Video: Film Piracy, Organized Crime, and Terrorism

I'm Greg Treverton. I direct the Center for Global Risk and Security here at RAND, which is very much interested in issues that are in the new security dimension, like terrorism, like organized crime, and their connections to other crimes.

We are a premier national security house. We're also well known for our expertise, especially in terrorism, in some ways we invented the creation of the modern study of terrorism. We also have lots of expertise on organized crime.

We do have both an important reputation and a real commitment to independence—we're a non-profit organization—and to the integrity of our analysis.

The point of this particular study was really to examine, in as much detail as we could, ideas that were out there but hadn't been looked at in quite such detail, in quite the same richness of case material, to really ask what are the connections among counterfeiting—using film piracy as an example—and organized crime and terrorism.

The cases themselves rested on lots of documentary evidence, but also on more than a hundred conversations with police officials in more than 20 countries. We checked notes to some extent with colleagues in the intelligence agencies and law enforcement agencies in the United States. So we tried to validate the information in every possible way.

The crime in film piracy obviously is a crime against intellectual property. Whoever takes the original is basically stealing somebody else's intellectual property and using it for their own gain.

Then when they go ahead and make copies of it and sell those, that obviously only compounds the original theft because it means that not only have they stolen the intellectual property, they're also giving that product to people who might otherwise have consumed it in a legitimate way, gone to a theater or bought a legitimate DVD.

The perception out there of film piracy in the general public, I think, even in some aspects of law enforcement, is that it's really a victimless crime, that it isn't a big- money, it's a kind of mom-and-pop operation that it is relatively easy to get into, which it is, and that many of the operations are relatively small.

Another part of the problem is that even if people recognize that what they're doing when they buy a pirated DVD is a crime, they tend to think of it as kind of a white crime. After all, the loser is only some big Hollywood studio that's plenty rich already, and therefore they tend to justify it that way.

That's the perception, but not the fact.

I think that film piracy, not surprisingly, is attractive to organized crime for really three kinds of reasons.

One is the profit margins are really enormous. We found profit margins greater for pirated DVDs than for much of narcotics sales.

Second, it's relatively easy to get in. Technology has made piracy and other forms of counterfeiting easier. The barriers to entry aren't that great. It isn't all that hard to buy blank DVDs or steal them to acquire replicating machines or other ways of copying DVDs and beginning to sell them.

And then third, even if you're caught, the penalties are relatively light.

When looking at these cases, we have 17 detailed cases with lots of other information. What we find is a very strong connection between organized crime and film piracy.

We found the same concentration of criminal activity, including piracy, in the United States as we found elsewhere in the world. Yi Ging in New York, they are primarily involved in film piracy and related activities and obviously prepared to protect their turf if need be by using violence. That tended to drive out the mom-and-pop organizations and leave organized crime, if anything, more in control.

The money made from film piracy could be used to build up other criminal operations, or those other operations could be used to get involved in film piracy. So once the money is there, it's fungible.

Once film piracy becomes part of a portfolio, then it gets nested with, may be supported by, or may support other kinds of crimes, like money laundering, like drugs, like counterfeiting, or like human smuggling.

Because you had people being smuggled from China, or elsewhere, to England, or Spain, or other locations, they were obviously paying to do that, incurred debts. Once they had incurred debts, or once they incurred others along the way, then they were very vulnerable to criminals saying that you're going to pay off that debt by making or selling pirated DVDs.

In one particularly horrific case in England where a number of Chinese being smuggled drowned because they were forced to illegally fish in a bay, in that case we found evidence that the same slave master who had been virtually compelling them to work on the cockle beds, and that associates of his were also deeply involved in film piracy.

I think it's a matter of national security if you think that the nesting, the combination, the criminal portfolios, and the increasing role of organized crime is in some sense a threat to the nation. It's also in that connection that much of the link to terrorism occurs.

As terrorists move into crime, they've particularly moved into film piracy.

We have three cases that detail different kinds of links between film piracy and terrorism.

There's been a lot of concern for many years about the tri-border region; that's the region where Brazil, Paraguay, and Argentina come together. It has become a kind of wild west area where you can buy almost anything, all kinds of things happen. We found quite compelling evidence, including a thank you letter, that some of the profits of film piracy were going to fund Hezbollah, an example of terrorist organizations benefiting from piracy even if they weren't directly engaged in it.

In the IRA case, it's really terrorist organizations using piracy initially partly to fund their operations and then over time as the political grievances wane, becoming more a criminal organization.

The third kind of connection we found between film piracy and terrorism is really the D-Company in India and Pakistan. They began as an organized criminal group heavily involved in Bollywood, moved into film piracy, and then over time became quite involved with Islamic fundamentalist terrorism.

This wouldn't be the RAND Corporation if we didn't, having done this investigation, then ask ourselves the question: what if anything could be done about it and what should be done about it?

We suggest in the reported number of recommendations for action by nations, by local law enforcement, by international organizations to, in effect, raise the profile of this crime, not for its own sake, but because it is an important part of the portfolios of major criminal organizations.

There are success stories out there. Hong Kong was one of the countries, for example, that decided to get serious about this and did a range of things. In particular, it provided for extended investigations. It let investigators go at this longer than they typically did and therefore gave them a greater chance of uncovering links to other crimes and other organizations.

Is it going to stop film piracy? Well, not likely, but can it do better and more important, can it do better at leveraging it to learn more and do a better job against organized crime more generally? That's the central argument of the recommendations.

I think the message for consumers is, do think about this. You may think it's a victimless crime or a pretty harmless one, but you've got to recognize that if you buy that pirated DVD, chances are, good chance, that some of that profit is going to fund an organized criminal enterprise, which may be involved in lots of other things, and you can't rule out the possibility that some of that profit may find its way to a terrorist organization.