In a case U.S. officials say is the first of its kind, a
Chinese businessman has pleaded guilty to selling stolen
American software used in defense, space technology and
engineering - programs prosecutors said held a retail value
of more than $US100 million.
The sophisticated software was stolen from an estimated 200
American manufacturers and sold to 325 black market buyers in
61 countries from 2008 to 2011, prosecutors said in court
filings. U.S. buyers in 28 states included a NASA engineer
and the chief scientist for a defence and law-enforcement
contractor, prosecutors said.
Corporate victims in the case included Microsoft, Oracle,
Rockwell Automation,, Agilent Technolgoies, Siemens, Delcam,
Altera Corp and SAP, a government spokesman said.
U.S. officials and the Chinese man's lawyer, Mingli Chen,
said the case was the first in which a businessman involved
in pirating industrial software was lured from China by
undercover agents and arrested.
The businessman, Xiang Li, of Chengdu, China, was arrested in
June 2011, during an undercover sting by U.S. Department of
Homeland Security agents on the Pacific island of Saipan, an
American territory near Guam.
Video from the undercover meeting in Saipan, filed as
evidence in court, is expected to be made public during a
press conference by John Morton, director of U.S. Immigration
and Customs Enforcement, and Charles M. Oberly III, the U.S.
Attorney for Delaware.
Li, 36, originally charged in a 46-count indictment, pleaded
guilty late on Monday (local time) to single counts of
conspiracy to commit criminal copyright violations and wire
"I want to tell the court that what I did was wrong and
illegal and I want to say I'm sorry," Li told U.S. District
Judge Leonard P. Stark during a 90-minute hearing in federal
court. The Chinese citizen spoke through a translator.
In a court filing, prosecutors David Hall and Edward McAndrew
said the retail value of the programs Li sold on the black
market exceeded $US100 million.
During the hearing, Li told U.S. District Judge Leonard Stark
that he disputes that figure. After the hearing, his lawyer
said Li did not realise the retail value of what he was
selling until he was caught and plans to present his own
estimate at sentencing, which is set for May 3, he said.
In recent years, U.S. officials have targeted software
pirates overseas but bringing them to the United States has
In one of the largest copyright cases, U.S. prosecutors last
year charged seven people, including Megaupload founder Kim
Dotcom, with racketeering conspiracy and copyright
violations. The indictment alleges that Dotcom, who lives in
New Zealand, ran an organisation that earned $175 million
selling an estimated $500 billion worth of pirated movies, TV
shows and other entertainment media. Dotcom is fighting
extradition from New Zealand.
The Li case involves sophisticated business software, not
entertainment software, and thus small quantities of
higher-priced products. The retail value of the products Li
pirated ranged from several hundred dollars to more than $1
million apiece. He sold them online for as little as $US20 to
$US1200, according to government court filings.
At one point, Crack99.com and Li's other sites offered more
than 2000 pirated software titles, prosecutors said.
Li trolled black market Internet forums in search of hacked
software, and people with the know-how to crack the passwords
needed to run the program. Then he advertised them for sale
on his websites. Li transferred the pirated programs to
customers by sending compressed files via Gmail, or sent them
hyperlinks to download servers, officials said.
"He was pretty proud of himself," Chen said of his client's
business acumen. "He did not realise it was such a big
Agents from Immigration and Customs Enforcement/Homeland
Security Investigations learned of Li's enterprise after an
unidentified U.S. manufacturer noticed his company's software
for sale on crack99.com.
Working undercover for 18 months beginning in early 2010, the
U.S. agents made at least five purchases from Li. These
included pirated versions of "Satellite Tool Kit" by
Analytical Graphics Inc, a product prosecutors said is
"designed to assist the military, aerospace and intelligence
industries through scenario-based modules that simulate
real-world situations, such as missile launches, warfare
simulations and flight trajectories."
Agents bought software worth $150,000 retail for several
Agents lured Li from China to the U.S. territory of Saipan
under the premise of discussing a joint illicit business
venture. At an island hotel, Li delivered counterfeit
packaging and, prosecutors said, "Twenty gigabytes of
proprietary data obtained unlawfully from an American
software company." Officials did not identify the company in