a commonwealth of the U.S., giving American authorities jurisdiction.
No Navy Seals or government conspiracies, just an old fashioned luring operation.