FBI, Chinese police bust 'largest' Microsoft piracy ring

Chinese police have broken up two criminal organizations and seized pirated software worth half a billion dollars US, the culmination of two years of work with the FBI, officials from both countries said Tuesday.

The gangs pirated Microsoft Corp. and Symantec Corp. software and sold it around the world, including in the U.S., said Gao Feng, an official with China's Ministry of Public Security.

In a news conference from the southern Chinese city of Shenzhen, Gao said police arrested 25 people and seized property worth about $8 million. Chinese police also confiscated counterfeit software with an estimated retail value of $500 million, according to an FBI statement.

Gao said Chinese police discovered in 2005 that the Chinese gangs were colluding with suspects in the U.S. and notified the FBI's Beijing office.

China has long been the world's leading source of illegally copied goods, including designer clothes, movies and music. The country has been under pressure to crack down, and that has been increasing ahead of next year's Summer Olympics in Beijing.

The Business Software Alliance, a trade group that tracks piracy, said in a statement Tuesday that software counterfeiting in China has dropped in recent years. But the group claims that global piracy took a $40 billion bite out of worldwide software revenue in 2006.

According to the FBI, Chinese police arrested Ma KePei and 10 others in Shanghai. Ma was indicted in 2003 in a New York court for making and distributing counterfeit Microsoft programs, but fled to China where he is now accused of making fake Symantec security software.

$2million in counterfeit software seized

In Shenzhen, a boomtown just over the border from Hong Kong, 14 people were arrested for making fake Microsoft programs, including Windows Vista and Office 2007. Six manufacturing and retail facilities were shut down, the FBI said.

"The majority of Chinese-based distributors advertised their products aggressively and recruited distributors via the internet," the bureau said. Suspects were in custody and have been charged with copyright violations.

In related actions in Los Angeles, FBI agents seized about $2 million in counterfeit software from the Chinese groups.

Bonnie MacNaughton, a senior attorney on Microsoft's worldwide anti-piracy team, said the Shenzhen group was the "largest criminal syndicate in Microsoft's history," responsible for an estimated $2 billion in fake software sales.

'We havea long way to go'

"We believe that these arrests and the seizures associated with them will have significant impact on the distribution of high-quality counterfeit software," MacNaughton said in a phone interview.

Microsoft provided investigators with information gathered from customers and partners. The company's two-year-old Windows Genuine Advantage program, which scans computers for counterfeit programs, has substantially increased the number of piracy leads, MacNaughton said.

MacNaughton noted that "we have a long way to go before we have all of our customers using genuine software."