The United States Attorney for the Northern District of California announced that Maksym Kovalchuk, 26, of Ternopil, Ukraine, made his initial appearance in federal court in San Jose today following his extradition from Thailand on charges arising out of his alleged distribution of millions of dollars of pirated computer software over the Internet.  Mr. Kovalchuk arrived in the United States with U.S. Marshals on Friday, March 26, 2004, after having been in custody in Thailand since May 2003, when the Royal Thai Police, assisted by U.S. Secret Service agents and Postal Inspectors, arrested him in Bangkok.

A criminal complaint filed in San Jose in April 2003 and unsealed today charges Mr. Kovalchuk with criminal copyright infringement in violation of 18 U.S.C. § 2319(a); trafficking in counterfeit goods in violation of 18 U.S.C. § 2320; money laundering and conspiracy in violation of 18 U.S.C. § 1956; and access device fraud in violation of 18 U.S.C. § 1029.

Mr. Kovalchuk appeared on the charges this morning before United States Chief Magistrate Judge Patricia V. Trumbull in San Jose.  Following the government's motion to detain the defendant as a flight risk pending trial, Judge Trumbull set a detention hearing on April 5, 2004, at 12:00 p.m.

The criminal complaint alleges that from December 2000 until his arrest Mr. Kovalchuk marketed and sold counterfeit software through Web sites such as cdservice.org, your-cds.org, gold-cds.org, and neocds.com, as well as through eBay auctions.  Products offered in this manner included valuable software titles owned by companies such as Autodesk, Microsoft Corporation, and Macromedia, which were generally offered for sale at a mere fraction of their actual retail values.  Mr. Kovalchuk allegedly shipped some counterfeit software bearing counterfeit trademarks and logos of the software products, while shipping other products simply as CDs without any manuals, registration papers, or other documentation.  The retail value of the infringed products allegedly exceeded $3 million dollars. 

To field and respond to orders for the pirated software products, Mr. Kovalchuk allegedly communicated with buyers under the guise of Web-based email accounts using the names of online aliases.  Mr. Kovalchuk also further disguised his true identity through the unauthorized use of an e-mail account connected to the Web site of a California based company.  Mr. Kovalchuk allegedly caused payments for the counterfeit software to be made to numerous intermediaries in the United States and Eastern Europe – including both individuals and online credit card processing services – who forwarded a portion of the sale proceeds to Mr. Kovalchuk.

According to the complaint, agents monitoring Mr. Kovalchuk's e-mail traffic in early 2003 learned of his travel plans from the Ukraine to Thailand – he made reservations at two Thai hotels via e-mail – which ultimately led to his arrest and extradition when U.S. agents met him in Bangkok.

A complaint simply contains allegations against an individual and, as with all defendants, Mr. Kovalchuk must be presumed innocent unless and until convicted. 

The maximum statutory penalties are five years imprisonment and a fine of $250,000 for each copyright offense; 10 years imprisonment and a $2 million fine for each counterfeiting offense; 10 years imprisonment and a $250,000 fine for each credit card fraud offense; and 20 years imprisonment and a $500,000 fine for each money laundering and conspiracy offense.  However, any sentence following conviction would be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and would be imposed in the discretion of the Court.

The investigation was overseen by the Computer Hacking and Intellectual Property (CHIP) Unit of the United States Attorney's Office.  Christopher P. Sonderby, Chief of the CHIP Unit, is the Assistant United States Attorney who is prosecuting the case. 

All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Christopher P. Sonderby at (408) 535-5037, or Assistant U.S. Attorney Matthew J. Jacobs at (415) 436-7181.