FBI seizes computers, equipment in first-ever P2P copyright act

WASHINGTON -- The FBI seized computers, software and equipment as part of an investigation into illegal sharing of copyrighted movies, music and games over an Internet "peer-to-peer" network, Attorney General John Ashcroft announced Wednesday.

Search warrants were executed at residences and an Internet service provider in Texas, New York and Wisconsin as part of the first federal criminal copyright action taken against a P2P network, in which users can access files directly from computers of others in the network.

The warrants sought evidence about the operators of five "hubs" of the "Underground Network," an organization of about 7,000 users who, prosecutors charge, repeatedly violate federal copyright laws by swapping feature films, music, software and computer games.

"The message is simply this: P2P or peer-to-peer does not stand for 'permission to pilfer,"' Ashcroft told reporters at a Justice Department news conference.

Unlike file-sharing networks popular with tens of millions of Internet users worldwide, the smaller network targeted by the Justice Department was managed by centralized "hub" computers that restricted participation. Technical experts said it operated similarly to the former Napster service, which the entertainment industry shut down in July 2000.

Industry groups say Internet piracy of intellectual property is a huge and growing problem. Ashcroft estimated $19 billion is the total cost to creative artists, management firms, distribution companies, theaters, and all the employees connected with them.

Jack Valenti, president of the Motion Picture Association of America, said the Justice Department initiative, dubbed "Operation Digital Gridlock," should "puncture the myth that illegal activity on the Internet is safe because it is not traceable."

Charges and arrests are likely to follow after the evidence is examined, investigators said. The maximum penalty for criminal copyright infringement is a fine of $250,000 and five years in prison.

The search warrants were executed at homes in San Antonio and Belleaire, Texas; Johnson City and Fulton, N.Y.; and Waukesha, Wis. Another search was conducted at the office of The Planet, a Dallas-based Internet service provider. Authorities said The Planet is not a target of the probe.

The individuals involved in the search warrants operate some of the Underground Network's hubs, which act as a central point for people granted membership to exchange copyrighted files. Ashcroft said the hubs can store digital data each day equivalent to 60,000 full-length movies or 10 million songs.

The five hubs are called Movieroom, Project X/The Asylum, Achenon's Alley, Digital Underground and Silent Echoes, according to an FBI affidavit filed in support of one search warrant.

Agents used covert computers to infiltrate the network and obtain for free huge amounts of copyrighted material, including such movies as "Kill Bill Vol. I," "The Last Samurai" and "Bruce Almighty." The agents downloaded music by artists ranging from Bruce Springsteen to Barry White as well as popular games and software.

In a related development, the Recording Industry Association of America continued its legal campaign to halt illegal downloading of music by filing another 744 copyright infringement lawsuits Wednesday against individuals using such P2P networks as eDonkey, Kazaa, Limewire and Grokster.

"There will always be a degree of piracy, both on the street and online," said RIAA President Cary Sherman. "But without a strong measure of deterrence, piracy will overwhelm and choke the creation and distribution of music."

The Justice Department also is preparing to announce the results of a nationwide campaign against the purveyors of e-mail "spam" that involves more than 100 arrests, search warrants, subpoenas and other law enforcement actions, said industry and law enforcement officials.

Many cases in "Operation Slam Spam" involve "phishing," which are e-mails that appear to be from financial institutions and other legitimate businesses but are actually fraudulent. They are used to induce people to provide credit card numbers and other personal information.

Other cases in the crackdown involve pornography and use of spam, or unsolicited e-mails, to infect computers with viruses that can obtain personal data or be used by a hacker to further spread the virus.

Congress last year passed a law making fraudulent and deceptive e-mail practices a crime punishable by up to five years in prison. Industry groups say spam e-mail accounts for almost three-quarters of the e-mail in the United States and costs consumers and businesses as much as $10 billion a year.

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On the Net:

Justice Department: http://www.usdoj.gov

Motion Picture Association of America: http://www.mpaa.org

Recording Industry Association of America: http://www.riaa.com