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[IP] Mystery shrouds arrest of accused software pirate




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Date: Fri, 03 Oct 2003 12:38:18 +1200
From: Hugh Lilly <h.lilly@xxxxxxx>
Subject: Fwd: Mystery shrouds arrest of accused software pirate
To: Dave Farber <dave@xxxxxxxxxx>


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Subject: Mystery shrouds arrest of accused software pirate
Date: Thu, 02 Oct 2003 15:04
From: "cybercrime-alerts" <alerts@xxxxxxxxxxx>
To: cybercrime-alerts@xxxxxxxxxxxxx

** via http://techPolice.com

-
Mystery shrouds arrest of accused software pirate
By Mike Brunker, MSNBC


U.S. authorities are trying to reel in a rare fish -- an alleged software
 pirate from the former Soviet Union who may be one of the biggest catches so
 far in the war on cybercrime. But instead of trumpeting the arrest of Maksym
 Kovalchuk, investigators and prosecutors have cast a net of secrecy around
 the case and their efforts to extradite the 25-year-old Ukrainian from
 Thailand.

THOUGH KOVALCHUK WAS described as a "kingpin" of international computer crime
 at the time of his arrest, many details of the case against him remain
 unclear more than four months after he was apprehended by Thai authorities
 as he was downloading a frozen treat in a Bangkok ice cream parlor.
 Kovalchuk's arrest on an international warrant obtained by U.S. authorities
 was the result of a criminal complaint filed in Northern California. But
 that complaint remains sealed, and officials with the U.S. Secret Service
 and the U.S. Attorney's Office in San Jose declined to discuss the case in
 response to interview requests from MSNBC.com.

One reason for the low-key approach is that U.S. authorities apparently hope
 to use Kovalchuk's arrest to further penetrate the shadowy world of software
 piracy in the Ukraine -- a global hot spot for intellectual property theft,
 much of it orchestrated by organized crime syndicates.

'OTHER SUSPECTS' SOUGHT
"His extradition is still pending, and there are other suspects in the case,
 so we really can't say anything at this point," said a U.S. Secret Service
 spokeswoman.

A Thai court may rule as early as Wednesday on a U.S. extradition request for
 Kovalchuk. If it turns him over, Kovalchuk apparently would be the first
 person from the Ukraine -- and possibly any of the former Soviet Union
 countries -- to stand trial in the United States on software piracy charges.

Most of what is known about the case is contained in a May 21 press release
 announcing Kovalchuk's arrest issued by the U.S. Attorney's Office in the
 Northern District of California on May 21.

In it, authorities said that Kovalchuk had been charged with criminal
 copyright infringement, trafficking in counterfeit goods, money laundering
 and possession of unauthorized credit card information.

The Ukrainian sold counterfeit versions of software from companies such as
 Autodesk, Macromedia and Microsoft on eBay and other Web sites and laundered
 the proceeds through numerous intermediaries in an effort to disguise its
 destination, according to the press release. It said the software had a
 retail value "in excess of $3 million."

A BIGGER PLAYER?
But there have been tantalizing hints in foreign media reports that Kovalchuk
 may have been a bigger player in the rough-and-tumble world of Ukrainian
 computer crime than U.S. authorities have let on:

The Ukrainian UNIAN news agency reported shortly after the arrest that he is
 accused of causing $100 million in damage without specifying how that figure
 was arrived at, and said he was accused of carrying out computer crimes
 against U.S. banks, specifically forging credit cards.

Agence France Presse, which quoted an unidentified official at the U.S.
 Embassy in Bangkok as describing Kovalchuk as a criminal "kingpin," reported
 that the suspected software pirate also apparently was a hacker who built a
 "back door" in the counterfeit software that enabled him to surreptitiously
 gain access to purchasers' computers and steal financial data.

Russia's ITAR-Tass news agency reported that Kovalchuk was somehow able to
 obtain a passport identifying him as Maksym Vysochansky shortly before
 traveling to Thailand on vacation with his wife.

The Secret Service and the U.S. Attorney's Office in San Jose declined
 comment on the reports.

Little is known about Kovalchuk, who reportedly is claiming that U.S.
 authorities have the wrong man while fighting extradition.

ITAR-Tass reported that he grew up with three siblings in a modest, two-room
 apartment in Ternopil in the western Ukraine. His mother, an employee at a
 local museum, and father, a locally renowned painter, still live in the
 apartment, with their sole visible asset a large library, the news agency
 said. His parents refused to discuss their son's arrest.

The news agency said that friends and former teachers at the Institute of
 Economics and Management of the Economics Academy, from which he graduated
 with honors in 1998, recalled him as modest and "unconflicting."

EXTRADITION SEEN AS LIKELY
Assuming they have solid evidence linking Kovalchuk to the counterfeit
 software, U.S. authorities have a good chance of bringing the suspect to the
 United States to stand trial, said Douglas McNabb, a Houston-based criminal
 defense attorney who specializes in extradition cases.

"The treaty requires that there be dual criminality, where you've got a crime
 in both countries that is analogous to a felony," he said. "?I'd be very
 surprised if Thailand doesn't have a money-laundering statute at least that
 corresponds closely to U.S. law."

No matter what the outcome, Kovalchuk's case illustrates that the United
 States is getting serious about going after thieves and hackers in countries
 with spotty or nonexistent enforcement records and getting increasing
 cooperation even in countries where such criminals have long been
 untouchable.

In Kovalchuk's case, for example, U.S authorities were able to identify the
 suspect while he was in the Ukraine and then place him on an international
 watch list in the event he left the country. When he did, they quickly
 orchestrated his arrest, even though he was traveling under a different
 name.

Sandy Boulton, director of piracy prevention for Autodesk, said that after
 investigators at the company documented multiple sales of its AutoCad design
 software on eBay and other Web sites for about one-eighth of its usual
 retail price, $4,000, federal agents "followed the money" to its source to
 identify Kovalchuk.

"It took some time to track because he set up some rather clever ways to
 divert the cash," she said.

GOVERNMENT PROMISES CRACKDOWN
Vladimir Golubev, director of the Computer Crime Research Center in
 Zaporozhye, Ukraine, also said there is evidence that the Ukrainian
 government is getting serious about cracking down on the various forms of
 computer crime that are rife within the Eastern European nation's borders.

"The Ukrainian government has passed ? changes in (the) National Security
 Strategy, where computer crime and cyberterrorism were defined as
 priorities," he wrote in an e-mail response to an inquiry. "And (the)
 Security Service of Ukraine is charged to investigate computer crimes and
 cyberterrorism."

But Ukrainian leaders need to do far more to combat copyright infringement
 and counterfeiting, said Eric Schwartz, vice president and special counsel
 of the International Intellectual Property Alliance (IIPA), which represents
 more than 1,300 companies.

"The Ukrainian police began making raids (on piracy operations) two years
 ago, but few prosecutions resulted and in the few cases where there were
 convictions, they were overturned on technicalities or very meager
 administrative penalties were assessed," he said.

The Business Software Alliance, another industry group, estimated that losses
 to U.S. companies due to software piracy in the Ukraine amounted to $75.4
 million in 2002.

The long-running dispute over the lax enforcement of intellectual property
 laws by Ukrainian authorities culminated with the imposition of trade
 sanctions by the United States on Dec. 20, 2001, specifically over the
 inability of President Leonid Kuchma's government to crack down on a
 thriving market in counterfeit optical disks.

The sanctions cost the country $40 million a year in trade benefits and also
 resulted in tariffs against other goods and services.

The main obstacle to substantive reform and vigorous enforcement of
 intellectual property laws is organized crime, which is responsible for much
 of the counterfeiting and intellectual property theft in the Ukraine,
 according to sources familiar with the situation.

'MOST LUCRATIVE INCOME SOURCE'
"They're involved in all sort of other operations, but their most lucrative
 income source -- and the one they're least likely to be prosecuted for -- is
 intellectual property crime," said one source.

In addition to levying punishing sanctions against the Ukraine and other
 nations that fail to crack down on counterfeiting and copyright
 infringement, U.S. and European leaders are trying to persuade governments
 that intellectual property laws offer an effective way of cracking down on
 organized crime.

"It's like Al Capone and taxes," said the IIPA's Schwarz. "You may not get
 them running guns or drugs, but you can get them selling materials illegally
 that come with forensic evidence ? that you can trace back to the master
 replicator at the plant."




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                          (C) 2003 Hugh Lilly
                         mail: h.lilly@xxxxxxx
                    blog: http://hugh.orcon.net.nz
   Registered Linux User # 295486, register @ http://counter.li.org
        ______________________________________________________
        There's only so much stupidity you can compensate for;
        there comes a point where you compensate for so much
          stupidity that it starts to cause problems for the
              people who actually think in a normal way.
                -Bill, digital.forest tech support

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