Chinese seller of pirated software sentenced to 12 years in US prison

The operator of a website that sold more than $100 million worth of pirated software to customers worldwide was sentenced Tuesday to 12 years in a U.S. federal prison.

Li Xiang, a 36-year old resident of Chengdu, China, was convicted of conspiracy to commit wire fraud and criminal copyright infringement for operating the website crack99.com, according to a U.S. Immigration and Customs Enforcement (ICE) statement.

The $100 million in revenue was achieved with 700 transactions to just 400 customers—an average sale price of over $140,000 per transaction.

He was arrested in June 2011 by U.S. agents when they lured him to a meeting in Saipan where he believed he was delivering 20 gigabytes of data to the representatives of U.S. businessmen. Saipan, an island in the middle of the Pacific Ocean, is part of the Commonwealth of the Northern Mariana Islands and like the Atlantic island of Puerto Rico is a commonwealth of the U.S., giving American authorities jurisdiction.

Li’s website specialized in offering copies of industrial software which had the access control or licensing files removed or circumvented.

The specific software titles sold by Li were not detailed in the statement but characterized as those for aerospace simulation and design, defense, electronics, energy, engineering, explosives simulation, intelligence gathering, manufacturing, mining, space exploration, mathematics, storm water management and manufacturing plant design.

In other words, they were considerably more specialized than the typical cracked software fare of Windows 7 and Photoshop.

Big shady business

The $100 million in revenue was achieved with 700 transactions to just 400 customers—an average sale price of over $140,000 per transaction.

Some of his customers were in countries under U.S trade embargo for such software products while others were agents of foreign governments and U.S. government contractors holding security clearances. The use of cracked software for classified projects can be particularly problematic because of the possibility that software back doors were introduced to the products when they were cracked. Typically, they also won’t receive necessary security patches.

Among Li’s customers named by the U.S. ICE were a NASA electronics engineer who used the software on a NASA network to work on a side project designing a thermal simulation for Chinese communications manufacturer Huawei Technologies and a freelance contractor who used it to design components for Patriot missiles and the radar systems on the Marine One and Black Hawk helicopters.

The ICE net started tightening around Li when agents began making a series of purchases in January 2010. A year and a half later, they suggested the Saipan meeting to collect pirated software and data and to discuss a plan to distribute software to businesses in the U.S. Li was arrested in a Saipan hotel after he delivered the software and was flown to Delaware.

While Li operated the crack99.com site and distributed the software, ICE agents believe he was part of a larger network of Chinese and Russian hackers that crack and trade in software.

U.S. Immigration and Customs Enforcement said his sentencing represented “one of the most significant cases of copyright infringement ever uncovered and dismantled.”

Li will be extradited to China after serving his jail sentence.