Software Pirate Pleads Guilty

California man faces record fine, prison for selling pirated software as 'backups.'

Grant Gross, IDG News Service

WASHINGTON-- A California man who operated a Web site selling millions of dollars of pirated software has pleaded guilty to two counts of criminal copyright infringement, the Department of Justice says.

Nathan Peterson, 26, of Antelope Acres, California, pleaded guilty Tuesday in U.S. District Court for the Eastern District of Virginia in Alexandria. Peterson was owner of iBackups.net, "the largest for-profit software piracy site ever shut down by law enforcement," U.S. Attorney Paul McNulty of the Eastern District of Virginia said in a statement.

Peterson faces a maximum sentence of ten years in prison and a $500,000 fine. Sentencing is scheduled for April 14. Including restitution of $5.4 million, the penalties may be the highest ever imposed on a software pirate, said the Software & Information Industry Association (SIIA). The trade group in 2003 alerted the FBI, which has been cracking down on piracy, of possible copyright violations at iBackups.

Peterson's Web site was responsible for close to $20 million taken away from software vendors, the DOJ said. Peterson told customers that software sold on iBackups was legal "backup software" to protect against computer crashes, SIIA said.

Site Shut Down

The iBackups site, distributing products via downloads or mail, sold software "substantially below" suggested retail prices from companies such as Adobe Systems, Macromedia, Microsoft, and Symantec, the DOJ said.

Law enforcement authorities shut down iBackups in February, and the site now tells visitors it was shuttered by the FBI and DOJ. The site started operating in 2003 and advertised its products over the Internet, SIIA said.

Peterson used iBackups to fund an "extravagant lifestyle," including purchases of multiple homes, cars, and a boat, the DOJ said. The government seized numerous assets from Peterson, including a restored 1949 Mercury Coupe vehicle purchased for $44,000, a 2005 Dodge Ram, a 2003 Chevrolet Corvette, a 2004 Toyota Camry, a 2005 Toyota Corolla, and a 2006 Mercedes-Benz S-Class bought for $125,000.