SAN JOSE – 11 October – LAWFUEL – The Law News Network – The United States Attorney’s Office for the Northern District of California announced the arrests of five individuals in Northern California and searches of 12 locations in California and Texas in “Operation Remaster,” an undercover law enforcement action in Northern California targeting large-scale illegal replicators of copyrighted music, software, and movies. Replicators are companies or individuals who use sophisticated machinery to create tens of thousands of copies of copyrighted works that are then distributed around the country.
According to court documents, Operation Remaster is a long-term undercover investigation into conspiracies of affiliated businesses and individuals that illegally produce and distribute copyrighted music, movies, and software. The operation is a joint investigation led by the Rapid Enforcement Allied Computer Team High Tech Crimes Task Force (REACT) in San Jose, the Federal Bureau of Investigation, the United States Secret Service, and the Sacramento Valley High Tech Crimes Task Force.
Replicator conspiracies often involve geographically separate businesses that secretly handle different stages of the process of pirating intellectual property, including replication, assembly, packaging, distribution, and retail. Once a pirated work enters the market, it can circulate widely. For example, according to court documents, a counterfeit music CD found at a retail store last month in Chicago, Illinois, came from two of the Northern California individuals arrested in the operation.
According to the complaint, piracy conspiracies commonly involve distinct roles. The replicator is the business or individual who has the manufacturing equipment to duplicate mass quantities of CDs or DVDs. Using expensive and sophisticated equipment, sometimes including silk screening machines to place artwork on the CDs or DVDs, replicators can quickly create tens of thousands of counterfeit CDs or DVDs. For example, a replicator armed with an easily obtainable mold of a CD or DVD – called a “stamper” – can potentially manufacture 50,000 to 80,000 counterfeit CDs or DVDs, effectively flooding the market with copies of the work.
Early this morning, law enforcement agents arrested the following individuals on warrants issued by U.S. Magistrate Judge Howard Lloyd of the Northern District of California:
Ye Teng Wen, a/k/a Michael Wen, 29, of Union City, California;
Hao He, a/k/a Kevin He, 30, of Union City, California;
Yaobin Zhai, a/k/a Ben Zhai, 33, of Fremont, California;
The defendants were arrested pursuant to criminal complaints charging, among other things, violations of 17 U.S.C. § 506(a)(1)(A) (Criminal Copyright Infringement); 18 U.S.C. §2319 (Criminal Copyright Infringement); 18 U.S.C. § 371 (Conspiracy); and 18 U.S.C. § 2 (Aiding and Abetting).
According to the affidavits in support of the criminal complaints, Wen and He have been involved in large-scale replication of pirated music, software, and movies, including songs by numerous Latin artists as well as anti-virus software manufactured by Symantec. Similarly, Zhai has been involved in large-scale replication of pirated Latin music. All the counterfeited works at issue are copyrighted in the United States.
Law enforcement agents also arrested Jesus Becerra Huerta, of Stockton, California, and Rosa Isela Huerta, of Stockton, California, on warrants issued out of the Eastern District of California. The U.S. Attorney’s Office for the Eastern District of California is handling the prosecutions of those individuals.
Wen and He have allegedly obtained over 400 stampers of pirated music and software, and Zhai is alleged to have obtained over 130 stampers with pirated music. Using replication equipment, Wen, He, and Zhai would have had the capacity to manufacture tens of thousands of counterfeit CDs and DVDs, with a market value in the tens of millions of dollars. The affidavits also allege that the Huertas have operated retail locations in the Bay Area and Central Valley offering for sale tens of thousands of music CDs and movie DVDs. The Huertas have also allegely sold numerous counterfeit works during several undercover purchases.
Zhai is being held in custody and will appear for a detention hearing on October 12, 2005, at 9:30 a.m. Wen and He were released on $75,000 bond and will appear tomorrow at 9:30 a.m. for appointment of counsel.
For someone without a similar prior offense, the maximum penalties under 18 U.S.C. §§ 506(a)(1)(A), 2319, 371, and 2 are five years imprisonment, a $250,000 fine, three years supervised release, and a $100 special assessment for each violation. 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.
A criminal complaint only contains allegations and these defendants, as with all defendants, must be presumed innocent unless and until convicted.
The investigation of large-scale replication conspiracies is continuing.
Mark L. Krotoski and Matthew A. Lamberti are the Assistant United States Attorneys from the CHIP Unit in the Northern District of California who are prosecuting the cases. The Recording Industry Association of American and the Motion Picture Association of America have also assisted in this investigation.
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.
Further procedural and docket information along with electronic court filings for criminal cases filed since February 2005 are available at https://ecf.cand.uscourts.gov/ (click on the link for “to retrieve documents from the court.”)