Piracy Investigation: Feds Seize Assets

Monday, February 16, 2015 @ 04:02 PM gHale

Federal investigators seized $25,000 in Bitcoin and Litecoin from one Seattle, WA, resident, along with over $7 million and other assets from related suspects, as part of an ongoing investigation into what investigators say could be the largest software piracy case ever pursued by the government.

The cryptocurrency, 105 BTC and 900 LTC, ended up seized from the home of a businessman named Rex Yang on December 10, 2014. According a court filing in the Western District of Missouri on January 30, the seizures were part of an investigation into “multiple and high varied methods for the illegal sale of both physical software products and software product activation key codes.”

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As a part of the investigation, investigators said Yang and other participants worked together since 2009, obtaining and selling fraudulent product activation keys for Microsoft and other software through a number of e-commerce websites, according to the filing. The investigation in the software piracy began in Kansas City in April 2013, when Homeland Security Investigation (HSI) agents got a tip Casey Lee Ross, the owner of a business called “Software Slashers,” was selling counterfeit computer software and DVDs, mostly from China.

Ross had been working with Yang and a network of other sellers across different states, including Washington, Colorado, Maryland, and Nevada, the filing said. The participants traded product key codes over email and wired money to each other between different bank accounts, according to the report. They operated a series of e-commerce sites, claiming to be selling the product activation keys legally, and received many “cease and desist” letters from Microsoft, according to the report.

The Kansas City Star reported the participants may have made at least $30 million in profits, according to the prosecution’s estimation. Customers likely spent $90 million on the pirated software, which falls far below market value for the software, according to the Star. So far there have been no criminal charges, but seizure of property is often a precursor in these kinds of investigations.

At the end of 2014, HSI Special Agents began seizing bank accounts and assets connected to the software case, according to court filings. This included $7.08 million from various bank accounts, a Porsche and other vehicles, gold and silver, four Rolex watches (one studded with diamonds), a diamond ring, and Yang’s Bitcoin and Litecoin.

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