Two Arrested in Alleged Software Counterfeiting Ring

Investigators for the Los Angeles County district attorney’s office have seized an estimated $6.2 million in purportedly pirated Microsoft computer programs and disclosed that they have broken what they called one of the largest software counterfeiting rings on the West Coast.

In their first public comments on a case that was filed Feb. 21 without fanfare in Los Angeles Municipal Court, detectives said that they have also seized more than $3.6 million in cash.

The investigation, which was launched in December with the examination of a computer store in Sherman Oaks, grew to include various locations in Orange County, a Monterey Park warehouse and a number of Southern California banks, according to court records and interviews Tuesday with detectives.

Two Chinese nationals who had been living in Monterey Park have been arrested and were being held at the Los Angeles County Jail on $5-million bail apiece--an extraordinarily high amount, particularly for a case that lacks allegations of violence.

Law enforcement and Microsoft officials said that the high bail underscores a growing recognition of the significance of alleged computer software piracy and the importance of the arrests of Zhijian Song, 43, and Jian Ping Zhu, 38.

The case is believed to mark “one of the largest” seizures of allegedly counterfeit Microsoft software in the United States, said Karen Porter, a spokeswoman for the Redmond, Wash.-based computer giant.

It also represents the largest seizure of cash and property in the history of the district attorney’s Bureau of Investigation, said Sandi Gibbons, spokeswoman for the office.

Comparing the case to a large-scale drug bust, Lt. Gary Schram, who heads the bureau’s major crimes section, said: “We feel we have hit a major cartel of the pirating industry.”

A preliminary hearing is scheduled for Thursday for Song and Zhu, who were arrested Feb. 19 and are each charged with a sole count of counterfeiting. Sources said, however, that the hearing is likely to be postponed because of the complexity of the case.

Zhu, according to court papers, is also known as Jenny Zhu. Little else is known about either her or Song, detectives said.

The case involves allegedly pirated copies of programs such as Microsoft’s Windows 95, the popular operating software for IBM-compatible computers, as well as Office Professional & Bookshelf, which does word processing and spreadsheets and comes with a CD-ROM disk that features reference materials such as an encyclopedia, dictionary and notable quotes.

Software--believed to have been manufactured overseas, most likely in China--was allegedly sold at cut-rate prices and distributed from the Monterey Park warehouse, detectives said. The figure of $6.2 million is the estimated wholesale value of the software, detectives said.

Patrick McPherson, the senior investigator who headed the inquiry, said Tuesday that it developed after he got a tip about the store in Sherman Oaks, which he declined to identify.

While the retail price for the Office Professional & Bookshelf software is often $495, McPherson said, the store was selling it for $117.

The Sherman Oaks store led detectives to Song, and in turn to the Monterey Park warehouse, McPherson said.

In turn, he said, that led to the execution last week of search warrants at four locations in Orange County. He declined to describe the locations but said those searches turned up more software as well as computer chips--which make the software run. The chips, McPherson said, are believed to be counterfeit Intel products.

Court papers reveal that investigators had seized $1.97 million in cash from various banks by Feb. 20.