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Intellectual Property Rights
03/18/2013

Chief scientist of government contractor sentenced for conspiring to obtain pirated software from Chinese and Russian cyber criminals

WILMINGTON, Del. – Following an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the chief scientist of a government contractor was sentenced Monday for conspiring to obtain pirated software from Chinese and Russian cyber criminals.

Dr. Wronald Best, 55, of Owensboro, Ky., was sentenced to one year in prison, ordered to pay a $6,000 fine and serve three years of supervised release. Best obtained over $2.3 million in stolen software from Chinese and Russian cyber criminals.

"Dr. Best betrayed our country and those who are sworn to protect it by conspiring with international cyber thieves who believed they could remain anonymous in cyberspace. They were wrong," said John P. Kelleghan, special agent in charge of HSI Philadelphia. "HSI and our law enforcement partners will continue to ensure that those who commit these crimes, no matter where they reside, are held accountable for their actions."

The HSI investigation identified a China-based website located at www.crack99.com (CRACK99) that was advertising thousands of pirated software titles at a fraction of their retail value. The investigation revealed that this website was operated by Xiang Li, 36, of Chengdu, China, who used the website to distribute pirated or cracked software to customers all over the world, including the United States. Software is "cracked" when its digital license files and access control features have been disabled or circumvented.

The HSI investigation revealed that from April 2008 to June 2011, Xiang Li engaged in over 500 transactions, in which he distributed approximately 550 different copyrighted software titles to at least 325 purchasers located in at least 28 states and over 60 foreign countries. These software products were owned by approximately 200 different manufacturers and were worth over $100 million. The software is used in a wide range of applications including defense, engineering, manufacturing, space exploration, aerospace simulation and design, mathematics, and explosive simulation. More than one third of the unlawful purchases were made by individuals within the United States, including small business owners, government contractors, students, inventors, and engineers.

Between January 2010 and June 2011, undercover HSI special agents made a series of purchases of pirated software worth hundreds of thousands of dollars from Xiang Li's CRACK99 website. The investigation culminated in a face-to-face meeting between Xiang Li and undercover special agents on the island of Saipan, in June 2011. Xiang Li agreed to travel from China to Saipan to deliver pirated software, design packaging, and 20 gigabytes of proprietary data obtained from an internal computer server of a U.S. software company to undercover special agents posing as U.S. businessmen. In addition, Xiang Li and the undercover special agents were meeting to discuss a plan to distribute pirated software to small businesses in the United States. The undercover special agents arrested Xiang Li on June 7, 2011, after he delivered the stolen intellectual property to them at a Saipan hotel. Xiang Li was transported to the District of Delaware, where he has remained in custody since June 2011.

On January 7, 2013, Xiang Li pleaded guilty to conspiracy to commit criminal copyright infringement and wire fraud in the United States District Court for the District of Delaware. Li is scheduled to be sentenced by United States District Judge Leonard P. Stark on May 3, 2013.

During the investigation, special agents learned that Dr. Wronald Best was one of CRACK99's top customers in 2008 and 2009. As the investigation shifted focus to Best's activities, special agents learned that between September 2008 and May 2011, Best conspired with Xiang Li and other computer software crackers located in China and Russia to obtain and utilize unauthorized copies of industrial-grade software in the performance of government contracts for the military and law enforcement sectors. At the time, Best held the position of chief scientist at MPD Inc., a Kentucky-based government contractor that services the U.S. and foreign militaries and law enforcement agencies.

The HSI investigation also revealed that Best communicated with approximately 35 different computer code crackers and obtained over 60 pirated software applications from Chinese and Russian sources. He paid over $6,000 to obtain pirated software worth over $2.3 million. Best told HSI special agents that he used that cracked software to conduct computer simulations on components MPD Inc. was designing for use in military helicopters, including the Black Hawk helicopter and the presidential helicopter fleet, commonly referred to as "Marine One." Other projects on which Best used cracked software included designing Patriot missile components, police radars and breath analysis equipment widely used by American police departments.

"Each year, American companies lose intellectual property valued in the billions of dollars to international cybercriminals engaged in rampant digital theft," said U.S. Attorney Charles M. Oberly, III. "Mr. Best's offenses are aggravated by the fact that he used pirated software obtained from these thieves to design parts for our military and law enforcement personnel. The successful prosecution of this conspiracy ring proves that neither the international cybercriminal behind a computer in China nor his customers behind computers in America are beyond the reach of U.S. law enforcement."

The investigation also confirmed that Best was more than a customer of Chinese and Russian cybercriminals. Best also used his position as chief scientist for a government contractor to obtain trial licenses to use various software applications, which he then provided to cybercriminals for cracking and future dissemination. He also provided these international software pirates with instructions on how to disable the security devices in certain software.