Operation Has Yielded First Convictions in U.S. for Camcording in …

Operation Has Yielded First Convictions in U.S. for Camcording in a Movie Theater and Uploading “Pre-Release” Movies on the Internet

SAN JOSE – LAWFUEL – Press Release Service – United States Attorney Kevin V. Ryan announced that as part of the ongoing prosecution arising out of Operation Copycat, two more individuals were convicted yesterday, bringing the total number of convictions to thirty. Since July 14, 2005, thirty-six individuals have been criminally charged as part of the ongoing investigation into online “warez” sites, and thirty of those individuals have been convicted since September 26, 2005.

Tom Leung, 53, of Cupertino, California, and Ray Morada, 32, of Washington, D.C., were each convicted today of conspiracy to commit criminal copyright infringement by electronic means, in violation of 18 U.S.C. § 371, and copyright infringement by electronic means and aiding and abetting, in violation of 17 U.S.C. § 506(a)(1)(B), 18 U.S.C. §§ 2, 2319(c)(1). Both defendants also agreed to forfeit their interest in computer and other equipment used to violate the criminal copyright laws.

On May 22, 2006, Paul Sherman, a film critic, of Malden, Massachusetts, pleaded guilty to aiding and abetting criminal copyright infringement by distributing a copyrighted work on a computer network. Sherman admitted that between May 2002 and June 2005, he sold over one hundred movies to a known warez supplier.

“Operation Copycat has yielded the conviction of a film critic who sold approximately 117 movies for illegal distribution. In addition, the case has yielded several notable firsts including the first convictions for recording a movie in a theater and uploading a pre-released movie on the Internet. The success of this investigation shows that individuals cannot hide behind advanced technology and the Internet to reproduce and distribute copyrighted works,” U.S. Attorney Kevin V. Ryan stated. “I thank the FBI and the prosecution team for their outstanding work on this case.”

Description of Warez Sites:

The charges stem from the undercover investigation targeting online “warez” groups illegally distributing newly-released movies, games, software and music. Warez groups are the “first-providers” of copyrighted works to the warez underground – the so-called “release” groups that operate as the original sources for a majority of the pirated works distributed and downloaded via the Internet. Once a warez release group prepares a stolen work for distribution, the material is distributed in minutes to secure, top-level warez servers throughout the world. From there the pirated works are distributed globally within a matter of hours, filtering down to peer-to-peer and other public file sharing networks accessible to anyone with Internet access.

Higher level members of the warez groups, known as site operators or “SiteOps,” administered and maintained the site and controlled access to the site by use of security measures such as usernames and passwords. Others serve as “equipment suppliers” (providing hardware, such as hard drives, computer parts, and computer servers to the warez site), “encoders” or “crackers” (those defeating copy protection devices); “scripters” (creating, programming, and helping build the warez site); “brokers” (who found groups to participate on the warez site). Lower level members included “suppliers” (providing an unauthorized copyrighted movie, game or software), “cammers” (those making unauthorized camcorder recordings in movie theaters), and “couriers” (those who gather the copyrighted material and upload it to the warez site).

Forfeitures

A substantial amount of equipment used in the copyright violations is being forfeited to the government. As part of each plea agreement, each defendant has agreed to forfeit any right, title and interest they have in computer and other equipment that was seized during the federal search warrants executed on June 29, 2005. The Forfeiture Section of the U.S. Attorney’s Office has assisted on the forfeiture of the following materials to date:

162 computers;

16 laptops;

5,448 infringed CDs and DVDs;

414 VHS tapes and floppies;

29 key boards and monitors;

5 digital cameras;

40 PlayStation and Xbox consoles;

15 i-Pods;

7 computer towers; and

a Plasma TV, cell phones, speakers, an MP3 player.

30 Guilty Pleas To Date:

Since September 26, 2005, the following thirty individuals have been convicted as part of Operation Copycat. The convictions have included the first under two new copyright statutes, including a new “camming” statute (unauthorized recording of motion pictures in a motion picture exhibition facility) and a new statute for uploading pre-releases on the Internet (criminal copyright infringement by distributing a copyrighted work on a computer network).

Two persons have been convicted for violating the Digital Millennium Copyright Act, which focuses on circumventing copy and access security measures (in contrast to infringement or the reproduction and distribution of copyrighted works):

February 27, 2006: David M. Fish, 24, of Watertown, Connecticut, a site operator and scripter, equipment supplier, broker, leech, and encoder for the warez sites, pleaded guilty to two violations of the Digital Millennium Copyright Act, including distribution of technology primarily designed to circumvent encryption technology protecting a right of a copyright owner; and circumventing a technological measure that protects a copyright work, in addition to other copyright charges.

May 22, 2006: Kevin Smith, of Columbia, Missouri, pleaded guilty to circumventing a technological measure that protects a copyright work

Two persons have been convicted under the new “camming” statute (unauthorized recording of motion pictures in a movie theater), including the first conviction in the country under the April 2005 statute:

September 26, 2005: Curtis Salisbury, 19, of St. Charles, Missouri, pleaded guilty to two charges under the recently enacted “Family Entertainment and Copyright Act of 2005.” He will be the first person convicted in the country under new statutes concerning the use of recording equipment in movie theaters and making a commercially distributed movie available for public consumption on a computer network. Investigators located Salisbury after analyzing the “dots” used on movies to designate the specific theater where the film was released. Salisbury admitted that, as an employee at the Des Peres Cinema 14 Theater Complex in St. Louis, Missouri, he used a camcorder to make and transmit copies of the movies. After the theater had closed to the public, he connected the camcorder equipment directly to the projector sound board while recording films in the theater. He also used a mini-disc recorder to capture the film sound that he later synchronized with the video using his computer to enhance the sound quality. His goal was to sell these unauthorized recordings by uploading them to the warez site. The movies included “The Perfect Man,” which he uploaded on June 21, 2005, and “Bewitched,” which he uploaded on June 28, 2005.

April 17, 2006: Susan Rempe, 55, formerly of Salinas, California (presently Bloomfield, New Mexico), pleaded guilty to “camming” or unauthorized recording of motion pictures in a movie theater. She admitted serving as a “cammer” by using audiovisual equipment to make and transmit unauthorized copies of movies, and portions thereof including sound, which were then uploaded to a warez site. She was employed at the Century Park 7 Theaters in Salinas, California. Some of the infringed movies included “A Lot Like Love,” which she uploaded on May 20, 2005, and “Madagascar,” which she uploaded on June 5, 2005 to the same warez server.

Three persons have been convicted under the new statute for uploading pre-releases on the Internet (criminal copyright infringement by distributing a copyrighted work on a computer network), including:

September 26, 2005: Curtis Salisbury, 19, of St. Charles, Missouri, noted above (first conviction in the country under new statute)

March 13, 2006: Matthew Fong, 19, of Miami, Florida , pleaded guilty to criminal copyright infringement by distributing a copyrighted work on a computer network, in addition to other copyright charges

May 22, 2006: Paul Sherman, of Malden, Massachusetts, a film critic, pleaded guilty to aiding and abetting criminal copyright infringement by distributing a copyrighted work on a computer network. Sherman admitted that between May 2002 and June 2005, he sold approximately 117 movies to a known warez supplier.

The following persons have pleaded guilty to conspiring to commit criminal copyright infringement and to violating the NET Act and aiding and abetting with the date of conviction noted:

May 8, 2006: Phillip Templeton, 24, of Kingsport, Tennessee

April 10, 2006: Johnny Russell, 34, of Spring, Texas

April 10, 2006: David Siloac, 27, of Clinton Township, Michigan

April 10, 2006: Ali Ghani, 28, of Irvine, California

April 3, 2006: Donovan Kargenian, 31, of El Cajon, California

April 3, 2006: David Siloac, 27, of Denver, Colorado, and formerly of Clinton Township, Michigan

April 3, 2006: Matthew Thompson, 22, of Lubbock, Texas

March 13, 2006: Eric Rolfe, 22, of Columbia, Missouri

March 13, 2006: Stephen Brown, 36, of Indianapolis, Indiana

March 13, 2006: Moises Nunez, 33, of Glendale, California

February 27, 2006: Deston Evans, 21, of Galax, Virginia

February 27, 2006: Oscar Martinez, 25, of San Diego, California .

January 9, 2006: Paul Aleman, 25, of Menafee, California

November 30, 2005: Nathaniel Lovell, 22, of Boulder, Colorado, an equipment supplier for the warez sites

November 14, 2005: Chirayu Patel, 23, of Fremont, California, and one of the site operators for the warez site

October 11, 2005: William Veyna, 34, of Chatworth, California, another site operator

The following persons have pleaded guilty to violating the NET Act and aiding and abetting with the date of conviction noted:

January 9, 2006: Philip Kang, 22, of Wayne, New Jersey

December 12, 2005: Jonathan Stanley Golenbock, 22, of Ithaca, New York

November 14, 2005: Daniel Van Horn, 32, of Wantagh, New York

October 3, 2005: Ryan Zeman, 23, of Rohnert Park, California

The following person has been convicted of conspiracy to commit copyright infringement:

May 22, 2006: Shon Peterman, 33, of Wichita, Kansas

The maximum penalties for conspiring to violated federal copyright law, in violation of 18 U.S.C. § 371, are five years in prison and three years of supervised release. The maximum penalties for violating the NET Act, in violation of 17 U.S.C. § 506(a)(1)(B), and 18 U.S.C. § 2319(c)(1), are three years in prison and two years of supervised release. A maximum fine of $250,000 applies to each offense, and a mandatory special assessment of $100 applies for each conviction. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. An indictment only contains allegations and these defendants, as with all defendants, must be presumed innocent unless and until convicted.

Mark L. Krotoski is the Assistant U.S. Attorney from the Computer Hacking and Intellectual Property (CHIP) Unit who is prosecuting the case, with the support of Legal Assistants Mimi Lam and Lauri Gomez. Assistant U.S. Attorney Stephanie M. Hinds and paralegal Alicia Chin are overseeing the asset forfeiture matters on the case.

Further Information:

More information on Operation Copycat may be found at:

http://www.usdoj.gov/usao/can/press/html/2005_07_14_copycat_indictment.html.

More information on Operation Site Down may be found at:

http://www.usdoj.gov/criminal/cybercrime/OperationSiteDown.htm

A copy of this press release and related court filings may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.

Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.plhttps://ecf.cand.uscourts.gov/.

Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.

All press inquiries to the U.S. Attorney’s Office should be directed to Luke Macaulay at (415) 436-6757 or by email at [email protected]

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