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U.S. Department of Justice
United States Attorney |
ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of
New York, RICHARD A. BROWN, District Attorney, Queens County, New York,
RAYMOND W. KELLY, Commissioner, New York City Police Department, KEVIN P.
DONOVAN, Assistant Director-in-Charge of the New York Office of the Federal
Bureau of Investigation, and PAUL L. MACHALEK, Special Agent-in-Charge,
Internal Revenue Service-Criminal Investigation, New York, announced the
arrests yesterday afternoon of KE PEI MA, KAI WU, XIA YU, JIANBUI YE, XI
KANG YU, and HSIEN-CHANG KO for their participation in a counterfeit software
distribution ring. City and federal law enforcement agents executed search
warrants at two of the defendants distribution centers, 136-46 59th
Avenue, Flushing, New York, and 15-38a 150th Place, Whitestone, New York,
as well as two vehicles used by the defendants to transport the counterfeit
software and packaging materials. Pursuant to these warrants, law enforcement
seized approximately $3.2 million worth of counterfeit Symantec software
and $5.9 million worth of counterfeit Microsoft software, as well as counterfeiting
paraphernalia such as shrink wrapping machines, heat guns, and boxes of
CD cases and CD sleeves. In addition, law enforcement seized approximately
$900,000 from two bank accounts controlled by the defendants at Cathay Bank,
40-14/16 Main Street, Flushing, New York, and a securities brokerage account
at TD Waterhouse Securities, 36-60 Main Street, Floor, Flushing, New York.
The defendants preliminary appearances will take place this morning
before United States Magistrate Judge Viktor V. Pohorelsky at the United
States Courthouse, 225 Cadman Plaza East, Brooklyn, New York.
According to a complaint unsealed this afternoon, beginning in June 2000,
MA and others began distributing counterfeit Microsoft software from a location
on 32nd Avenue in Flushing, New York. On June 21, 2000, FBI agents executed
a court-authorized search warrant at that location, but the defendants
had apparently vacated the location, leaving behind only a few compact disks
(CDs) containing counterfeit software, as well as other items
evidencing the distribution of counterfeit software.
More recently, NYPD officers, working with the FBI agents and the IRS Special
Agents, learned that the defendants had moved their counterfeiting operation
to the 59th Avenue and 150th Place locations in Queens, New York, and that
from approximately November 2002 through January 2003, used these locations
to package counterfeit Symantec Norton Antivirus software and counterfeit
Microsoft Office software. Symantec Norton Antivirus software is commonly
used on home computers to guard against destructive computer viruses. Microsoft
Office software contains computer applications used by businesses, such
as wordprocessing, accounting and programs for visual presentations. Using
UPS facilities in the Bronx and Queens, the defendants distributed the counterfeit
software to computer software retailers and wholesalers throughout the United
States. According to the complaint, between November 4, 2002 and January
24, 2003, the defendants distributed approximately 37,971 counterfeit CDs,
and were paid approximately $1,898,550 by their customers. All told, the
government estimates that over the two-year period charged in the complaint,
the defendants received approximately $15,198,400 in payment for their counterfeit
software.
The complaint alleges that the companies purchasing the counterfeit software
from the defendants issued checks to PC Tech and Blue Media, shell companies
controlled by the defendants KO, WU and XI KANG YU. The defendants deposited
the checks into three accounts they controlled at Cathay Bank and TD Waterhouse
Securities. The complaint charges that between April 2001 through January
23, 2003, $5,396,472 was deposited into these accounts.
In announcing the arrests, United States Attorney MAUSKOPF stated, The
arrests and seizures in this case are another example of law enforcements
successful efforts to coordinate with private industry in order to combat
the widespread assault on the intellectual property rights of American business,
in this case, the widely-used software of Symantec and Microsoft. These
arrests should send the message to counterfeiters they will be prosecuted
to the full extent of the law. Ms. MAUSKOPF thanked the Trademark
Counterfeiting Unit of the New York City Police Department and the El Dorado
Task Force, which under the direction of Nelson J. Chen, is comprised of
federal, state and local law enforcement agencies, for their invaluable
assistance in the investigation.
District Attorney BROWN stated, The defendants are alleged to have
committed marketplace piracy by selling almost 300,000 counterfeit compact
disks illegally copied from authentic Symantec Norton antivirus software
and to have reaped windfall profits of over $15 million in just two years
- - almost $2 million in just three months. The manufacture, distribution
and sale of counterfeit trademark products is not a victimless crime. Legitimate
businesses such as Symantec Norton - - and ultimately the consumer - - are
the victims.
Police Commissioner KELLY stated, The New York City Police Department
is committed to stopping counterfeiters of all kinds, and this case proves
that the computer industry is no exception. If you counterfeit software,
we will do everything in our power to catch you and bring you to justice.
As always, our officers did a great job of tracking these criminals, collecting
evidence and placing them under arrest. I commend them for their hard work
in this case.
FBI Assistant Director-in-Charge DONOVAN stated, The FBI and our law
enforcement partners will continue this investigation in an effort to identify
other individuals who may have participated in this scheme. Protection of
intellectual property is an important priority investigative area within
the FBI.
IRS Special Agent-in-Charge MACHALEK stated, Product counterfeiting
schemes victimize consumers, businesses and ultimately the American taxpayer.
IRS-Criminal Investigation, a cooperating agency in the El Dorado Task Force,
is always eager to lend its financial expertise in the investigation of
complex fraud investigations like this one.
If convicted on all charges, each defendant faces a maximum sentence of
15 years imprisonment, a fine of $2,250,000, or twice their gains, or twice
the loss to the public, and the forfeiture of their illicit proceeds.1
The governments case is being prosecuted by Assistant United States
Attorneys Amy Walsh and Sarah Lum, and Special Assistant United States Attorney
David Chen, from the Queens County District Attorneys Office.
The Defendants:
Name: KE PEI MA
Address: 66-23 Alderton Street, Rego Park, New York
Age: 45
Name: KAI WU
Address: 4125 Kissena Boulevard, Apartment 6CC, Flushing, New York
Age: 26
Name: XIA YU
Address: 141-07 20th Avenue, Room 502, Whitestone, New York
Age: 39
Name: JIANBUI YE
Address: 149-35 Northern Boulevard, Flushing, New York
Age: 39
Name: XI KANG YU
Address: 158 Baron Lane, East Brunswick, New Jersey
Age: 55
Name: HSIEN-CHANG KO
Address: 8941 Duarte Road, San Gabriel, California
Age: 26
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1 The charges contained in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
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