Chinese businessman gets 12 years for software piracy

A Wilmington judge sentenced a Chinese businessman to 12 years in U.S. prison Tuesday for his role in a global network that stole and hacked more than $100 million in sophisticated corporate and engineering software and sold it on the black market.

Xiang Li, arrested in a 2011 sting in Saipan by Philadelphia-based agents of Homeland Security Investigations, is believed to be the first cyber-criminal prosecuted in the United States for crimes committed in China. His victims ranged from tech giants like Microsoft, Adobe, and IBM to government contractors such as Analytical Graphics, an Exton firm whose software is used in missile defense, spacecraft, and "communications and electronic warfare" systems.

From his home in southwest China, Li, 37, enlisted hackers to steal software and disable the licensing codes, then sold the products online. At one point, his site, www.crack99.com, offered pirated versions of 2,000 pieces of "cracked" software.

"He stands between the hackers and the crackers on one end, and the consumers on the other end," said Assistant U.S. Attorney David Hall, one of the prosecutors on the case.

Li completed 700 transactions in 60 countries in three years, according to agents. They said some of the proprietary software he pilfered was worth tens or hundreds of thousands of dollars.

Hall and Assistant U.S. Attorney Edward McAndrew couldn't say how the software was being used, but noted that pirated software often includes malware or viruses that can infect larger systems. And they said Li's customers included a government contractor who worked on systems for Marine One, a man in Syria, which is embargoed from such U.S. purchases, and a NASA engineer, Cosburn Wedderburn, who was also prosecuted.

"He downloaded onto the NASA server and into the NASA network," Hall said. "That could have caused all kind of problems."

Li's lawyer challenged prosecutors' estimated value of the stolen goods, accusing the government of "a math myth" designed to inflate his sentence.

The lawyer, Mingli Chen, described Li as a devoted father and son who had no criminal record. He noted that he cooperated with authorities, pleaded guilty in January, and had not seen his young children or elderly grandmother since his arrest nearly two years ago.

But U.S. District Judge Leonard Stark rejected her request for a drastic departure from the sentencing guidelines.

Li had been held without bail since undercover agents posed as customers and lured him to Saipan to arrest him.

John P. Kelleghan, special agent in charge of Homeland Security Investigations in Philadelphia, said the case shows the steps the United States will take to fight cyber-crime.

"Xiang Li mistakenly thought he was safe from the long arm of HSI, hiding halfway around the world in cyberspace anonymity," Kelleghan said.