News / Economy

Chinese National Pleads Guilty of Selling $100 Million in Pirated US Software

Meredith Buel
A Chinese national has pleaded guilty to charges related to selling illegally copied American software worth more than $100 million.  U.S. officials say it is one of the most significant cases of copyright infringement ever uncovered by law enforcement authorities.  
 
U.S. officials say 36-year-old Xiang Li of Chengdu, China, operated a website to distribute pirated software.
 
According to statements and court documents Li's website, Crack99, advertised thousands of stolen software titles and sold them at well below market prices to customers in the United States and 60 other countries.
 
Software is considered "cracked" when its digital license files and access control features have been disabled or bypassed.
 
John Morton, the director of Immigration and Customs Enforcement, spoke about the case Tuesday.
 
"This is organized crime pure and simple.  Hackers are literally stealing sophisticated U.S. software,  cracking the codes and selling it on the street through criminal middle men like Mr. Li.  American jobs, innovation and sensitive technology are lost in the process.  This harms our country in a very, real, real way," he said. 
 
Officials say Li sold about 550 software titles to at least 325 purchasers.
 
The products were owned by 200 different manufacturers.  They are used in a wide range of applications including defense, engineering, space exploration and manufacturing.  Most were high-end commercial products that normally sell for more than $100,000.
 
More than one-third of the unlawful purchases were made by individuals in the United States, including small business owners, government contractors, students, inventors and engineers.
 
Some of the largest American customers held important engineering positions with government agencies and contractors.
 
For example, Li sold software worth more than $1.2 million to Cosburn Wedderburn, who was then a NASA engineer working at the space agency's Goddard Space Flight Center in Maryland.
 
Wedderburn has pleaded guilty to conspiracy to commit criminal copyright infringement and is awaiting sentencing.
 
Again, John Morton, director of Immigration and Customs Enforcement.
 
"Sophisticated software development depends on intellectual property protection.  Innovation depends on people playing by the rules.  We cannot expect American companies to invest millions of dollars to develop new products if those same products are stolen and counterfeit the very next day," he said. 
 
In 2010 and 2011, undercover agents from the Department of Homeland Security purchased pirated software from Li's website.
 
In June 2011, Li agreed to travel to the Pacific island of Saipan, an American territory, to deliver pirated software to undercover agents posing as U.S. businessmen.  Li was arrested there and transported to the eastern United States, where he remains in custody.
 
He originally was charged with more than 40 criminal counts, but has pleaded guilty to conspiracy to commit copyright violations and wire fraud.
 
Li faces a maximum sentence of 25 years in prison and a $250,000 fine.  Sentencing is scheduled for May 3.

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