Does File Trading Fund Terrorism?

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: Matt Oristano <Matt () Oristano net>
Date: Fri, 14 Mar 2003 08:41:09 -0500
To: farber () cis upenn edu
Subject: Does File Trading Fund Terrorism?

Dave - FYI:
After Osama comes Kazaa.  Make sure you read down to Rep Carter's
exhortation to throw some college kids in jail.
Matt


Does File Trading Fund Terrorism?

Industry execs claim peer-to-peer networks pose more than just legal
problems.

Grant Gross, IDG News Service
Thursday, March 13, 2003

WASHINGTON -- A congressional hearing on the links between terrorism,
organized crime, and the illegal trading of copyrighted material produced
more complaints about college students using peer-to-peer networks and
other governments sanctioning copyright violations than it did evidence of
nefarious connections.

Witnesses and representatives at the U.S. House Judiciary Committee's
Subcommittee on Courts, the Internet, and Intellectual Property hearing
Thursday did express fears that profits from widespread copying of movies,
music, and software outside the United States were being funneled into
terrorist organizations, but the hearing produced no concrete examples of
that happening.

John G. Malcolm, deputy assistant attorney general in the criminal division
of the U.S. Department of Justice, did say there seems to be some
connection between illegal copying and organized crime, in that many of the
groups profiting from illegal copies are highly organized and can have
international distribution networks. Organized crime often supports
terrorism, he suggested.

"These groups will not hesitate to threaten or injure those who tend to
interfere with their operations," Malcolm said.

Searching for Specifics
But when subcommittee chairman Lamar Smith (R-Texas) asked Malcolm for
examples of cases where file trading was connected to terrorism, Malcolm
said he couldn't give concrete examples. "It would surprise me greatly if
the number were not large," Malcolm added. "This is an easy enterprise to
get into; the barriers of entry are very small, and the profits are huge."

Smith and several others at the hearing noted that selling illegally copied
materials can be more lucrative than selling illegal drugs, and several at
the hearing compared the copyrighted materials trade to the drug trade.
Illegally copied materials can have markups of 900 percent, Smith noted.

Malcolm told the representatives of this week's indictment of Hew Raymond
Griffiths, of Bateau Bay, Australia, for his role as an alleged kingpin in
DrinkOrDie, a software piracy group founded in Russia in 1993. The
Department of Justice is working to get Griffiths extradited to the United
States, Malcolm said, and the indictment is part of the DOJ's "Operation
Buccaneer," in which 20 U.S. defendants have been convicted of felony
copyright offenses since December 2001.

"For too long, people engaged in piracy believed that if they were outside
the borders of the United States, they could violate our intellectual
property laws with impunity," Malcolm added. "They were wrong. This
indictment and the extradition sends a clear and unequivocal message to
everybody involved in illegal piracy that regardless of where you are, the
Justice Department will find you, investigate you, arrest you, prosecute
you, and incarcerate you."

More Than Money
Malcolm also called the creators of "warez" file-trading networks organized
criminals, although he admitted warez fans aren't motivated by money. Many
warez groups, who distribute pirated commercial software over the Internet,
operate in a very organized fashion, Malcolm said, with a hierarchy based
on how much individual members contribute to the group. Much of the pirated
material on the Internet comes from warez groups, Malcolm suggested.

"They are nonetheless responsible for a massive number of pirated movies,
music, games, and software in circulation each year, and represent a
significant and growing threat to intellectual property rights around the
globe," he said.

Representative Robert Wexler, (D-Florida), praised the hearing for
highlighting the "disastrous connection" between copyright piracy and
organized crime. "I can't help but sit here and wonder...if parents fully
understand the ramifications of what it is to steal a movie or pirate a
song," he said. "If more American parents understood the connection between
the pirating of intellectual property and organized crime, I think then
there'd be a much more effective public relations response in our own
country to better appreciate the disastrous ramifications."

Wexler suggested public service commercials should highlight that alleged
connection between piracy and organized crime, much like anti-drug
commercials highlight the connection between the sale of illegal drugs and
funding terrorism.

Familiar Complaints
Part of the hearing rehashed complaints about file trading by college
students over P-to-P networks, covered in previous hearings and statements
from the Motion Picture Association of America. No one at the hearing
connected P-to-P trading with the financing of terrorism or organized crime.

Jack Valenti, president and chief executive officer of the MPAA, described
a couple of examples of copying operations that had been raided outside the
United States, and he said 26 copying factories in Russia can copy 300
million DVDs and CDs a year. He claimed his industry is losing billions of
dollars a year to piracy, although a couple of representatives also pointed
out the motion picture industry had record box-office receipts in 2002.

Valenti predicted investors would stop investing in the movie industry if
piracy is allowed to continue. He repeated earlier requests for Congress to
pass new anticopying laws.

Valenti also complained about P-to-P trading. "It's low risk. Nobody does
anything about it," he said.

Criminal Charges
Representative John Carter, (R-Texas), suggested that college students
would stop downloading if some were prosecuted and received sentences of 33
months or longer, like the defendants in the DOJ's Operation Buccaneer. "I
think it'd be a good idea to go out and actually bust a couple of these
college kids," Carter said. "If you want to see college kids duck and run,
you let them read the papers and somebody's got a 33-month sentence in the
federal penitentiary for downloading copyrighted materials."

The committee also spent a significant amount of the hearing listening to
the testimony of Joan Borsten Vidov, president of Films by Jove, a small
Los Angeles film distributor. In 1992, Vidov's company purchased the rights
to restore and distribute a number of old Russian animated films, but Vidov
accused the Russian Ministry of Culture of trying to redistribute the films
without her company's permission.

"What fits the definition of organized crime more than a foreign government
deciding to steal the property of a small U.S. business?" Vidov asked.
"That is the worst kind of organized crime by the most powerful possible
organization."

The Russian embassy in Washington didn't have an immediate comment on
Vidov's or Valenti's testimony.


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