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Criminal Copyright Prosecutions of Warez Traders

As discussed in the section "Elements of a Prosecution and Applicable Defenses" in Part 1 of this article, warez traders have few viable defenses to a criminal copyright prosecution. Not surprisingly, scores of warez traders have been successfully convicted of criminal copyright infringement. The appendix to this article provides a table of publicized warez-related prosecutions that have resulted in convictions.

Significantly, the Department of Justice has won every publicized case they have brought under the NET Act, reflecting typical department care in selecting defendants and preparing cases. Not coincidentally, almost all warez trading defendants plead guilty when charged. At least some defendants do so to reduce their sentences.20 Others may plead because of the warez trading ethos; traders know that they are playing a game that involves both winning and losing and thus may willingly accept losing if they feel the Feds outsmarted them. Whatever the reasons, only two warez traders, Christian Morley (PWA) and Tony Walker (Fastlane) have taken their case to a jury, and both lost.

As of November 1, 2003, at least 20 of the warez trading defendants listed in the appendix had received jail sentences. Of those defendants, the (initial) average length is approximately 25.7 months; the longest jail sentence was 46 months and the shortest was 4 months.21 It's hard to draw many conclusive inferences about why sentences vary, except that generally a warez group leader gets the harshest sentence and mere participants (as opposed to leaders) often get probation instead of jail time.

The following sections provide some specific details about the publicized prosecutions.

Jeffrey Levy

In August 1999, Jeffrey Levy, a 22-year-old University of Oregon senior, became the first individual convicted under the NET Act. He was a small-time trader of music, movies, and traditional warez. A "conservative estimate" of his warez' retail value was $70,00022 but he pleaded guilty to distributing warez with a retail value of at least $5,000 and was sentenced to two years probation.23

As a minor warez trader, normally Levy would have escaped prosecutorial attention. However, three months prior to his arrest, Congress angrily demanded that the government deliver some convictions under the NET Act,24 and Levy appears to have been a timely and easy target.

Eric Thornton

Eric John Thornton, another small warez trader who operated a web site called "No Patience," was the second person convicted under the NET Act. In one specific instance, a third party downloaded 20 software programs with a retail value of $9,638.25 Thornton pleaded guilty to a misdemeanor violation of the NET Act26 and was sentenced to five years probation.27 In an unusual twist, he had to post a cautionary tale on his web site for 18 months.28 Thornton's prosecution resembles Levy's in import and timing, suggesting that both prosecutions were hurriedly initiated in response to Congress' demands but Thornton's prosecution just took longer than Levy's.

Brian Baltutat

Brian Baltutat was a slightly more substantial warez trader than Levy or Thornton. He operated a web site called "Hacker Hurricane" that offered 142 software programs for downloading and was visited by 65,000 people.29 He was sentenced to three years probation and 180 days home confinement.30

Fastlane

In February 2001, the government finally scored a major bust by arresting nine members of the warez distribution group Fastlane.31 The FBI infiltrated the group by setting up and surreptitiously operating a computer site known as Super Dimensional Fortress Macros (SDFM).32 SDFM had 697 gigabytes uploaded and 1.9 terabytes downloaded between January and September 2000, with a total retail value over $1 million.33

All defendants were charged with one count of conspiracy to commit copyright infringement, and eight were charged with one count of committing copyright infringement.34 Eight of the nine defendants pleaded guilty; one defendant (Tony Walker) was found guilty at a jury trial.35 Three defendants received jail sentences ranging from 5–30 months,36 and the others received probation of three years.

Pirates With Attitude (PWA)

After Fastlane, PWA37 was the next major warez distribution group busted. The group operated 13 FTP servers, with its flagship site "Sentinel" housed at the University of Sherbrooke.38 Sentinel had more than 30,000 warez and more than 100 users.39

Seventeen defendants were indicted: twelve PWA members and five Intel employees who supplied computer hardware in exchange for access rights to the warez servers.40 Following the indictments, many defendants entered into plea agreements. The government then claimed the warez had a retail value of more than $10 million.41 A group of defendants jointly moved to limit this retail value based on expectations that the defendants formed while negotiating their plea agreements. The judge rejected the motion but permitted defendants to rescind their plea agreements, and thus withdraw their guilty pleas, if they chose to do so.42 None did.43

A group of defendants then petitioned the court to set a lower retail value. Using a series of questionable estimates, the court set the value at $1,424,640,44 a calculation upheld by the Seventh Circuit.45 With the retail value established, individual defendants were sentenced.

Robin Rothberg, the PWA leader, entered a blind guilty plea46 but requested downward departure from the Sentencing Guidelines.47 After obtaining some relief from the court on that front, he was sentenced to eighteen months in prison.48

Another PWA member, Christian Morley, didn't negotiate a plea agreement and instead took his case to trial. A jury found him guilty, and he received two years in prison.49 On appeal, Morley challenged the judge's failure to provide a jury instruction regarding fair use, but the Seventh Circuit affirmed this omission.50

Two other defendants, Jason Slater and Justin Robbins, received jail sentences of eight months and seven months, respectively.51 Nine defendants received five years probation, and two defendants (Thomas Oliver and Steven Ahnen) each received three years probation.52 Two defendants remain at large.53

Operations Buccaneer, Bandwidth, and Digital Piratez

Operations Buccaneer, Bandwidth, and Digital Piratez were major government operations targeting warez distribution groups that, on December 11, 2001, led to the execution of approximately 100 search warrants in the U.S., Canada, the United Kingdom, Australia, Sweden, Norway, and Finland.54

Operation Buccaneer55 primarily targeted DrinkOrDie, one of the oldest and best-known warez distribution groups.56 Among other accomplishments, the group claimed to have released Microsoft Windows 95 two weeks prior to its commercial release.57 The group allegedly had two leaders, two or three council members, 12–15 staff members, and approximately 65 general members.58 The groups' archives contained, in some cases, two terabytes of warez estimated to have a retail value of hundreds of millions of dollars.59 However, as part of plea agreements, many Operation Buccaneer defendants admitted that the retail value was between $2.5 million and $5 million.60

In conjunction with Operation Buccaneer, Mark Shumaker pleaded guilty to operating the Apocalypse Crew site, which contained prereleased digital music files solicited from DJs and reviewers.61 Shumaker also admitted to uploading and downloading infringing files from DrinkOrDie servers, and his total infringement was stipulated at $40,000–$70,000.62

Of the 19 Operation Buccaneer defendants in the appendix sentenced as of November 1, 2003, eleven received jail sentences ranging from 18 to 46 months (although at least ten of these defendants had their sentences reduced in exchange for government cooperation), three received five years probation, one received one year probation and the other four received two years probation.

Operation Bandwidth63 primarily targeted Rogue Warriorz (RWZ), another major warez distribution group. The group required membership applications and recorded statistics for group members who had maintained and moved the greatest number of files.64 Undercover FBI, EPA, and Defense Criminal Investigative Services agents infiltrated the group's Shatnet site,65 which contained more than 9,000 warez with a retail value of approximately $7 million.66 As of January 1, 2004, at least 19 Operation Bandwidth defendants have pleaded guilty and at least 5 of those have been sentenced, all to probation.

As of January 1, 2004, Operation Digital Piratez has resulted in two publicized convictions. First, Christopher Motter was sentenced to two years in federal prison for his oversight of the warez server "Wonderland," allegedly containing more than 5,000 warez with a retail value in excess of $500,000.67 Second, Daniel McVay pleaded guilty to operating a warez server known as "City Morgue," which contained 1,000 warez.68 Five additional men have been indicted in connection with Operation Cyber Sweep (a larger government crackdown on Internet crime).69

William Fitzgerald

William Fitzgerald, a 53-year-old computer technician for Arlington County, Virginia, obtained warez from IRC and posted them on three computers he ran from his home.70 Fitzgerald stipulated that the warez were worth $40,000–$70,000.71 He pleaded guilty to one count of criminal copyright infringement and received four months in prison and four months of home confinement.72 Given the Department of Justice's recent large initiatives to take down major warez groups, Fitzgerald's prosecution for relatively small-scale activity is a little puzzling.

Operation Safehaven

Operation Safehaven73 was a 15-month investigation into software piracy. In April 2003, government agents executed more than 20 search warrants, leading to the seizure of thousands of CDs and DVDs and various warez servers, including the largest warez site seized in the U.S. to date.74 Four defendants have pleaded guilty to conspiracy to commit copyright infringement and are awaiting sentencing.75

Operation Cybernet

Operation Cybernet targeted the individuals operating the Usenet group alt.2600.warez and other FTP sites and IRC channels.76 The operation produced its first conviction in December 2003 with the guilty plea of James Remy, a 40-year-old from Washington Township, NJ.77 Remy admitted to operating a warez server in his home that, from October 26, 2000 through July 24, 2001, was used to download files with a total retail value of $2,242,712.78 The Department of Justice touted this as "the largest loss nationwide in a criminal copyright infringement case resulting from the conviction of a warez site operator who is not part of an organized group."79

Movie Traders

While not typical warez traders, two individuals have been prosecuted for distributing prerelease versions of movies. Jason Spatafore distributed parts of Star Wars Episode I: The Phantom Menace,80 for which he was sentenced to two years probation.81 Kerry Gonzalez posted an unfinished "work print" copy of The Hulk to a movie bootleg web site two weeks prior to the movie's opening,82 for which he was sentenced to six months home confinement.83

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