TX Court Sentences Dunaway to 41 Months of Jail Term for Selling Counterfeit Software Worth $1 Million on Web Sites

Holding:

The U.S. District Court for the Northern District Court of Texas has sentenced Timothy Kyle Dunaway, 24, of Wichita Falls, Texas, to 41 months in prison for selling counterfeit computer software through the Internet in violation of criminal copyright infringement laws, particularly 17 U.S.C. Sections 506(a)(1)(A) and 2319. The software sold by Dunaway had a combined retail value of more than $1 million. Dunaway was also sentenced to two years of supervised release and ordered to pay $810,257 in restitution. The district court also ordered Dunaway to forfeit a Ferrari 348 TB and a Rolex watch purchased with illegal proceeds of the scheme. The district court issued the judgment of guilt and imposed the sentencing on February 17, 2009 after Dunaway pleaded guilty on October 30, 2008, to one count of criminal copyright infringement for selling pirated business software through the Internet.

Detailed Summary:

According to court documents, from July 2004 through May 2008, Dunaway operated approximately 40 Web sites that sold a large volume of downloadable counterfeit software without authorization from the copyright owners. Dunaway admitted he operated computer servers in Vienna, Austria and Malaysia.

Undercover agents of the U.S. Immigration and Customs Enforcement (“ICE”), after sting operations, determined that Dunaway was associated with various websites such as downloads4software.net and esoftdownloads.net that offered pirated business software for sale.  ICE agents further discovered that upon visiting these websites, customers could select which software they wanted to purchase.

After providing payment information, customers were emailed a link that provided the ability to download the purchased software via the internet.  Credit card payments for the pirated software are processed through merchant company First Data Inc. through an account owned by Dunaway.  The ICE complaint further alleged that the websites are hosted by a service provider in Malaysia, while all of the downloadable content is hosted on a separate computer server assigned IP address 83.64.127.23 on the network NETonE in Austria.  The websites have offered a variety of products from software companies, but offered a significant amount of Adobe products.

The ICE’s complaint also stated that though separate websites exist, no matter which website the pirated software is purchased from, the purchaser is directed to download the pirated software from the computer server(s) assigned IP address 83.64.127.23.

According to the complaint, Dunaway promoted his illicit scheme by purchasing advertising for his Web sites from major Internet search engines. Throughout the entire course of the scheme, the defendant processed more than $800,000 dollars through credit card merchant accounts under his control.

In addition to the penalties of restitution and 41-month imprisonment at a Bureau of Prison facility, the district court ordered that upon release from imprisonment, Dunaway shall be placed on supervised release for a term of two (2) years. During this period, Dunaway is prohibited from performing a variety of acts, including: installation of new hardware, performing upgrades, or effecting repairs on his/her computer system without receiving prior permission from the probation officer;  accessing any service or use of any software which allows for direct peer to peer contact which may include chat rooms, file sharing, or other similar activity without permission from the probation officer; engaging in or utilization of any service which allows peer-to-peer file sharing or file transfer protocol activity; downloading, possession, and/or installation of copyrighted materials without permission of your probation officer; and, possession or use removable media configured with bootable operating systems.

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