The investigation revealed that Software-Inc. was selling counterfeit software copyrighted by Adobe Systems, Autodesk, Macromedia, Microsoft, and Novell on the Internet. Ultimately, the government seized nearly all of Software-Inc.'s assets, including their Web site. It is believed to be the first time federal prosecutors claimed cyberspace as part of a criminal case related to intellectual property rights violations.

Beginning in late 1997, Maria Yolanda Sola Lirola and Francisco Javier Arjona Joyanes, citizens of Spain and the principal operators of Software-Inc., sold counterfeit software on their Web site, on numerous Internet auction sites, and through direct e-mail contacts using various false seller information. Unknowing customers would purchase software online or fax an order form, and make payment via check or credit card. Software-Inc., which originally operated out of Spain, would then, based on these orders, smuggle the counterfeit software into the United States to their customers via international mail.

Software-Inc. later expanded their operation to New York and Los Angeles. Customs Agents in the San Francisco office conducted multiple undercover purchases to confirm the selling of counterfeit software.

In September 2000, U.S. Customs in San Francisco, with the assistance of U.S. Customs in Los Angeles, executed search and arrest warrants on Software-Inc. in an apartment in Los Angeles.

In October 2000, information was filed in the Northern District of California (San Jose) in which Lirola and Joyanes were charged with several felony counts relating to their involvement in the distribution of counterfeit, copyrighted computer software while operating Software-Inc.

On January 5, 2001, Lirola and Joyanes subsequently each pled guilty in Los Angeles to three felony counts for copyright infringement, and conspiracy. In addition to their guilty plea, Lirola and Joyanes agreed to forfeit approximately $900,000, a 2000 Chevrolet Corvette convertible, a large quantity of high-end computer systems and equipment, and their Web site (www.software-inc.com).

Says Charles O. Simonsen, Special Agent-in-Charge, San Francisco, "The federal prosecution and conviction of these violators sends a strong message to others who illegally profit from the copyrighted material of others. No longer can these violators anticipate just civil injunctions and penalties. They are now put on notice that, upon conviction, they potentially face months or years of incarceration plus forfeiture of all their illegal gains."