The sentencing follows an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the FBI and the U.S. Postal Inspection Service.
Naveed Sheikh was sentenced by U.S. District Judge Richard D. Bennett, who entered an order requiring Sheikh to forfeit $4 million.
"Copyright infringement is not a victimless crime," said William Winter, special agent in charge of HSI Baltimore. "Intellectual property theft costs U.S. businesses billions of dollars each year and accounts for the loss of American jobs and innovation. HSI will continue working with our law enforcement and private industry partners to pursue criminal organizations that are engaged in this type of illegal activity."
According to Sheikh's guilty plea, from February 2003 to June 2008, Sheikh conspired to infringe copyrights by reproducing and distributing more than 1,000 copyrighted commercial software programs worth $4 million.
Sheikh recruited and compensated co-conspirators, directed the actions of other co-conspirators, obtained infringing copies of software that were used for distribution and planned and organized the activities of the conspiracy. Sheikh created multiple websites through which the infringing software was sold.
Sheikh advised purchasers that the programs offered for sale were not legal because they were copies of original software programs or "cracked" versions. Because these items were cracked, they could not be registered with the legitimate companies that developed the software programs and held copyrights covering the software.
Sheikh rented computer server space in Scranton, Pa., and hosted the websites with the infringing software on computers in Scranton and at his Bel Air, Md., home.
Sheikh advised purchasers that software programs could be mailed to purchasers on compact discs and downloaded from the Internet. Sheikh requested that purchasers send money orders for infringing software to a P.O. Box he maintained in Towson, Md. Sheikh also permitted customers to pay for infringing software through credit card charges and electronic fund transfers. In order to process the electronic payments, Sheikh and his co-conspirators used the credit card processing accounts for a defunct business previously owned by Sheikh's family, and caused monies from the software sales to be deposited into accounts previously associated with the business.
Some of the individuals who worked for Sheikh were located overseas and could assist with overnight projects. Sheikh and other conspirators posed as other individuals when corresponding with customers by email.
Sheikh did not report the income from the copyright infringement scheme on his tax returns. During the time of the conspiracy, Sheikh used services such as Western Union to transmit money outside the United States, particularly to Pakistan.
The copyrighted works copied and sold illegally included: Microsoft Office; Microsoft Money 2006 Small Business; Adobe Acrobat; Adobe Photoshop; Adobe After Effects Pro 7.0; Veritas NetBackUp Pro 5.1; Solid Works Office 2000 Premium; Quicken Premier Home and Business 2006; Apple Mac OS X Panther 10.3 and Microsoft Windows XP Professional with SP2.
In meetings with federal prosecutors and HSI special agents during the course of the investigation, Sheikh made numerous false statements in order to obstruct the investigation. For example, Sheikh claimed that he had rented computer space to another individual, whom Sheikh believed was selling computer training programs. Sheikh falsely said that he did not learn that this individual was selling copyright infringing software until 2008.
Sheikh further claimed that he had recorded phone conversations with this individual in an effort to assist the government investigation. Through his attorney, Sheikh provided the fraudulent recordings that he created. During fall of 2010, the government engaged in plea negotiations with Sheikh. In November 2010, shortly before the deadline for Sheikh to reach an agreement with the government or be charged, Sheikh left the United States for Pakistan.
When he re-entered the United States in January 2012, Sheikh was carrying electronic media containing evidence that he and his co-conspirators were responsible for the sales of infringing software.
This investigation was supported by the HSI-led National Intellectual Property Rights (IPR) Coordination Center in Washington. The IPR Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 21-member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety and the U.S. economy.
For more information on the IPR Center please visit www.IPRCenter.gov.
HSI encourages the public to report intellectual property rights violations and related information by calling at 1-866-DHS-2ICE or by visiting www.ICE.gov/tips.
The Business Software Alliance and Microsoft Corporation also assisted HSI with this investigation.
Assistant U.S. Attorneys Harry M. Gruber and Martin J. Clarke, District of Maryland, prosecuted this case on behalf of the U.S. government.