RCMP Raid Shuts Down Massive Alleged Music Counterfeiting Operation in Winnipeg, Following Investigation By Canadian Recording Industry Association

Police file criminal charges against four people and seize more than 200,000 music CDs and DVDs

Toronto, March 6, 2008 – Following a year-long investigation by the Canadian Recording Industry Association (CRIA), the RCMP has shut down Audiomaxxx.com Ltd., a major alleged music counterfeiting operation in Winnipeg, and filed criminal charges against four individuals.

Raj Singh Ramgotra, the principal behind Audiomaxxx, was among those arrested during a raid yesterday at the organization, which for three years has allegedly manufactured pirated compact discs and hard core pornographic videos, and distributed them throughout Canada, the U.S., Europe and Jamaica. More recently, Audiomaxxx’s offerings have also included allegedly pirated digital downloads.

In addition to the arrests, police seized an enormous volume of suspected counterfeit goods. This includes more than 200,000 music CDs and DVDs, numerous movie DVDs and hundreds of thousands of blank discs. Police also seized five CD/DVD burning towers, each with 12 burners, which together are capable of burning well in excess of 10,000 CDs and DVDs a day. The raid also netted several computers and hard drives, two commercial CD printers, four colour copiers and other office equipment.

In the past 10 years, the raid closest in scale to the action against Audiomaxxx involved the seizure of about 10,000 counterfeit music CDs and DVDs – one-twentieth the volume netted yesterday.

More than 10 police officers were involved in yesterday’s raid.

“We sincerely thank the RCMP officers who have worked so hard to bring Audiomaxxx to heel, and to the federal prosecutors who have worked closely with them,” said Graham Henderson, President of the Canadian Recording Industry Association. “Today’s arrests send out a clear message that commercial piracy will no longer be tolerated in Canada.”

Audiomaxxx is suspected of being one of Canada’s leading music counterfeiters. In Toronto alone, approximately 30 percent of the pirated CDs seized allegedly originate from the operation. CRIA estimates that, at minimum, Audiomaxxx has been shipping tens of thousands of allegedly pirated CDs each month.

CRIA has received dozens of complaints concerning the operation from artists, music associations and music labels around the world, including numerous small, independent labels. In the past, when faced with demands by rights holders to cease its activities, Audiomaxxx has consistently ignored the demands or failed to fully comply.

The operation appears to be highly developed, with a significant catalogue of allegedly pirated CDs and music downloads offered for sale via the website www.audiomaxxx.com, including copies of tracks by famous artists like Shania Twain, Lionel Richie, Jay-Z, Mary J. Blige and Nelly Furtado.

“The RCMP has again demonstrated that it stands side by side with artists and rights holders in the fight against intellectual property crime,” said Randy Lennox, President and CEO of Universal Music Canada Ltd. and Chairman of CRIA. “CRIA has a longstanding partnership with the RCMP and other police forces in fighting piracy, and today we have taken a big step together to stop one of the most flagrant examples of its kind in Canada.”

Audiomaxxx’s alleged piracy affects not just famous artists, but also new and independent artists – largely in the reggae, soca and hip-hop community – who are struggling to build careers. For example, Vancouver’s Utopia Records, one of the many independent labels to voice concerns, has seen new artist albums appear on the Audiomaxxx website on the day an album is released in stores or even before the legitimate launch date.

“The harm done by music piracy is especially troubling when it undermines a promising artist’s burgeoning career,” Henderson said. “We will continue to work with police and lawmakers to give these artists, and the organizations behind them, the opportunity to succeed.”

CRIA began investigating Audiomaxxx as part of an ongoing program to deter music counterfeiting and piracy. The operation came to CRIA’s attention because of the large volume of suspected counterfeit products openly offered for sale on the Internet and the owner’s failure to stop selling these products after the issuance of cease-and-desist orders.

Since CRIA began dedicated anti-counterfeiting operations more than a year ago, the association and police have seized more than 400,000 CDs and issued 80 cease-and-desist orders against retailers of illicitly copied music.

The Impact of Piracy and Counterfeiting on Canadian Artists and Rights Holders

Piracy and counterfeiting exact a steep toll on artists and rights holders in Canada. This is reflected in significant music sales declines since the advent of widespread unauthorized file-swapping in 1999 and the proliferation of CD and music DVD counterfeiting in recent years. In that time, retail sales of pre-recorded audio products (CDs, digital tracks, etc.) declined by 47 percent, from $1.3 billion in 1999 to $703.7 million in 2006.

For the 11 months ended November 2007, net wholesale shipments of CDs, music DVDs, and other “physical” recorded music formats dropped 16 percent to 37.9 million units from 45.1 million units in the year-earlier period, while the related net wholesale value dropped 20 percent to $382.4 million from $476.3 million.

A 2007 national POLLARA survey found that purchases of counterfeit goods such as music CDs displace legitimate commerce. About half of those who bought counterfeit music, movies or software would have purchased the genuine version had they not purchased a copy (for music, the figure was 43 percent; movies, 45 percent; and software, 44 percent).