Fall 2010

Crime Doesn’t Pay

Using new technology and old-fashioned police work, U.S. Immigration and Customs agents seized seven major websites trafficking illegal content as part of an aggressive and ongoing operation. Here’s how it went down.


Internet Theft - Crime Doesn't Pay
The 4400 block of Gandy Boulevard in Tampa, Fla., appears utterly ordinary. Traffic whizzes through a commercial district where a McDonald’s, a Wendy’s, and a Sonic Drive-In share an intersection. A Bank of America and a post office flank a huge, bland-looking industrial building. It’s hard to imagine this site could matter to the motion picture industry. But on the morning of June 30, federal agents arrived to carry out a sting operation of major significance.

For years, a website called zml.com had accumulated a library of more than 10,000 pirated movie titles that it distributed to users from a server inside the massive, refrigerated building, which houses an Internet data center, or server farm. On that midsummer day, every major movie title then playing in theaters was being streamed from that site—from Inception and Salt to Toy Story 3 and Dinner for Schmucks.

The service wasn’t free—users paid a $40 monthly membership fee for unlimited downloads. The revenue went to the website operators, who, it was rumored, had ties to the Russian mafia. None of it was returned to the copyright holders—the movie studios or filmmakers who’d created the product.

They weren’t acting alone. Simultaneously, more than 100 other agents were serving warrants and seizing hardware at targets across the country. On the West Coast, the raids had begun in pre-dawn darkness at server farms that operated 24/7, like VeriSign, Inc. in Mountain View, Ca., or eNom, Inc. in Bellevue, Wa. In Scottsdale, Az., agents showed up at GoDaddy.com, the domain name giant. In Reston, Va., and Horsham, Pa., employees of U.S. Immigration and Customs Enforcement (ICE) dismantled pirate websites at registries like The Public Interest and Afilias Ltd.

By 11 a.m. PST, ICE had convened a press conference at a Disney Studios soundstage with key representatives from the entertainment industry, including the DGA, to announce that via an initiative called Operation In Our Sites, federal agents had shut down seven major websites that offered pirated movies. They had also seized the assets of 15 associated payment, investment and advertising accounts. It was the first major coordinated effort of its kind, and had gone down so swiftly and smoothly that it looked as if it was easy. It was anything but.

“It’s not hard to find a website that offers pirated movies,” says Erik Barnett, ICE’s assistant deputy director. “It’s finding a solution that is challenging.”

Finding a place to download or stream pirated content can be as easy as typing a request into a search engine. Since the spread of broadband connections in the late 1990s, the practice has grown to alarming proportions. The MPAA estimates that in 2008, copyright industries lost $25.6 billion in revenue to piracy, and American workers lost more than $16 billion in annual earnings due to copyright infringement. Until recently, prosecution had been limited to what Barnett called “onesies and twosies,” where individual U.S. operators were tracked down and prosecuted in time-consuming actions that affected one or two websites at best. The shell game, transnational nature of Internet theft means individuals can distance themselves with a series of company names. Ultimately, they tend to be registered in foreign countries, such as the Netherlands or Germany, making it difficult for U.S. copyright law to prevail.

“Our goal has always been to have a significant impact,” says Barnett. The challenge was how. Then investigators realized that they didn’t necessarily have to target individuals to achieve that goal. “These websites exist to earn profits illegally by distributing copyrighted content,” says Barnett. “So we determined that by seizing the domain names, we would literally take away their capacity to earn revenue.”

But couldn’t those businesses simply adopt a new name? Not easily, says Barnett. “To earn ad revenue, they need a significant number of visitors, and it takes time to develop that kind of traffic.”

The seven websites that ICE seized in June had a combined total of 6 million visitors in May 2010. Just one of them, Movie-links.tv, accounted for 3.3 million of those. On June 15 alone, Sex and the City 2 was viewed 32,000 times via downloads or streaming from that site, Barnett said.

“The problem is that of those 32,000 viewers, none were earning money for the director of that movie—they were earning it for an illegal site called Movies-links.tv,” Barnett points out. “By taking away these domain names, we basically took the financial incentive out of the criminal activity.”

But deciding on a course of action was only the beginning. Law enforcers next had to determine their targets and gather the evidence they needed to obtain warrants. In addition, a decision was made to coordinate nationwide efforts so that the seizures could happen all in one day, sending the loudest message possible.

The MPAA, which oversees content protection on behalf of the rights holders, which in this case were the major studios, would play a key role. In February 2010, the trade group met with Homeland Security agents and a federal prosecutor in the office of Preet Bharara, U.S. Attorney for the Southern District of New York. “They asked us for input on who the main offenders were globally, and we provided those targets,” said Kevin Suh, MPAA vice president of content protection. “We look at a number of metrics, but popularity is certainly one of the indicators.”

The next step was to investigate the target sites and establish via painstaking reports that criminal infringement was taking place, and on what scale. This involved real-time downloads of multiple illegal copies from each site by ICE agents and computer forensics specialists in Manhattan, who documented the process in a 44-page affidavit. To verify the traffic stats, they used tools like Alexa.com and Compete.com; to locate the IP addresses of the host computers for each website, they used CommView, while databases like WHOIS provided registry information. Based on the affidavit, a federal magistrate issued the warrants. The registry companies were then contacted. Most had worked with federal agents before on unrelated matters, and were willing to cooperate, said Barnett.

“They didn’t know who we were after,” said a senior agent involved in coordinating the sting. “But they were working with us. We needed to know how quickly this could take place. For most of us, it was the first case of this kind that we’d worked on.”

A server farm has a striking internal architecture. Rows and rows of tall towers hold racks of servers humming in locked steel cages. The air-chilled atmosphere is sterile; people are scarce. Security is a priority; locked doors and anonymity abound.

When the Tampa agents arrived at a building identified on the outside as Sago Networks, they presented a warrant that contained the IP address of the infringing server. The building manager led them through the forest of steel stalls to the row that contained the IP address they sought.

“He unlocked it, and we found the racks that were numbered with the IP address we were looking for,” said a fraud group special agent who was present. There were handles on each side. The agent undid a few clips, and out they came. That was it. “We seized the property, and issued a receipt to the manager. We then brought them back to our office, where the computer forensics specialist mirrored the drives, so that we had evidence of the activity that was taking place at that time.”

Within hours, torrent users who visited the seized websites got a surprise: a banner emblazoned with the emblems of the Department of Justice, ICE, and the National Intellectual Property Rights Coordination Center (IPR). “This domain name has been seized,” the banners said. “It is unlawful to reproduce or distribute copyrighted movies, music, software or games without authorization.” The relevant statutes and punishments were cited.

“For a two-week period in early July, two million individuals a day saw those banners. So we’re using the traffic the pirates had built up to educate people,” says Barnett about one of the operation’s main goals. These banners, which are still posted online, are intended to both inform those users who may not be fully aware of the illegal nature of the sites and to warn those who are.

A backlash was inevitable and expected. Users of pirate websites, who tend to cast themselves as the voice of independent have-nots striking a blow against a wealthy entertainment industry, peppered comment boards with outcries. A common plaint was to question why ICE was protecting the property of movie studios rather than devoting all its resources to rounding up illegal aliens.

On industry news sites, some responded to the story wondering why the advertisers who make pirate movie sites profitable aren’t prosecuted. Barnett says the distanced nature of Internet business makes advertisers free of culpability. “Advertisers tend not to be aware that they are advertising on those websites,” he says. “It’s all done by rankings. Ad brokers are directed to get the messages onto the most popular sites, and Movies-links.tv was ranked 257th. It turned out that even some of the companies whose property was being stolen were inadvertently advertising on some of these sites.” ICE’s action brought that to the attention of these advertisers. Many comments online decried the effort as futile. “Shut down seven, seventy more will spring up,” said one.

The MPAA’s Kevin Suh disagrees. “We did see, in the wake of the takedowns, a slew of fraudsters positioning their sites [to seem like] one of the sites that was taken down, in an attempt to reroute that traffic [to them],” he said. “But for the most part, the targeted sites are no longer functioning in the same capacity. We’ve seen a profound effect. There have even been cases where other sites, having gotten the message, have chosen to desist. And I think that’s a testament to how committed ICE has been to this action.”

Specifically, says Barnett, two sites that weren’t even targeted took themselves down rather than endure a government investigation. “So there has been a marked difference in the online piracy world. There really has been a significant impact.”

Federal agents are now engaged in the next step—prosecuting the profiteers who illegally operate the targeted websites; they are not after individuals at their homes. The law provides for up to five years of imprisonment on first-time convictions, along with restitution and fines. “The end goal is that criminals should face as much punishment as the statute allows,” says Barnett.

“It’s also important that the MPAA member companies stay involved in the investigation,” says Barnett. “These rights holders have important information and technology that can help us. We are now set up to take referrals from the industry and those will be investigated.”

DGA President Taylor Hackford concurs. “It’s crucial that the entertainment industry participates in enforcement activities like Operation In Our Sites. The DGA and its members have the creativity and expertise to help educate and mobilize the public against Internet theft.”

“The ICE takedown was a very significant step,” adds Hackford, “but it’s just round one in what the entertainment industry and the government see as a long-term cooperative effort. Still, it’s a terrific start and I think we’re all extremely encouraged by this success.”

Internet Theft
As part of the Guild’s effort to keep members informed about the complex issues of Internet theft, the Quarterly has run an ongoing series of stories on the subject.
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