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Biker gangs and mafia linked to software piracy

Canadian software piracy is close to $1 billion in losses

MARKHAM, Ont. — Microsoft Canada and the RCMP have linked the notorious Hell’s Angels biker gang along with Asian triads and other ethnic organized crime outfits in Canada to software and other computer products counterfeiting.

At the 11th annual Anti-Counterfeiting Conference, held here this week, officials from law enforcement, concerned community groups and the IT industry exposed a wide range of counterfeit products from aircraft parts, soccer jerseys, perfume, luxury hand bags, Adidas running shoes, Viagra pills, condoms, Timberland work boots, baby formula, heart medication, toy action figures and crazy glue.

IT items included Dell laptop computers, Xbox console systems, software, ink toner cartridges, cell and laptop batteries, optical disk drives, and PC cables.

Sue Harper, anti-piracy manager for Microsoft Canada, said the Canadian Alliance Against Software Theft (CAAST) has estimated the losses to the software industry here at just under $950 million because of counterfeiting.

Harper added that she wasn’t surprised to learn that biker gangs and other organized crime groups are behind this activity.

In the past, software piracy has been linked to small computer shops or resellers trying to make a fast buck.

Superintendent Ken Hansen, director of the RCMP’s federal enforcement branch, said 15 year’s ago intellectual property crime was not considered a serious problem. Today, it is very different.

“Every major organized crime gang is doing this. This is a lucrative way of making money with low risk,” he said.

For example, a person nabbed with 40 kilograms of cocaine goes to jail. That same person with 100 kilograms of counterfeit pharmaceutical drugs gets fined, Hansen said.

“Organized crime are making huge profits with low risk. Even if they get caught the penalties are too low,” he said.

The RCMP has evidence from more than 400 investigations done this year that link biker gangs, triads and the mafia in Canada to counterfeiting. He added that the financial gains are then funneled into other illegal activities such as the drug trade and prostitution. “They are now infiltrating major retailers,” Hansen said.

This leads to innocent consumers buying non-authentic merchandise. Even the retailers are unaware of counterfeit products are in their stores.

According to Lorne Lipkus, a founding member of the Canadian Anti-Counterfeiting Network and a partner in the Toronto law firm Kestenberg Siegal Lipkus LLP, counterfeiting is the largest growing crime in North America.

In 2005 counterfeit products accounted for between five and seven per cent of the world economy, he said. Today, that figure has grown to 18 per cent of the world economy, the vast majority of which is sold at flea markets.

“We just can’t keep up with counterfeiter wholesalers and manufacturers, so how can we keep up with the flea markets?” Lipkus said.

Of real concern are phony batteries and printer cartridges that blow up equipment, Lipkus said.

“There are three to four year-old children working in factories in China mixing chemicals for these counterfeit toner and batteries. Some of these (kids) are being poisoned,” Lipkus said.

He added that one of the easiest ways to put a dent into counterfeiting is by amending the Customs Act to enable officers at the border to search for and detain potential counterfeit products for the RCMP.

“I wish I had an answer as to why it is taking the government so long to simply amend this act,” Lipkus said. “I’ve been holding this conference for 11 years and I have been fighting counterfeiting for 20 years. It is about applying the right amount of pressure to the government for them to respond,”.

Besides economic fall-out from counterfeiting, it also poses environmental concern as well, Lipkus said. Contaminated knock-off batteries cannot be destroyed because of the mercury in them.