Two men plead guilty to CD counterfeiting

By Julia Cheever, Bay City News Service

April 4, 2006

SAN FRANCISCO (BCN) - Federal prosecutors announced in San Francisco today that two Union City men pleaded guilty in federal court in San Jose this morning to mass producing pirated music and software compact discs.

Kevin Ryan, the U.S. attorney for Northern California, said Ye Teng Wen, 29, and Hao He, 30, were part of "a sophisticated CD piracy scheme that was distributing hundreds of thousands of CDs around the country."

Ryan called the case "the largest case involving CD manufacturing and piracy in the United States today."

He said the two men admitted to mass producing 194,000 pirated music and software CDs in Hayward and Union City in 2004 and 2005.

Wen and He each pleaded guilty before U.S. District Judge Ronald Whyte to five counts, including pirating conspiracy, trafficking in counterfeit labels, criminal copyright infringement and criminal trademark violations.

In the fifth count, they pleaded guilty to counterfeiting the FBI's own anti-piracy seal on the counterfeit music discs.

Ryan said the pirated CDs included mostly Latin music and antivirus software.

The two men are scheduled to be sentenced by Whyte in San Jose on Oct. 16. Each count carries a possible maximum of five years in prison, but the actual penalty will be determined after consideration of federal sentencing guidelines.

Ryan was joined at a news conference at his office in San Francisco by Brad Buckles, chief of anti-piracy for the Washington D.C.-based Recording Industry Association of America. Buckles said, "The value of this prosecution to the entire music community cannot be overstated."

He said, "The illegal profits generated by these highly sophisticated operations come at the expense of the artists, songwriters, retailers, record labels and many others whose creative energies make music possible.

"The pleas - stemming from the largest U.S. manufacturing raid on record - should leave no doubt that the consequences for theft of this kind are real," Buckles said.

On Oct. 6, federal agents seized a total of nearly 500,000 counterfeited CDs in 13 locations in California and Texas, including the 194,000 in the South Bay.

A few days later, Wen and He were indicted on a total of 10 criminal counts. That indictment was replaced last month by a five-count superseding information to which they pleaded guilty today.

A third defendant, Yacobin Zhai, 33, of Fremont, was separately indicted in October on seven counterfeiting-related counts. The charges against him remain pending. His next court appearance is scheduled in federal court in San Jose on May 22.

Wen and He were described in the charges as "replicators," who used a "stamper" or mold for mass production of pirated music and software CDs and then used silk-screening machines to counterfeit the artwork on the CDs.

Ryan said one stamper can make 50,000 to 80,000 counterfeit CDs of a single work. During the raid in the South Bay in October, authorities seized 2,248 stampers, he said.

The prosecution stemmed from a joint federal, state and local investigation called Operation Remaster, which targeted large scale illegal counterfeiting of copyrighted music and software.

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