In a landmark case that highlights the pervasive threat of digital piracy, U.S. Attorney Tammy Dickinson of the Western District of Missouri revealed the conviction of a Seattle man, the sixth individual to be found guilty in a massive software piracy conspiracy. This complex scheme, one of the largest ever prosecuted by the U.S. Department of Justice, originated in Kansas City, Missouri, and extended its illicit operations across the nation and even overseas.
Dickinson emphasized the staggering scale of the operation, stating, “An investigation that began in Kansas City, Mo., uncovered one of the largest software piracy schemes ever prosecuted by the U.S. Department of Justice, with tentacles reaching into cities across the United States and overseas.” The authorities successfully seized over $20 million in assets from the individuals involved, who are estimated to have illegally sold counterfeit software worth in excess of $100 million to countless online customers.
The U.S. Attorney underscored the severe consequences of software piracy, not just for software developers but also for unsuspecting consumers. “Software piracy is a significant economic crime that victimizes not only software developers and manufacturers, but unwitting consumers,” Dickinson explained. She also indicated that the investigation is ongoing, suggesting that more individuals involved in this widespread network could soon face justice.
Echoing this sentiment, acting Special Agent in Charge James Gibbons of HSI Chicago remarked on the broader economic impact of such crimes. “Pirating software, particularly on this massive scale, damages the American economy, hurts private businesses and harms the unsuspecting buyer,” Gibbons stated. He hailed the guilty pleas as a significant victory in the ongoing battle against intellectual property theft.
The Kansas City Connection: Ross Software and the Genesis of the Scheme
The investigation that unraveled this vast piracy network began in Kansas City, Missouri, focusing on Casey Lee Ross, 29, and his company, Ross Software, operating under the name Software Slashers. Federal agents discovered in 2013 that Ross Software was deeply involved in purchasing and distributing tens of thousands of illegitimate Microsoft product key codes and counterfeit product key cards, sourced from suppliers in China.
Ross admitted to purchasing approximately 30,159 of these illicit product key codes and counterfeit cards. These were acquired at prices significantly below retail value, often presented on fake card stock designed to mimic genuine Microsoft products. The modus operandi of Ross Software involved distributing these codes and counterfeit cards in bulk to co-conspirators across the United States. These individuals, in turn, sold them through their own websites and major e-commerce platforms like eBay and Amazon, often deceiving customers into believing they were purchasing legitimate software licenses.
Ross Software’s network was extensive. Records show that Ross received substantial payments from other key figures in the conspiracy, including $1,387,595 from Rex Yang Jr. of Seattle, $1,127,190 from Matthew Lockwood of Denver, and $875,630 from Reza Davachi of Maryland, among others. These transactions highlight Ross Software’s central role in the distribution chain of the pirated software.
Unmasking the Network: From Seattle to Las Vegas
The case expanded beyond Kansas City, implicating individuals across multiple states. Rex Yang, 37, of Seattle, a key figure who dealt with Ross Software, pleaded guilty to conspiracy. Yang operated Digisoft, LLC., and Premiere Software, Inc., and was found to be in possession of over 10,000 counterfeit Microsoft certificates of authenticity. His transactions included purchasing software and components worth $402,929 from Davachi and selling software worth $1,574,054 to Lockwood, further illustrating the interconnectedness of this piracy ring and Ross Software’s place within it.
Matthew Lockwood, operating as Discount Mountain, Inc. in Denver, also pleaded guilty. His dealings extended to Davachi and Yang, and he admitted to acquiring thousands of counterfeit certificates of authenticity and product key cards. Reza Davachi of Maryland utilized a charitable organization, Project Contact Africa, to mask his for-profit sales of illicit software, highlighting the deceptive tactics employed by the conspirators. Even a charity intended to support a medical clinic in Africa was exploited in this scheme.
Further connections led to Las Vegas, where Arunachalam Annamalai, owner of Vegascart, LLC., admitted to purchasing product key codes from Ross Software. Jake Schwartz, also of Seattle, pleaded guilty to misprision of a felony for concealing Yang’s involvement, demonstrating the layers of deception and the attempts to cover up the illegal activities.
The Modus Operandi: How the Software Piracy Scheme Functioned
The conspiracy revolved around the illegal sale of software product key codes for major software companies like Microsoft and Adobe. These product key codes are essential for activating and licensing legitimate software. The conspirators obtained unauthorized or counterfeit key codes and then sold them online, often at discounted prices, attracting unsuspecting customers.
Over 170,000 product activation key codes were distributed, with many being used and activated multiple times, maximizing the illicit profits. The scheme involved a complex network of individuals and businesses, operating both domestically and internationally, including in China, Singapore, and Germany. The use of counterfeit certificates of authenticity and product key cards further deceived buyers into believing they were purchasing genuine software.
Financial Repercussions: Millions Seized in Assets
The financial gains from this software piracy operation were immense. Authorities seized over $20.6 million in assets, including over $10 million from bank and investment accounts, luxury vehicles, and numerous real estate properties. These seizures represent a significant blow to the financial infrastructure of the conspiracy, aiming to dismantle the profitability of such illegal ventures. Affidavits revealed that the conspirators likely reaped around $30 million in profits from customer payments exceeding $100 million.
The scale of the investigation is further underscored by the execution of search warrants at 13 locations across five states, demonstrating the widespread reach of this criminal enterprise and the extensive efforts required to bring it to light.
Combating Digital Piracy: A Continuing Battle
This case serves as a stark reminder of the ongoing challenges in combating software piracy in the digital age. The sophisticated methods employed by these criminals, including the use of international networks and deceptive tactics, highlight the need for continued vigilance and robust law enforcement efforts. For consumers, it emphasizes the importance of purchasing software from legitimate sources to avoid unknowingly supporting illegal activities and to ensure they receive genuine, secure products. The successful prosecution of these individuals marks a significant victory in protecting intellectual property rights and safeguarding the digital marketplace from illicit activities like those associated with Ross Software and its co-conspirators.
