$30 Million in Fake Software Seized; O.C. Gang Suspected

In one of the largest-ever computer-software piracy busts in Southern California, Westminster police and the FBI confiscated an estimated $30 million worth of counterfeit Microsoft software and arrested at least six people in Los Angeles County late Wednesday afternoon.

Investigators raided five warehouses--two in Long Beach, three in Paramount--as part of an ongoing examination into Orange County-based Asian gangs trafficking the illegal software.

The suspects, who names were not disclosed, were in custody on counterfeiting charges, said FBI supervisor Keith Trace. Four other individuals were detained.

Stacks of compact discs sporting the Microsoft Corp. logo were found in warehouses, as well as at least one $1.5-million commercial CD duplicator, police said.

Among other things, the cache included illicit copies of Microsoft’s Office 97, which retails for about $450, and pirate versions of its Windows 98 operating system, which normally retails for about $150.

“This was a very sophisticated commercial operation. This isn’t someone copying floppies in their bedroom,” said FBI Special Agent Carl Swanson.

Microsoft employees joined law enforcement during the raid and helped confirm that the products were fake, police said. The Redmond, Wash., software giant has known about these operations in Southern California for about two years. Wednesday’s raids have been in the works for several months, officials said.

The investigation remains ongoing.

The suspects will face felony charges, police said. Legal experts note that suspects who are convicted in criminal piracy cases usually serve relatively short prison terms, often three years or less.

Police believe the software is connected to a Westminster-based Asian gang, which officials say has been involved in high-tech counterfeiting for years.

“It appears these guys are back in business,” said Westminster Police Sgt. Mike Mittelstaedt.

Wednesday’s crackdown marks the latest of a series of high-profile software counterfeit cases in Orange County. In July, a San Clemente man was arrested by Anaheim police after undercover detectives bought more than $97,000 worth of pirated Microsoft software.

And in an ongoing investigation that dates to 1997, police continue to unravel a worldwide, multimillion-dollar software piracy ring operated out of Little Saigon.

The probe, led by a Westminster police task force, has turned up at least $3 million in counterfeit software and federal indictments against 14 people.

Despite international efforts to curb high-tech theft, sales of pirated software continue to plague the computer industry. The U.S. software arena lost more than $11 billion in revenue worldwide last year through the sale of pirate disks, according to findings by industry trade groups Business Software Alliance and the Software Publishers Assn. Microsoft’s fiscal 1998 sales, by comparison, totaled $14.5 billion.

To help combat piracy, computer companies such as Microsoft say they are trying to work more closely with law enforcement agencies.

Over time, Microsoft has seen an increase in the number of cases involving organized crime groups, said Nancy Anderson, a company attorney.

“These are professional criminals, ones who are investing and laundering significant amounts of money from their activities,” Anderson said.