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Share this story In June of 2011, Xiang Li sat in a hotel room in Saipan, trying to close a deal with US businessmen. The 35-year-old entrepreneur from Chengdu, China had brought along some samples of his wares—a collection of software on DVDs ready for resale; sample packaging materials and associated designs; and 20 gigabytes of proprietary data from software developers. And every bit of it was stolen. The customers were already familiar with Xiang's business.

They had made a number of purchases from him via the Internet through his site, Crack99.com. But what Xiang didn't know as he explained how to get the goods back through customs without raising suspicions was that his customers were planning on bringing back more than just pirated software to the US. They were undercover US Homeland Security Investigations (HSI) agents preparing to close a trap. And soon Xiang Li's short trip to Saipan became a much longer visit to a federal facility in Delaware. Today, that unexpected trip got a whole lot longer. In a press conference today, US Attorney for the District of Delaware Charles M.

Oberly III and Immigration and Customs Enforcement Director John Morton announced that Xiang to charges of conspiracy to commit criminal copyright infringement and wire fraud. Xiang faces up to 25 years in prison, as well as fines for having sold over $100 million worth of pirated software to customers across the globe—including engineers and scientists working for the US government. Xiang Li explains to undercover Homeland Security Investigations agents how to get pirated software and packaging material back through customs. (Source: Department of Homeland Security/ ICE) The Crack99 pipeline Xiang himself was not a hacker. He was an aggregator, paying others to circumvent the license keys and DRM of various software packages and then redistributing them through his site. Working with others who acted as a financial go-between, he sold from a library of about 550 different software titles, including sophisticated engineering design, modeling, and simulation tools that sold for as much as $250,000 through legitimate channels.

ICE has confirmed sales by Crack99 to at least 325 different purchasers worldwide; a third of his buyers were in the US. And some of his best customers were people working for the US government—and not in a law enforcement capacity.

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One of those customers was Cosburn Wedderburn, now a former electronics engineer at NASA's Goddard Space Flight Center. Between 2008 and 2010, Wedderburn purchased 12 software packages from Xiang with a total retail value of over $1.2 million. Wronald Best—a former US Navy scientist who had taken a position as chief scientist for a defense consulting firm in Kentucky—purchased 10 software packages worth over $600,000. Some of the software companies whose products Xiang was illegally reselling were all too aware of what he was doing, since he openly advertised their software on his website. But because he operated out of China, and through a veil of anonymity online, there was little they could do directly to stop him. The software wasn't sold directly through the site, but through a network of filesharing servers around the world, and each purchase was negotiated through e-mail.

As Xiang told investigators during the sting, he had a simple way of dealing with software firms who sent him e-mails telling him to stop selling their products—he just deleted the e-mails. Xiang explaining his approach to dealing with DMCA requests to investigators in June of 2011.

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(Source: Department of Homeland Security/ ICE) Going big, and getting caught ICE began working its way toward Xiang in January of 2010, when agents started to make 'controlled purchases' of pirated software from the Crack99.com site. They sent e-mails to Xiang negotiating the purchase of software, and made a total of $8,615 in payments to him and a partner via Western Union wire transfers. One of the software products that agents were able to obtain through Crack99 during their investigation was Analytical Graphics, Inc.' S: a simulation package used for modeling satellite orbits and 3-dimensional battlefield scenarios as well as simulating missile defense systems. The agents paid $1,000 for version 8.0 of the STK software; its retail license at the time sold for over $150,000. In November, just a few months after AGI released an upgrade, they purchased version 9.2.1 of STK and license keys from Xiang for $2,000 more; the software and modules they received were worth over $250,000.

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A demo video of STK Pro's use in simulating a missile defense scenario. (Source: AGI) In January, the investigation moved into its next phase. ICE undercover agents sent a message to Xiang saying that they wanted to discuss a plan to resell 'cracked' software from him to small businesses in the US. He agreed, and for $1,467, he gave then 15 software products with circumvented licensing—and then offered to provide designs for counterfeit packaging for the software for $1,500 more.

He also told agents he had 'more pleasant surprises,' including internal data from one software provider that he would sell them for an additional $3,000. For the next few months, agents reeled Xiang in, finally getting him to agree to meet with them in Saipan in June.

He arrived with pirated copies of 16 software packages, including a mix of simulation and modeling tools for computer, electronics and wireless communications engineering, along with packaging for them. And the internal data he promised included a trove of resources from one software developer, including code for a software license server, training materials, and other technical data. Unfortunately for Xiang, Saipan is a US territory, and the ICE undercover agents were on home turf. As soon as he transferred the goods to his customers, he was arrested and prepared for transport back to Delaware.

Listing image by Aurich Lawson / Homeland Security ICE.