Guilty plea in sprawling industrial and engineering software pirating scheme

A defendant in one of the largest copyright infringement and wire fraud cases ever uncovered and dismantled by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) pleaded guilty on Jan. 8 to pirating and distributing more than $100 million in software worldwide.

Xiang Li, 36, of Chengdu, China, pleaded guilty late on Jan. 7 to conspiracy to commit criminal copyright infringement and wire fraud. According to ICE, Li operated a website used to distribute more than $100 million worth of pirated software around the world.

The software Li “cracked” is used in a wide range of applications including defense, engineering, manufacturing, space exploration, aerospace simulation and design, mathematics, and explosive simulation.

Li’s plea was announced on Jan. 8 at a press conference in Delaware where the case was prosecuted by ICE director John Morton.

"Circumventing our commercial aerospace and defense software licensemechanisms not only harms the competitiveness of our company, but also U.S. national security interests,” said one of the company victims in piracy scheme in a statement by ICE.  “In addition to the revenue lost, we spend significant legal resources obtaining patents and trademarks to protect our intellectual property. We also invest a lot of energy administering software license agreements and product-based, end-user licenses, which are key components of our U.S. export control compliance and customer support programs."

Li’s plea was announced on Jan. 8 at a press conference in Delaware where the case was prosecuted by ICE director John Morton.

Li is slated for sentencing in May and faces a maximum sentence of 25 years in prison, a $250,000 fine and three years of supervised release following his prison sentence, said ICE.

According to statements made at the plea hearing and documents filed in court, HSI identified Li as the operator of a website located at www.Crack99.com that advertised thousands of pirated software titles at a fraction of their retail value. The investigation, said ICE, revealed Li used the Crack 99 website to distribute pirated or cracked software to customers all over the world, including the U.S. Software is "cracked" when its digital license files and access control features have been disabled or circumvented.

"Li mistakenly thought he was safe from the long arm of HSI, hiding halfway around the world in cyberspace anonymity," said ICE director John Morton. "Fast forward to today, where he is now being held accountable in Delaware for illegally stealing, distributing and ultimately exploiting American ingenuity and creativity at a loss of at least $100 million to U.S. companies. HSI is committed more than ever to protecting American industry and U.S. jobs from criminals like him."

Through emails sent to customers of his website, Li described himself as being part of "an international organization created to crack" software. Between April 2008 to June 2011, ICE said Li engaged in more than 500 transactions that distributed approximately 550 different copyrighted software titles to at least 325 purchasers located in at least 28 states and more than 60 foreign countries. These software products were owned by approximately 200 different manufacturers and were worth more than $100 million.

More than one-third of the unlawful purchases were made by individuals within the U.S., including small business owners, government contractors, students, inventors and engineers. According to ICE, some of Li's biggest American customers held significant engineering positions with government agencies and government contractors. For instance, ICE said Li sold 12 cracked software programs worth more than $1.2 million to Cosburn Wedderburn, who was then a NASA electronics engineer working at NASA's Goddard Space Flight Center, in Greenbelt, MD. Li also sold 10 cracked software programs worth more than $600,000 to Dr. Wronald Best, who held the position of chief scientist at a Kentucky-based government contractor that services the U.S. and foreign militaries and law enforcement with a variety of applications such as radio transmissions, radar usage, microwave technology and vacuum tubes used in military helicopters.

Both Wedderburn and Best, said ICE, have pleaded guilty to conspiracy to commit criminal copyright infringement and are awaiting sentencing in the District of Delaware.