Arrests and Convictions for IP Crimes: the Imagine and Ninja Video Cases
ASIDE FROM THE FANFARE THAT accompanied the raid on Megaupload and arrest of Kim Dotcom associates, many other arrests and convictions have occurred with little public notice due to the investigations by ICE—the US Immigration and Customs Enforcement agency—the largest investigative arm of the Department of Homeland Security. Commonly, ICE is associated with immigration fraud and uncovering and deporting illegal immigrants, but they have also played a major role in discovering copyright infringement and other intellectual property crimes, which have resulted in arrests, prosecutions, convictions, and sentences to jail time.
As described in a series of press releases, about 20 percent of their cases involve IP infringement (33 out of 174 cases between September 1, 2011, and June 3, 2013), while others mainly involve counterfeit products, including phony drugs. So far, these arrests do not include pirated books, but in the future, ICE investigators could easily go after the book pirates, using the same kinds of techniques used to obtain these other convictions (http://www.ice.gov/news/releases/index.htm?top25=no&year=all&month=all&state=all&topic=12). The following are some examples of these copyright infringement cases:
1. Numerous members of the “IMAGINE” piracy group were sentenced to prison terms after an ICE investigation. Beginning on April 18, 2012, four leading members of the IMAGINE group, described as “an organized online piracy group seeking to become the premier group to first release Internet copies of new movies only showing in theaters,” were indicted. Before they were shut down, the group operated between September 2009 and September 2011 as the most prolific motion picture piracy release group on the Internet.
One of the first to plead guilty on May 9 was Sean M. Lovelady, of Pomona, California, who admitted that he went to movie theaters near his home and secretly used receivers and recording devices to copy the audio track of the movies. Then, he synchronized the audio with an illegally obtained video file of the movie to create a complete movie file to share over the Internet among the IMAGINE group members and others. The case was successfully prosecuted by attorneys in the Criminal Division’s Computer Crime and Intellectual Property Section; Lovelady faces up to five years in prison, a fine of $250,000, and three years of supervised release.
On June 22, Willie O. Lambert of Pittston, Pennsylvania, pleaded guilty to similarly capturing the audio track, soon to be followed on July 11 by, Gregory A. Cherwonik of Canandaigua, New York; they face the same punishment. Then, August 29, the group leader Jeramiah B. Perkins of Portsmouth, Virginia, pleaded guilty to conspiring to willfully reproducing and distributing tens of thousands of infringing copies of movies before they were commercially released on DVD, and he faces the same penalties as the others. Among other things, Perkins took the lead in renting computer servers in France and elsewhere and registered domain names for the group. He opened email and PayPal accounts to receive donations and payments from persons downloading or buying the pirated copies. Plus, Perkins directed and participated in using recording devices in movie theaters to secretly capture the audio soundtracks and synchronize them with the illegally recorded files. One additional conspirator, Javier E. Ferrer of New Port Richey, Florida, was charged on September 13.
On November 2 and 29, the four were sentenced—Lambert to thirty months in prison, three years of supervised release, and $449,514 in restitution; Lovelady to twenty-three months in prison, three years of supervised release, and $7,000 in restitution; Cherwonik to forty months in prison; and Perkins, the group leader, to sixty months in prison, three years of supervised release, and $15,000 in restitution. Subsequently, Ferrer pleaded guilty on November 12 and was sentenced on April 10, 2013, to twenty-three months in prison, three years of supervised release, and $15,000 in restitution.
2. In another big case, part of the first phase of an Operation in Our Sites investigation, five individuals were charged on September 9, 2011, in Alexandria, Virginia, for their involvement with the NinjaVideo website, which operated from February 2008 until law enforcement shut it down in 2010. According to the indictment, the site provided millions of website visitors with the ability to illegally download infringing copies of copyright-protected movies and television programs in high-quality formats. Many of the movies were still playing in theaters, while others had not yet been released. Reportedly, the website offered many copyrighted movies free of charge, while customers had access to a greater selection of copyrighted materials for a “donation” of at least $25. In addition, the website gained significant revenue through advertising. Allegedly, the defendants collected more than $500,000, while the website operated for 2.5 years and infringed upon millions of dollars of copyrighted movies, TV programs, and software products.
Among those charged were Hana Amal Beshara of North Brunswick, New Jersey, and Matthew David Howard Smith of Raleigh, North Carolina, identified as the service’s founders and administrators; Joshua David Evans of North Bend, Washington and Zoi Mertzanis of Greece, allegedly two of the most active uploaders of copyrighted material; and Jeremy Lynn Andrew of Eugene, Oregon, who allegedly headed up security for the website. Over the next few months, Beshara and Smith pleaded guilty to conspiracy and criminal copyright infringement, and faced sentences of up to five years on each count. The remaining defendants opted for a jury trial, scheduled for February 6, 2012. Beshara, who had personally received over $200,000 from the operation, also agreed to forfeit any earnings that had been seized, which included cash, an investment brokerage account, two bank accounts, a PayPal account, and one Internet advertising account. Eventually, Evans—called the “Head God” of the uploaders—also admitted to both uploading his own content and supervising other uploaders, pleading guilty to one count each of conspiracy and criminal copyright infringement; he agreed to pay back the $26,660 he received from the operation. Two other men, Jeremy Lynn Andrew of Eugene, Oregon, who earned $5250 from the scheme, and Justin A. Dedemko of Brooklyn, New York, who earned $58,0004, pleaded guilty to a single count of conspiracy for their role in uploading infringing content on the Internet. Additionally, Dedemko played a role in marketing and talking to companies about placing ads on the NinjaVideo website. As part of his plea, he agreed to return the $58,004 he received. Meanwhile, an arrest warrant was issued for Zoi Mertzanis of Greece.
Then, in January 2012, Beshara, known as “Queen Phara” on the Internet and the public face of NinjaVideo, was sentenced to twenty-two months in prison for criminal copyright conspiracy, along with two years of supervised release, five hundred hours of community service, repaying the $209,827 she personally received from her work at NinjaVideo, and forfeiting several financial accounts and computer equipment involved in the operations. Subsequently, Matthew Smith received fourteen months in prison, two years supervised release, and was ordered to pay back about $172,000 that he earned from the site. Though the government sought a prison term for Andrew, the court eventually sentenced him to three years probation, finding that he wasn’t motivated primarily by monetary rewards (http://torrentfreak.com/tag/ninjavideo).
Ironically, when Beshara was released from prison in April 2013 to a half-way house with a requirement that she find a job, stay in home detention for two months, and spend the next two years under supervised release, she came out defiant. She attacked Hollywood for its inflated budgets and ridiculous salaries, blaming Hollywood’s practices for the prevalence of piracy. In fact, she announced plans to remain an advocate for the free media movement (http://arstechnica.com/tech-policy/2013/04/ninjavideo-link-site-founder-out-of-prison-wants-to-lead-free-media-movement).
However, regardless of the apologists for piracy, these ICE investigations of two major operations show the ability of the government to successfully go after the big piracy operations, serving as a warning to those seeking to earn money on the piracy black market. And even smaller, more independent pirates aren’t safe, as numerous other ICE operations show, to be described in the next section.