Authorities announced Monday they had broken up the nation's largest videotape piracy ring with the arrest of 35 people in New York, an operation so sophisticated that it sold copies of such movies as "The Hunchback of Notre Dame" and "The Nutty Professor" before the films opened in theaters.
Ringleaders peddled franchises to people who wanted to enter the counterfeit video business in other areas of the country and distributed illegal copies to stores in California, Connecticut, Maryland, Michigan, Pennsylvania and the District of Columbia, police said.
As part of the franchising operation, three people also were arrested in Lodi, Calif., where authorities believe they made and sold counterfeit videotapes.
Manhattan Dist. Atty. Robert M. Morgenthau, who announced the arrests at a news conference with police and members of the Motion Picture Assn. of America, said the ring sold more than 100,000 videotapes weekly and grossed more than $500,000 a week.
"What we found during the investigation was a fully integrated video piracy operation," Morgenthau said. "They made their own blank tapes, copied stolen master tapes in bulk, packaged their tapes to make them appear genuine, distributed both locally and nationwide, and even franchised their operation for a fee."
"They were outdoing McDonald's as a franchising operation," the district attorney said.
"They not only illegally copied commercially available videos, but also obtained and copied movies that had not yet been released to movie theaters," Morgenthau added.
Edmund J. Pistey, the MPAA's director of anti-piracy operations in the United States, described the ring as the largest yet uncovered. "The magnitude of these results clearly points out that video piracy on this level is an extremely organized criminal activity. This is not a mom-and-pop operation by any stretch of the imagination."
The MPAA estimated the economic impact of the ring at $87 million a year in revenue lost from ticket and video sales and other fees.
Morgenthau said the six principal defendants in the alleged scheme would face multiple charges. The six defendants, all from Brooklyn, are Yeheskel Halali, 58; his son Yeoshua Halali, 36; Asher Sudry, 29; his brother Nissim Sudry, 19; Noor Siddiqi, 48; and Amos Takir, 34.
The charges include conspiracy, manufacturing or selling unauthorized recordings, racketeering and criminal possession of a forged instrument.
The arrests followed a six-month investigation code-named Operation Copy Cat. It included raids by more than 75 police officers who said they recovered more than 100,000 bogus videotapes. Police also found about 100 million feet of blank tapes, expensive machinery to manufacture cassettes, more than 800 commercial videotape recorders, stolen master copies of movies and machinery to wrap cassettes.
Police confiscated stolen master tapes for movies not yet in video release, including "The Cable Guy," "The Phantom," "Eddie," "Twister," "The Rock" and "Mission: Impossible."
MPAA personnel who are able to recognize bogus videotapes also participated in the investigation.
In California, San Joaquin County Dist. Atty. John Phillips said police discovered machines for copying videotapes, master tapes, counterfeit jackets and other equipment in a store in Lodi.
Phillips said the store acted as a distribution point for Sacramento and San Joaquin counties, and that the owner of the shop and two employees were arrested.