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Copyright Cases - U.S. v. Fontanini et al.(S.D. Cal.) (also charged under trademark violation)

February 26, 2003

U.S. Department of Justice
United States Attorney
Eastern District of New York
One Pierrepont Plaza
Brooklyn, New York 11201
Mailing Address: 147 Pierrepont Street
Brooklyn, New York 11201
Phone: (718) 254-6267
Peggy Long
United States Attorney's Office
Phone: (718) 254-6267
Patrick Clark
Queens District Attorney's Office
Phone: (718) 286-6409
Michael O'Looney
New York City Police Department
Phone: (646) 610-6700
Joseph Valiquette
Federal Bureau of Investigation
Phone: (212) 384-2715
Kevin McKeon
Internal Revenue Servie
Phone: (212) 719-6762

Six Charged With Trafficking in Counterfeit Computer Software -- $9 Million Worth of Counterfeit Software Seized

During Search of Defendants’ Distribution Centers  

ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York, RICHARD A. BROWN, District Attorney, Queens County, New York, RAYMOND W. KELLY, Commissioner, New York City Police Department, KEVIN P. DONOVAN, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation, and PAUL L. MACHALEK, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York, announced the arrests yesterday afternoon of KE PEI MA, KAI WU, XIA YU, JIANBUI YE, XI KANG YU, and HSIEN-CHANG KO for their participation in a counterfeit software distribution ring. City and federal law enforcement agents executed search warrants at two of the defendants’ distribution centers, 136-46 59th Avenue, Flushing, New York, and 15-38a 150th Place, Whitestone, New York, as well as two vehicles used by the defendants to transport the counterfeit software and packaging materials. Pursuant to these warrants, law enforcement seized approximately $3.2 million worth of counterfeit Symantec software and $5.9 million worth of counterfeit Microsoft software, as well as counterfeiting paraphernalia such as shrink wrapping machines, heat guns, and boxes of CD cases and CD sleeves. In addition, law enforcement seized approximately $900,000 from two bank accounts controlled by the defendants at Cathay Bank, 40-14/16 Main Street, Flushing, New York, and a securities brokerage account at TD Waterhouse Securities, 36-60 Main Street, Floor, Flushing, New York.

The defendants’ preliminary appearances will take place this morning before United States Magistrate Judge Viktor V. Pohorelsky at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

According to a complaint unsealed this afternoon, beginning in June 2000, MA and others began distributing counterfeit Microsoft software from a location on 32nd Avenue in Flushing, New York. On June 21, 2000, FBI agents executed a court-authorized search warrant at that location, but the defendants’ had apparently vacated the location, leaving behind only a few compact disks (.CDs.) containing counterfeit software, as well as other items evidencing the distribution of counterfeit software.

More recently, NYPD officers, working with the FBI agents and the IRS Special Agents, learned that the defendants had moved their counterfeiting operation to the 59th Avenue and 150th Place locations in Queens, New York, and that from approximately November 2002 through January 2003, used these locations to package counterfeit Symantec Norton Antivirus software and counterfeit Microsoft Office software. Symantec Norton Antivirus software is commonly used on home computers to guard against destructive computer viruses. Microsoft Office software contains computer applications used by businesses, such as wordprocessing, accounting and programs for visual presentations. Using UPS facilities in the Bronx and Queens, the defendants distributed the counterfeit software to computer software retailers and wholesalers throughout the United States. According to the complaint, between November 4, 2002 and January 24, 2003, the defendants distributed approximately 37,971 counterfeit CDs, and were paid approximately $1,898,550 by their customers. All told, the government estimates that over the two-year period charged in the complaint, the defendants received approximately $15,198,400 in payment for their counterfeit software.

The complaint alleges that the companies purchasing the counterfeit software from the defendants issued checks to PC Tech and Blue Media, shell companies controlled by the defendants KO, WU and XI KANG YU. The defendants deposited the checks into three accounts they controlled at Cathay Bank and TD Waterhouse Securities. The complaint charges that between April 2001 through January 23, 2003, $5,396,472 was deposited into these accounts.

In announcing the arrests, United States Attorney MAUSKOPF stated, .The arrests and seizures in this case are another example of law enforcement’s successful efforts to coordinate with private industry in order to combat the widespread assault on the intellectual property rights of American business, in this case, the widely-used software of Symantec and Microsoft. These arrests should send the message to counterfeiters they will be prosecuted to the full extent of the law.. Ms. MAUSKOPF thanked the Trademark Counterfeiting Unit of the New York City Police Department and the El Dorado Task Force, which under the direction of Nelson J. Chen, is comprised of federal, state and local law enforcement agencies, for their invaluable assistance in the investigation.

District Attorney BROWN stated, .The defendants are alleged to have committed marketplace piracy by selling almost 300,000 counterfeit compact disks illegally copied from authentic Symantec Norton antivirus software and to have reaped windfall profits of over $15 million in just two years - - almost $2 million in just three months. The manufacture, distribution and sale of counterfeit trademark products is not a victimless crime. Legitimate businesses such as Symantec Norton - - and ultimately the consumer - - are the victims..

Police Commissioner KELLY stated, .The New York City Police Department is committed to stopping counterfeiters of all kinds, and this case proves that the computer industry is no exception. If you counterfeit software, we will do everything in our power to catch you and bring you to justice. As always, our officers did a great job of tracking these criminals, collecting evidence and placing them under arrest. I commend them for their hard work in this case..

FBI Assistant Director-in-Charge DONOVAN stated, .The FBI and our law enforcement partners will continue this investigation in an effort to identify other individuals who may have participated in this scheme. Protection of intellectual property is an important priority investigative area within the FBI..

IRS Special Agent-in-Charge MACHALEK stated, .Product counterfeiting schemes victimize consumers, businesses and ultimately the American taxpayer. IRS-Criminal Investigation, a cooperating agency in the El Dorado Task Force, is always eager to lend its financial expertise in the investigation of complex fraud investigations like this one..

If convicted on all charges, each defendant faces a maximum sentence of 15 years imprisonment, a fine of $2,250,000, or twice their gains, or twice the loss to the public, and the forfeiture of their illicit proceeds.1

The government’s case is being prosecuted by Assistant United States Attorneys Amy Walsh and Sarah Lum, and Special Assistant United States Attorney David Chen, from the Queens County District Attorney’s Office. The Defendants:


Address: 66-23 Alderton Street, Rego Park, New York

Age: 45 Name: KAI WU

Address: 4125 Kissena Boulevard, Apartment 6CC, Flushing, New York

Age: 26 Name: XIA YU

Address: 141-07 20th Avenue, Room 502, Whitestone, New York

Age: 39 Name: JIANBUI YE

Address: 149-35 Northern Boulevard, Flushing, New York

Age: 39 Name: XI KANG YU

Address: 158 Baron Lane, East Brunswick, New Jersey

Age: 55


Address: 8941 Duarte Road, San Gabriel, California

Age: 26


1 The charges contained in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.


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