8 Arrested in Alleged Software Scheme

Federal and state authorities seized several Los Angeles County homes valued at more than $4 million and arrested eight people this week on suspicion of money laundering and running the nation’s largest Microsoft counterfeiting scheme.

Atul Sowmitra Dhurandhur, 51, and his wife, Mamta, 44, both of Palos Verdes, are accused of running a $56-million piracy ring that authorities say may have shipped at least 15,000 fake software disks a month worldwide since 1996.

The couple are accused of using several legitimate businesses in Long Beach to run the secret operation, including Digital Colors print shop, MD Packaging and MD Printing and Bindery Zone.

Thursday’s arrests followed raids in February in which Westminster police and FBI agents found tens of thousands of fake Microsoft Corp. products in several warehouses in Long Beach and Paramount.

Included were such bestsellers as the computer operating systems Windows 95 and Windows 98 and business software Office 97.

“That represents just one day’s inventory,” said Westminster Police Sgt. Marcus Frank, who led the local investigation. “That’s how much was on hand. It goes to show the extent and scope” of the venture.

Investigators who raided five locations in Long Beach and nearby Paramount found so much fake merchandise that at one site they had to use a semitrailer to haul away the software replicator and dozens of boxes of packaged software.

In another location, officers discovered a publishing enterprise: printing presses, paper cutters, collating machines, shrink-wrapping devices, counterfeit Microsoft certificates of authenticity, sophisticated hologram labeling and cardboard boxes printed with the Microsoft logo.

Prosecutors allege that the Dhurandhurs used an elderly relative’s bank account to hide more than $3 million in cash from sales of the fake software products. The couple purportedly opened several accounts with Bank of America and Bank of Orange County to launder the proceeds from the pirated goods, Assistant U.S. Attorney Stephen Larson said.

Part of the profit was spent on residential and commercial properties across Southern California, including a $1.6-million home in Palos Verdes Estates and houses worth $600,000 and $435,000 in Rancho Palos Verdes, according to authorities.

Civil forfeiture proceedings have been started for the property and other seized goods, which police confiscated this week.

The Dhurandhurs were arrested with Zhi Ang “Mike” Chen, 38, of Walnut; Alpha Brown, 30, of Torrance; Daniel Labonte, 50, of Long Beach; Mar Madrid, 31, of Azusa; Loren Woolley, 54, of La Verne; and Claude Irwin, 76, of Nueva.

None of the suspects or their attorneys could be reached Friday for comment.

Prosecutor Larson said the eight were arrested the day after a federal grand jury in Los Angeles indicted them on 45 counts of money laundering and conspiracy to traffic in counterfeit computer programs.

A ninth suspect, 45-year-old Yiu Joe Chung of Pomona, has agreed to surrender to authorities, police said.

Chung is accused of acquiring a CD-ROM replicator--a room-sized machine capable of mass-producing counterfeit software--for the Dhurandhurs, and is suspected of acting as a local distributor for the fake Microsoft products. The replicator was allegedly bought in Taiwan for $1.2 million and was assembled in a Southern California warehouse.

Chung is free on bond after being convicted in federal court in San Francisco on related charges of software piracy tied to a U.S. Customs case. He could not be reached Friday for comment.

Thursday’s arrests capped an eight-month federal investigation into the enterprise. The probe was part of an intensive campaign against high-tech crime that has resulted in seizure of more than $300 million in pirated software across the region since 1997.

The defendants made an initial appearance in U.S. Central District Court in Los Angeles on Thursday. Four were released on bail, and four were held pending later bail hearings. The Dhurandhurs are being held until bail can be set, probably Monday.

Three men arrested soon after the raids were indicted on charges of trafficking in counterfeit computer software and packaging. The three--Hemant Navnit Bham, 41, of Corona; Victor Duran, 43, of Los Angeles; and Jorge Higinio Calderon, 27, of Los Angeles--all pleaded not guilty and are free on bail.

None of those three suspects or their attorneys would talk this week about the case, which is set for trial next month in Los Angeles.

Worldwide, the computer industry lost $11 billion to piracy last year, according to a study by the trade group Business Software Alliance.