FBI Shutters Rings Allegedly Running Half of the DVD Piracy Worldwide

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Federal officials yesterday shut down two New York City-based movie pirating rings they said were responsible for half of the DVD piracy worldwide.

The FBI arrested 13 individuals they said secretly filmed, reproduced, and sold counterfeit movies both domestically and abroad since 1999, including recent releases such as “The Da Vinci Code,” “X-Men,” and “Nacho Libre.” In addition to the arrests, investigators seized master plates allegedly used to create DVD labels from a printing shop on Van Sindren Avenue in Brooklyn, where they also confiscated between 200,000 and 300,000 sheets of labels.

The suspects face varying numbers of charges of conspiracy, copyright infringement, and trafficking in counterfeit labels, documents, and packaging. Each charge contains a maximum sentence of five years.

“The suspects taken into custody today are responsible for nearly half of all video recordings that occur in the United States, we believe,” the vice president and director of anti-piracy operations at the Motion Picture Association of America, Michael Robinson, said. “That is a tremendous piece of movie piracy that occurs worldwide.”

Mr. Robinson said movies illegally reproduced in New York have been found in 65 countries. “This is not a ragtag bunch of petty thieves,” he said. “This is an organized, criminal enterprise.”

According to the criminal complaint unsealed yesterday, the investigation started three years ago, after the MPAA’s own inquiry into counterfeit copies of “The Matrix Reloaded” pointed to sources in New York. Representatives from MPAA contacted the FBI’s New York office, setting into motion an investigation that involved two undercover operations and unidentified cooperating witnesses.

Speaking to reporters yesterday, investigators said the bootlegging operations began with “cammers” who recorded movies from various theaters, and then handed off their discs to wholesalers who created master copies for reproduction. From there, both the master copies and labels were sold to retailers, who mass-produced the movies and distributed them to individuals who sold them on the street.

Investigators estimated that pirated DVDs typically generate around $10 each, adding up to what MPAA officials said was an $18 billion annual loss for the film industry. “It is a worldwide problem, and New York and the United States are at the center of that,” Mr. Robinson said.

According to the assistant director of the FBI’s New York office, Mark Mershon, the effects of the operation likely will be seen immediately. The defendants “are believed to be responsible for 50% of the piracy and the distribution of pirated DVDs worldwide. That is substantial,” he said. “In the very short term, you may see the disruption in availability in new releases.”


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