FOR IMMEDIATE RELEASE CRM

FRIDAY, SEPTEMBER 8, 2006 (202) 514-2007

WWW.USDOJ.GOV TDD (202) 514-1888

For-Profit Software Piracy Web Site

Operator
Sentenced to 87 Months in Prison
Defendant Made More Than $5.4 Million in Illegal
Revenue
WASHINGTON — The owner of a massive for-profit software piracy Web site was
sentenced today in federal court to 87 months in prison, Assistant Attorney General
Alice S. Fisher of the Criminal Division and U.S. Attorney Chuck Rosenberg of the
Eastern District of Virginia announced.

Nathan L. Peterson, 27, of Antelope Acres, Calif. was also ordered by Judge T.S.
Ellis, III of the Eastern District of Virginia to forfeit the proceeds of his illegal
conduct and pay restitution of more than $5.4 million. The forfeiture involves a
wide array of assets, including homes, numerous cars, and a boat, which Peterson
had purchased with the profits from his illegal enterprise. Today’s sentence is the
second recent major prison sentence received for software piracy. In August 2006,
Danny Ferrer, 37, the operator of www.BuysUSA.com, received a six- year prison
sentence. Peterson is believed to be the most prolific online commercial distributor
of pirated software ever convicted in the United States, the Department said. “This
defendant lined his pockets by stealing the hard work of others,” said Fisher.
“Today’s sentence sends a clear message that those who sell pirated software will
be convicted and punished.”

Beginning in 2003, and continuing until its shutdown by the Federal Bureau of
Investigation (FBI) in February 2005, Peterson operated the www.ibackups.net
website which sold copies of software products that were copyrighted by companies
such as Adobe Systems, Inc., Macromedia Inc., Microsoft Corporation, Sonic
Solutions, and Symantec Corporation at prices substantially below the suggested
retail price. The software products purchased on Peterson’s website were reproduced
and distributed either by instantaneous computer download of an electronic copy
and/or by shipment through the mail on CDs. Peterson often included a serial
number that allowed the purchaser to activate and use the product.
“Stealing the intellectual property of others is always a bad idea in any context. It’s
theft. And, so, a sentence of seven plus years in prison and restitution of $5.4
million is richly deserved,” said Rosenberg.

The investigation was conducted by agents of the FBI’s Washington Field Office.
After receiving complaints from copyright holders about Peterson’s website, an
undercover FBI agent made a number of purchases of business and utility software
from the site, which were delivered over the Internet and by mail to addresses in
northern Virginia.

As a result of the FBI’s investigation, Peterson’s website was taken down in

February 2005. Further investigation established that, during the time of its
operation, www.ibackups.net illegally sold more than $5.4 million of copyrighted
software. These sales resulted in losses to the owners of the underlying copyrighted
products of nearly $20 million.

Peterson used the proceeds of his illegal conduct to fund an extravagant lifestyle,
including the purchases of multiple homes, cars, and a boat. The government seized
numerous assets from Peterson including: a number of bank and trading accounts, a
fully restored 1949 Mercury Coupe purchased originally 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 purchased for $125,000.

Peterson pleaded guilty before Judge Ellis on Dec. 13, 2005, to two counts of
criminal copyright infringement for selling pirated software. While awaiting
sentencing in this case, Peterson was arrested, convicted, and sentenced in
California on state gun charges resulting from an investigation by the Los Angeles
Police Department. He was sentenced on June 1, 2006, to 16 months of
incarceration on those charges. Federal prosecutors then sought his return to the
Eastern District of Virginia for sentencing on the federal charges. Trial Attorneys
Jay V. Prabhu and Lily Chinn of the Criminal Division’s Computer Crime and
Intellectual Property Section, and Assistant U.S. Attorney Stephanie B.
Hammerstrom for the Eastern District of Virginia, prosecuted the case. The Business
Software Alliance, a trade association which represents leading computer software
companies, provided significant assistance to the investigation.

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