Cyber crime, as an area of legal practice, regularly presents new challenges on both sides of the criminal justice system. Despite new technologies and new laws, prosecutors often use laws that have been around since telephones were still relatively new to take on alleged schemes that rely heavily on the internet. Federal prosecutors recently brought fraud charges against a pair of defendants accused of an elaborate scheme involving false claims of online copyright infringement. United States v. PH, et al., No. 0:16-cr-00334, indictment (D. Minn., Dec. 14, 2016). The case illustrates many of the unusual challenges of cyber crime law.
Copyright protection gives an author of creative works, such as books and films, the exclusive right to use, distribute, display, or license the use of a copyrighted work. The use of a copyrighted work without the copyright owner’s permission may constitute copyright infringement and could potentially result in liability to the owner. Willful copyright infringement may carry criminal penalties in certain circumstances. 17 U.S.C. § 506, 18 U.S.C. § 2319. In any case of alleged non-criminal copyright infringement, the copyright owner is responsible for pursuing the alleged infringer.
The PH case does not involve alleged criminal copyright infringement. The defendants were charged with mail and wire fraud for allegedly sending out fraudulent claims of copyright infringement with settlement demands. Federal law prohibits any “scheme or artifice to defraud” that affects interstate commerce, such as through the use of the U.S. Postal Service—more commonly known as mail fraud. 18 U.S.C. § 1341. Fraudulent schemes that involve the use of interstate or foreign “wire, radio, or television communication” are categorized as wire fraud. Id. at § 1343.
The PH case began with a series of lawsuits filed by the defendants, who are both attorneys, alleging copyright infringement against numerous individuals, claiming that they downloaded unauthorized copies of videos from the internet. These lawsuits typically did not identify any defendants by name but only by IP addresses. Subpoenas to internet service providers sometimes revealed individual names. The defendants allegedly sent demand letters to those individuals, offering them a choice between paying a $4,000 settlement or having their names made public. The copyrighted films at issue were reportedly “adult” in nature, making the demand a choice between paying or facing public embarrassment.
The alleged copyright owners in these lawsuits were often overseas corporations, which raised a judge’s suspicions. That judge eventually sanctioned the defendants over inconsistencies in pleadings and other court documents. Ingenuity13 LLC v. John Doe, No. 2:12-cv-08333, order (C.D. Cal., May 6, 2013). By the time prosecutors indicted the defendants in late 2016, they claimed to have uncovered evidence that the defendants had uploaded the copyrighted videos to file-sharing sites themselves and then sued individuals who downloaded them.
The indictment listed five counts of mail fraud, 10 counts of wire fraud, and one count each of conspiracy to commit and suborn perjury, conspiracy to commit mail and wire fraud, and conspiracy to commit money laundering. 18 U.S.C. §§ 371, 1349, 1956(h). One defendant pleaded guilty to conspiracy to commit mail fraud, wire fraud, and money laundering in March 2017. Charges against the other defendant are still pending.
These blog posts are meant to be illustrative only. Unless expressly stated to the contrary herein, these matters are not the result of any legal work of Michael J. Brown, but are used to communicate a particular point of view. Michael J. Brown does not claim credit for any legal work done by any lawyer or law firm either generally or specifically, with respect to the matters contained in this blog.
For more than 20 years, board-certified cyber crime lawyer Michael J. Brown has defended people facing alleged federal and state charges in West Texas courts. To schedule a confidential consultation to discuss your case, contact us today online or at (432) 687-5157.
More Blog Posts:
Federal Cybercrime Statute Covers Wide Range of Activity, Texas Criminal Defense Lawyer Blog, January 25, 2017
Social Media, Digital Technology Create Unexpected Criminal Complications for Some Young People, Texas Criminal Defense Lawyer Blog, January 25, 2017
How the U.S. Legal System Deals with Online “Trolling”, Texas Criminal Defense Lawyer Blog, January 25, 2017.