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April 8, 2004
The United States Attorney for the Northern District of California announced today that a federal grand jury returned an indictment yesterday against Maksym Vysochanskyy, a/k/a Maksym Kovalchuk, 26, of Ternopil, Ukraine, charging multiple counterfeiting, money laundering and credit card fraud offenses arising out of his alleged distribution of millions of dollars of pirated computer software over the Internet.
The 20-count indictment charges the defendant with three counts of criminal copyright infringement in violation of 18 U.S.C. § 2319(a); five counts of trafficking in counterfeit goods in violation of 18 U.S.C. § 2320(a); 11 counts of international money laundering in violation of 18 U.S.C. § 1956(a)(2)(B)(i); and one count of access device fraud in violation of 18 U.S.C. § 1029(a)(2).
The indictment follows the defendant's recent extradition from Thailand, where he was arrested in May 2003 on a provisional arrest warrant by the Royal Thai Police with the assistance of U.S. Secret Service agents and Postal Inspectors. The arrest was based on a criminal complaint that was filed in San Jose in April 2003. Following a detention hearing earlier this week, Chief U.S. Magistrate Judge Patricia V. Trumbull ordered that the defendant be held in custody as a flight risk pending trial of these charges. His arraignment on the indictment is scheduled before U.S. Magistrate Judge Howard R. Lloyd in San Jose on April 12, 2004, at 2:30 p.m.
According to the indictment and the criminal complaint, the defendant 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. The defendant 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, defendant allegedly communicated with buyers under the guise of Web-based email accounts in the names of online aliases. The defendant also further disguised his true identity through the unauthorized use of an email account connected to the Web site of a California company. The defendant 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 payment processing services, who then forwarded the defendant a portion of the proceeds.
According to the complaint, agents monitoring Mr. Kovalchuk's email traffic in early 2003 learned of his travel plans from Ukraine to Thailand. He allegedly made reservations at two Thai hotels via email, which ultimately led to his arrest and extradition when U.S. agents met him in Bangkok.
An indictment and criminal complaint simply contain allegations against an individual and, as with all defendants, Mr. Kovalchuk's 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 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 prosecution is the result of a two-year investigation by agents from the San Francisco Electronic Crimes Task Force, which includes agents from the United States Secret Service, the United States Postal Inspection Service and the Internal Revenue Service, Criminal Investigations Division. More information concerning the SFECTF can be found at www.ectaskforce.org. The United States Embassy in Thailand and the authorities from Thailand, including the Royal Thai Police, also substantially assisted in the apprehension and extradition of Mr. Kovalchuk.
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.
A copy of this press release may be found on the U.S. Attorney's Office's website at www.usdoj.gov/usao/can.
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.
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