Friday, August 31, 2007

The World v. & Russian Copyright Law

Music collectors on the Internet got a mixed message this week as a Russian court found that Denis Kvasov, the head of was innocent of all charges.

While Napster, iTunes, WalMart and other online music retailers sell songs for 75 cents to 99 cents each, had nearly as large a selection and sold tracks for a mere 10 cents apiece or entire albums for $1 apiece.

The US-based music industry cried foul, and the US Department of Commerce agreed, making the closure of a requirement in Russia's 2006 attempt to join the World Trade Organization. Eight online music sites in Russia were shut down, and criminal charges brought against their owners in July, prior to the WTO Summit.

The company's website made clear that users should make sure the use of did not violate copyright laws in their home country.

No news on the RIAA Lawsuit against, where they are asking for $150,000 in damages for each of the 11 million songs in their catalog, or a $1.65 Trillion lawsuit.

In Russia, the copyright law requires that selling copyrighted material is legal, if a 15% royalty payment is paid to ROM, the Russian Organization for Multimedia and Digital Systems. Oleg Nezus, speaking for ROM, says that all of the major record labels have royalty payments waiting for them in Russia, but EMI and Universal have refused to accept their payments - not wanting to send the message that 10 cent downloads are adequate for their constituents.

Zemchenkov, of the Russian Anti-Piracy Organization was praising Russia's newly beefed up anti-piracy laws, which carry penalties of up to six years in prison for DVD pirates, as recently as April -- see: Hollywood Reporter: Putin Beefs Up Penalties for Piracy. Now, he is saying this lack of action against "sets a very bad precedent".

Zemchenkov, whose organization has the support of the Motion Picture Association (MPA), has been active in the Coalition for Intellectual Property Rights, and has attended all of the meetings of the "Russian Federation IP Working Group". CIPR also produces a monthly newsletter about IPR issues in Russia. In their most recent issue they conclude their summary of the case with this statement:

the court was not convinced that EMI, Warner and Universal Music have rights to the music sold by Allofmp3

citing as their source this August 16th article in

Вину Allofmp3 не доказали (Not Guilty Allofmp3 Vindicated)

Суд оправдал бывшего гендиректора “Медиасервисез”, владевшей музыкальным интернет-магазином Allofmp3. Прокуратура обвиняла его в нарушении прав звукозаписывающих компаний, но суд не нашел доказательств того, что EMI, Warner и Universal Music действительно владеют правами на музыку, которую продавал Allofmp3.

Which means (gar's rough computer-assisted translation):

Court absolved former general director MediaServices who owned the internet music shop Allofmp3. The office of the public prosecutor accused it of violating the rights of the production companies, but the court did not find evidence that EMI, Warner, and Universal Music really own rights for the music which was sold on Allofmp3.

The prosecutor in the case, had claimed that from September 4, 2003 until December 1, 2005, Kvasov had infringed on the rights of Universal, Warner, and EMI by distributing music for which they owned the rights.

The ruling went on to find there was no reason they could not return to business, which announced on their website this morning with the headline "The Service Will Be Resumed".

The press release, dated August 31st, says:

"The service will be resumed in the foreseeable future. We are doing our best at the moment to ensure that all our users can use their accounts, top up balance and order music."

This is a major blow to copyright holders around the world, as it sends a message that as long as you pay your license fee to the Russians, you can sell anything you want for any price you want. The Russians did have 1600+ arrests for copyright infringment in 2006, but it is believed these were cases against people who hadn't paid their local "fees".

A survey of Intellectual Property brand owners conducted in 2006 by CIPR had found that 6% believed the situation with regards to IPR in Russia had improved significantly while 46% believed it had improved slightly. (See Survey Results). I wonder what they will think after this ruling?

Tuesday, August 28, 2007

How Far Would You Travel for $7 Million in Gold?

How far would you travel for $7 million in gold bars? For Igor Klopov of Moscow, Russia, the answer was "all the way to Manhattan".

In an August 16, 2007 Press Release from the Manhattan District Attorney's office the full scheme was laid out as charges were pressed against Klopov and his four American co-conspirators.

Klopov found his inspiration as he read the Forbes 400 Richest People, determining that these would be the perfect victims. Using a combination of computer hacking, open source investigation, and actually hiring private detectives, he built profiles on his targets, but he felt safer using Americans to do his dirty work.

Using and, Klopov recruited Americans who would act as his agents to do the "real world" work. Klopov provided them with First Class air fare, 5-star hotels, limousine service, fake identities, and all of the false documents necessary to accomplish his frauds.

The co-defendants who were charged last week include:

Westley Watson, 37, Detroit MI
Lee Monopoli, 41, Fort Lauderdale, FL
James Dalton, 33, Konroe TX
Richard Hoskins, 29, London KY

JP Morgan Chase alerted law enforcement when they realized that James Dalton was attempting to withdraw $7 Million from the account of Charles Wyly. The Manhattan Identity Theft Task Force went into action, setting up an undercover sting.

In this operation, an undercover Secret Service agent managed to get himself "recruited" by Klopov. As proof that the transaction was completed, he arranged to have himself photographed with $7 Million in gold bars, which Klopov decided to come and handle himself.

He "snuck in" to the country on a private plane to meet the undercover officer, who arrested him at the airport in New York back in May.

Monday, August 20, 2007

Aggrevated Identity Theft Law in Action

There are so many interesting angles to the story this week about a case in Tucson, Arizona. The conviction actually went down in March 2007, with Jacob Vincent Green-Bressler, now 21 years old, being one of the 16 individuals who had been indicted in 2005 for trafficking in stolen identities. (See: Global Web Fraud Case has 17 Local Indictments in the Arizona Star, November 8, 2005.

Green-Bressler and company were not identity thieves themselves. They were not putting together phishing sites. They instead served in the role of "cashiers". A "cashier" in the Identity Theft business is someone who is willing to perform the risky role of converting the stolen identity information into an ATM Card and using that counterfeit card to drain a bank account.

During their time of activity, Jacob's gang obtained identities for 4,500 individuals from criminal conspirators in at least 20 countries, including Vietnam, Pakistan, Jordan, Egypt, the Philippines, Macedonia, Romania, Estonia, Lebanon, Mexico, France and the United Kingdom. They then used those identities to create counterfeit ATM cards which they used to steal and send overseas nearly $300,000 from various banking accounts. As their commission on these services, Jacob and friends kept $148,000 -- a 50% commission!

So what does this have to do with the Aggravated Identity Theft Law?

Jacob's original sentence would have been sixty months for his crime, but because of Title 18 section 1028A - the Aggravated Identity Theft Act, a mandatory +2 years is added to the jail time. With criminals getting so many light sentences for cyber crimes, its nice to see someone getting the Extra Two.

That's one of the reasons the Attorney General supported this act back in 2002. See this Congressional Testimony from Dan Collins, the Chief Privacy Officer of the US Department of Justice at the time. S.2541, the "Identity Theft Penalty Enforcement Act" was a good idea, and one that should be used more often in the courts.

The full list of defendants in this case:

Robbin Shea Brown, 24
Jacob Vincent Green-Bressler, 19
Joshua Trever Lee Breshears, 20
David Lee Merrill, 25
Corrine Dazette Perez, 24
Richard Daniel Staton, 24
Rollin Edward Vaughn II, 23
Randi Michelle Rodela, 20
Joseph David Wallum, 20
Joseph Robert Jando, 21
Martin Corey Halula, 19
James Dennis Olsen, 19
Steven Don Olsen, 23
Christopher James Griffin, 23
Daniel Roy Leon Mendez, 20
Robin Duane Brown, 52
Ana Marie Honeycutt, 32

(See: )

I look forward to seeing how many of the others also get a taste of the Aggravated Identity Theft penalties!

Monday, August 06, 2007

AffPower Indictments Scare Affiliates!

Today I heard the news that the "AffPower" drug network is being shut down, starting with 18 arrests in Texas, Florida, Colorado, New York, and Oregon.

Congratulations, Corbin A. Weiss, Special Assistant US Attorney with the Computer Crime and Intellectual Property Section of the DOJ! What a great indictment!

Here's a link to the full Indictment (caution: 124 pages!)

I have to say, I LOVE to hear about scared bad guys, and THIS one has people scared who have previously considered themselves bulletproof. Why? Because the AFFILIATES are also being arrested.

The 18 are:

3 doctors
2 pharmacists
1 pharmacy operator
1 credit card processor
8 website affiliates

Mark Anthony Heredia, Manager and administrator in the Affpower enterprise in San Jose, Costa Rica;

William Polk Harrington and Todd Wurtzel, AKA "Sonny Gallo", recruited doctors and pharmacies to participate in the Affpower enterprise and managed the doctors they recruited;

Claude Covino, operated Saveon RX Pharmacy in Florida, part of the Affpower enterprise, and recruited other pharmacies to participate;

Dolores Lovin and Mary Aronson, owned, operated, and were licensed pharmacists working in St. Vrain Pharmacy in Colorado;

Subramanya K. Prasad, MD, Chandresh B. Shah, MD, and Gerald C. Morris, MD, were licensed medical doctors who issued prescriptions for controlled and non-controlled prescription drugs through and on behalf of the Affpower enterprise;

Philip James Bidwell, 50, of Frisco, TX, is accused of operating multiple affiliated websites and recruiting other affiliates to the enterprise and managing them. He has been released on $1 million bail.

Henriko Chung is charged with the same activities as Bidwell.

David Eldon Fisher, Richard Edward Koch, Jeffrey A. Light, (Name Withdrawn By Request),
Peter P. Bragansa, and Bessie K. Ricoarango were affpower affiliates who operated multiple affiliate websites

Nathan Jacobson was the owner and manager of RX Payments, Ltd, a credit card processing agency in Tel Aviv, Israel.

How hard are they hitting the Website Affiliates?

Jeffrey A. Light, 44, of Heath, TX, has been released on $1 million bail.

(Name withdrawn by request), 46, of Dallas, has been released on $500,000 bail.

Chandresh Shah faces additional charges in Georgia, Subramanya Prasad faces additional charges in Kentucky and Ohio, and Gerald Morris faces additional charges in Massachusetts, the states where each was licensed to practice medicine.

Dolores Lovin and Mary Aronson face additional charges in Colorado, and Claude Covino faces additional charges in Florida, the states where they were licensed in pharmaceutical practice.

ALL of the defendants face racketeering charges and much more in this 313 count indictment.


But does this really scare the bad guys? ABSOLUTELY! Let's drop in and visit a few websites where they bad guys talk about their pill-spamming and see what they are saying:

We'll start at

ChesterCoperPot, an RXAffiliateForum member since 2003 whose made more than 400 posts to this forum, starts things off by quoting in bold text "AND EIGHT AFFILIATE WEBSITE OPERATORS".

Pillz, a "senior member" with over 200 posts, adds:
"BTW, the gov't is going for RICO on this."

RxRob, another "senior member" with over 1400 posts, says:
"OMFG, they charged Bess (WICKED on this forum). She was just an Affiliate!"

Rumple, trying to stem the panic, posts:


"Settle down boys and girls......

Trying to win a case against an affiliate would be very hard to do, the reason you never hear about affiliates being charged is because it would be damn hard to prove without a doubt in a court that an affiliate new that Affpower was breaking the laws that they were breaking...

You didnt touch any of the money being moved into Dave's accounts and you didnt handle any of the drugs being shipped stop worring

It would be a waste of time and effort for the government to even try to get a case against an affiliate that it could win, you would have to have direct business dealings with Dave for them to have something on you..."


And that is EXACTLY what needs to happen if we are going to stop pill-spam. If the government is serious about wanting to stop this, they need to convince the jury and the sentencing judge that it doesn't matter if they "touched the money" or if they didn't "handle the drugs". What matters is that their behavior makes this entire scheme possible, and puts American lives in danger for their own greed.

Some of the websites involved include:

Let's peek in on a couple more forums and see how they affiliates are taking the news so far:


On ePharmacyWatch everybody wants to know WHICH WEBSITES are involved! They are also scurrying to see if the sites they are selling for do business in Cyprus.

Sadly, several of the posts make it clear that some of these poor suckers think they are "following the rules" and doing pill-spam for prescription drugs in a "legal" way! DOH!

(One Hundred Seventy Two users had logged in to this forum in the previous 30 minutes when I was reading it!)


(182 registered users in the past 30 minutes!!!)

This thread is also mostly about posters wondering if what they are doing is really illegal or not! Amazing!

------ laughs at them all and points out that Magic Mushrooms don't use prescriptions. (a photo of a cow says "This is my pharmacist!")


Online Justice: Slow and Incomplete

Last week the online media went nuts over the sentencing of Christopher William Smith, known to anti-spam researchers as "Rizler". I'd like to stand at the front of the line in congratulating Assistant US Attorney Nicole Engisch and US District Judge Michael Davis for sticking it to Rizler with a THIRTY YEAR SENTENCE!

Rizler has been spamming an enormous volume for a long time. The 211-page complaint against Rizler by AOL documented over 1.1 BILLION emails that Rizler had sent -- just to AOL subscribers!

Rizler was arrested in a raid on May 10th, 2005, in which his 85-employee company, Xpress Pharmacy Direct, was shut down and in which $4.2 Million in assets, including $1.8 Million in luxury automobiles was seized. Skipping bail to the Dominican Republic, it was only a matter of weeks before Rizler had restarted his spamming operations. His websites, such as,,,, and, claimed to operate legally by having a real doctor read answers to your online profile questions, and prescribe your medications from his office in New Jersey. Rizler paid Dr. Philip Mach $7 per prescription for these services. . .more than 20,000 times in one four month period!

Spamhaus's Steve Linford told's Will Sturgeon back at that time, "Rizler was way up in our Top Ten". ( The Spam Report, 06JUL05)

Good story, right?

Well . . . how is that Rizler is charged with operating a "continuing criminal enterprise" and "conspiracy", but there don't seem to be any co-conspirators?

Bernadette Hollis, who was in charge of acquiring the Hydrocodone for the online pharmacies, and who Smith confided in with his desire to kill one of the prosecutions chief witnesses, walks away with one year of probation and forty hours of community service.

Alton Scott Poe, was described as being an innocent office manager, who was brought in to instill good business practices. Apparently the judge bought this story, or perhaps nobody ever heard of the Online University that Poe ran? The Lawsuit against Alton Scott Poe and his brother lays out their online scheme for selling diplomas for between $300 and $500, complete with an imaginary transcript showing what grades you received in what classes! Innocent Office Manager? He'll do 6 months for assisting in the sale of millions of dollars of illegal drugs. I wonder what scheme he'll launch in six months and one day?