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Home » Hacking News » FBI arrests four alleged software smugglers

FBI arrests four alleged software smugglers

by ivy on August 14th, 2001 Four people were arrested by the FBI last week after making the first serious attempt to illegally replicate Microsoft's new hologram security feature on software CDs, authorities said.

The FBI on Thursday arrested the four in Los Angeles and said they had tried to distribute counterfeit Microsoft software with an estimated retail value of $10.5 million.

The FBI said the suspects were part of an organized Asian criminal group that has been active in California's San Gabriel Valley for some years. "This was a very significant seizure because of the sophistication of this ring," said FBI spokeswoman Cheryl Mimura.

Searches of houses and storage facilities in the San Gabriel Valley resulted in the seizure of counterfeit copies of Windows 98, Office 2000, Windows NT Server and Windows Me.

Each counterfeit copy of the Windows Me CD was overlaid with a stick-on label that carried a hologram similar to those embedded in the metal portion of genuine CDs.

The FBI said it had arrested Chien Sim Cheh, also known as Ted Chien; Hung Gia Huynh, also known as Raymond Wong; Henry Chi Wong and Eddy Chun Yao King. A fifth man, Cheuk Wong, who was named in the FBI complaint, is now considered a fugitive. All are Taiwanese-born and, with the exception of King, are naturalized U.S. citizens.

Mimura said the software was smuggled to the U.S. from Asia and alleged that the four individuals who had been arrested were responsible for pickup and distribution.

After an initial court appearance Thursday, Raymond Wong and Henry Wong were released on $50,000 bail. Ted Chien was held pending bail; King was detained without bail.

According to Richard LaMagna, a former Drug Enforcement Agency veteran who heads Microsoft's Worldwide Piracy Investigations unit, 6.6 million units of counterfeit software with a retail value of approximately $2 billion were seized worldwide in the two-year period ended in June, much of them of poor quality. Microsoft has become increasingly concerned about Asian organized crime rings producing high-quality counterfeit copies of its software CDs. The legal discs are produced in replication plants in Asia, and "leakage" from those plants is a serious problem.

LaMagna stressed that in this case, Microsoft's key antipiracy technology, the edge-to-edge disc holograms, hadn't been replicated because the counterfeiters were unable to put the hologram on the discs themselves. However, the stick-on label was sufficiently close to the look of the official hologram and could plausibly pass as genuine.

Mimura, who was unfamiliar with the look of the genuine discs until Friday, said the discs looked official. "I would have thought it was the real thing," she said.

LaMagna joined Microsoft two years ago, after 27 years with the DEA, where he specialized in cracking Asian drug rings. His unit focuses on going after high-quality counterfeiting cases. These usually involve material that's created in factories in Asia and then shipped to the U.S., sometimes via Central or South America. The U.S. buyers might find these items on the Internet, or they might be sold to consultants who build IT systems for small businesses and who don't ask questions about its provenance.

from: computerworld

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