Three Former Employees of Movie Post-Production Firm Charged
in Conspiracy that Led to Illegal Sale of ‘Kill Bill’ and Illegal Distribution of ‘The Passion of the Christ’ LOS ANGELES - In the latest actions targeting copyright infringement and the illegal distribution of pirated entertainment products, federal prosecutors have obtained charges against four individuals who allegedly copied and distributed such recent feature films as “Pirates of the Caribbean” and “Matchstick Men.” A criminal complaint filed yesterday charges three Los Angeles-area men with conspiracy to violate federal copyright laws. All three defendants formerly worked at Lightning Dubbs, a Hollywood-based post-production company that is now known as Lightning Media. It was through their employment that the defendants had access to pre-release copies of films and allegedly were able to make illegal copies for their use and the use of others. The defendants named in the complaint are:
· Richard Young, 42, of Northridge;
· Victor Ochoa, 31, of Reseda; and
· Frank Pelayo Jr., 23, of Burbank. In the second case, a federal grand jury this morning indicted an Illinois man on conspiracy and copyright infringement charges for allegedly obtaining more than 40 Academy Award “screeners,” which he reproduced and distributed to others.
Russell William Sprague, 51, of Homewood, Illinois, was charged with one count of conspiracy and one count of criminal infringement of a copyright. According to the indictment, an unindicted co-conspirator who used to be a member of the Academy of Motion Pictures Arts and Sciences provided Sprague with dozens of screeners that were given to Academy members over the past several months as part of the Academy Award-nominating process. Sprague allegedly took the screeners in VHS tape format, digitized the films and produced illegal DVDs that were distributed to a variety of persons.
The Motion Picture Association of America estimates that the domestic film industry loses more than $3 billion annually in potential worldwide revenue due to piracy. This figure does not take into account losses suffered as a result of films that are illegally posted on the Internet, a growing problem that is exacerbated by improved digital compression technology and faster Internet connections.
“Theft of intellectual property from the entertainment industry leads to real losses that affect real people,” said United States Attorney Debra W. Yang. “This theft leads to a potential loss of jobs, loss of income and loss of ownership. We are committed to working with all industries to reduce the theft of copyrighted material and to punish those who benefit from piracy.”
Over the past year, the United States Attorney’s Office has prosecuted a series of significant cases that provide a look at the growing threat of intellectual property crime. In addition to cases dealing with copyright piracy, the office has filed cases dealing with trademark counterfeiting, the theft of trade secrets and violations of the Digital Millennium Copyright Act.
Both cases announced today are the result of FBI investigations that started when pirated copies of movies appeared on the Internet. In the case of the ex-Lightning Dubbs employees, the investigation started when a 3-minute piece of “The Passion of the Christ” (which at the time was being called “The Passion”) appeared last October on filmstew.com. Soon after, a newspaper obtained a complete version of the movie, which the paper used as the basis for an article. After interviewing people associated with filmstew.com and after obtaining the complete movie from the newspaper, investigators were able to quickly trace the pirated video back to Lightning Dubbs, which had made copies of the movie for Icon Productions. The investigation broadened when pirated copies of “Kill Bill: Vol. 1” were found being offered by at least one Los Angeles-area black marketer and became available on the Internet. According to Miramax, the only outside company that made copies of “Kill Bill” was Lightning Dubbs. During the course of the investigation, dozens of pirated movies have been seized from Lightning Dubbs employees and others who had friends employed by the company. (There is no evidence to suggest that Lightning Dubbs management was aware of the illegal copying of movies at its facilities, and the management of Lightning Dubbs cooperated fully in the investigation.)
The case against Sprague is the result of an investigation into Internet postings of seven feature films that had been nominated for Academy Awards. According to a criminal complaint filed against Sprague last month, forensic analysis of the films posted on the Internet revealed that many of the movies were derived from Academy screeners that had been embedded with a new digital watermark that discretely identifies individual screening tapes. This watermark on all seven movies linked them to actor Carmine Caridi, who admitted sending copies of his screeners to Sprague in Illinois.
FBI Acting Assistant Director in Charge Ralph Boelter said: “These cases demonstrate the FBI’s commitment and ability to fight the theft of intellectual property, one of the cornerstones of the Los Angeles economy. We also want to educate the public that illegally transferring copyrighted material is wrong because it deprives the artists who created it from their rightful compensation.”
Sprague was arrested pursuant to the criminal complaint on January 22. He was freed on bond, and he has been ordered to appear in United States District Court in Los Angeles on February 17. If convicted of the two charges in the indictment, Sprague faces a maximum possible sentence of eight years in federal prison.
Young, Ochoa and Pelayo are each charged with one misdemeanor count of conspiracy, meaning they each face a maximum penalty of one year in prison if convicted. They do not face felony charges because investigators have not uncovered any evidence that they personally profited from the illegal copying of movies. Young, Ochoa and Pelayo will be summoned to appear in federal court for an arraignment in the next several weeks.
Both an indictment and a criminal complaint contain allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
In addition to the case against Sprague, which involves the illegal distribution of screeners, and the case against the post-production insiders at Lightning Dubbs, the United States Attorney’s Office last year indicted a man on charges of using a camcorder to illegally film movies during premiere screenings. Johnny Ray Gasca, 34, of Hollywood, was indicted last May on charges of criminal infringement of a copyright, interstate communication of a threat, possession of a false identification document of the United States and witness retaliation. A search warrant executed on Gasca’s residence in March of last year led to the seizure of a large quantity of video duplication equipment, a false Social Security card and two diaries in which Gasca wrote that he made as much as $4,000 per week. Gasca is currently a fugitive being sought by authorities after he escaped from the custody of his lawyer on the eve of his trial.
All of the cases discussed above are the result of investigations conducted by the Federal Bureau of Investigation.
Release No. 04-017