Microsoft Gives $300,000 to Los Angeles Area Boys & Girls Club Amidst "Monster" Display of Anti-Counterfeiting Efforts

Extent of Counterfeiting Problem Illustrated Through Monster Truck Demolition of Counterfeit Software

WESTMINSTER, Calif., July 26, 2000 — Today in front of a backdrop of a 16-by-16-foot wall made of counterfeit software, Microsoft Corp. announced plans to donate $300,000 from anti-piracy recovery efforts to the Boys & Girls Club of Westminster, Calif., over the next three years. To show the extent of the software counterfeiting problem in Los Angeles and throughout the country, a monster truck demolished a wall made of counterfeit software seized in raids in the Los Angeles area. Dozens of children who participate in the Westminster Boys & Girls Club helped to build the counterfeit wall -- made of nearly 40,000 counterfeit CDs -- as a summer project.

The Boys and Girls Club of Westminster is situated in an underprivileged community that has long been dominated by three prevalent gangs. The club has several programs that have successfully kept kids off the streets and out of trouble. Microsoft's donation will help bolster current programs, as well as build a new on-site library and expand and upgrade the club's computer lab.

"We are thrilled to receive this generous donation from Microsoft," said Monique Lawee, executive director of the Boys & Girls Club of Westminster. "It will allow us to continue to grow, reach out to students and offer them programs that provide a safe place to learn and to form ongoing relationships with caring adults."

The Boys & Girls Club of Westminster, Calif., is one of many recipients of donations from Microsoft's anti-piracy recovery efforts. Last year the company announced that it would donate half of its anti-piracy recoveries -- estimated to be $25 million over the next five years -- to nonprofit organizations worldwide.

Today's donation stems from Microsoft's settlement recoveries and judicial awards resulting from the company's efforts to reduce software piracy. It is the largest single donation made to date stemming from these recovery dollars. Microsoft's corporate philanthropy is focused on creating greater access to information technology in disadvantaged communities in the United States and around the world. This is accomplished through the support of higher education, youth programs, nonprofit technology infrastructure, public libraries and the creative community.

Microsoft became aware of the needs of this Boys & Girls Club chapter through the Westminster Police Department, which has been active in fighting criminal counterfeiting in the Los Angeles area. In particular, the Westminster Police Department was instrumental in the largest seizure of counterfeit Microsoft® software to date. The February 1999 raid in Paramount, Calif., recovered more than $60 million in counterfeit software and resulted in eight criminal indictments.

"California is one of our nation's leading states in the software publishing industry," said Anne Kelley, Microsoft senior corporate attorney. "Unfortunately, the same entrepreneurial spirit that has made California home to so many high-tech establishments also makes it a hotbed for software pirates and counterfeiters -- making it a principal counterfeit software manufacturing center and lead exporter of counterfeit software."

In the past few years, organized criminal counterfeiting has grown dramatically around the world. The United States has become the leading manufacturer and exporter of counterfeit software, with major counterfeiting rings based in California, Texas, Florida and New York. These counterfeiting operations have produced hundreds of millions of software units per year. Between June 1998 and June 2000, authorities seized 9.3 million units of counterfeit Microsoft software.

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Microsoft Donates $300,000 to Los Angeles-Area Boys & Girls Club

The Southern California Boys & Girls Club is the recipient of the largest all-cash donation to date from Microsoft's anti-piracy efforts.

WESTMINSTER, Calif., July 26, 2000 — When Monique Lawee accepted the position as executive director of the Boys & Girls Club of Westminster five years ago, the building didn't have heating or air conditioning. Located in a neighborhood described as "gang infested," the club had a staff of five. Times were tough. "Once I tried to network the printers," she recalls with a laugh. "It took 10 minutes to print a single piece of paper." The club, she says, was "dead broke."

These days, things for Lawee and the Boys & Girls Club of Westminster are definitely looking more upbeat. Not only have its programs expanded along with the staff, which quadrupled from five to 20, but today Microsoft announced it will donate $300,000 in cash to the club over the next three years. The award is the company's largest software piracy recoveries donation to date. Microsoft has pledged to donate half of its anti-piracy recoveries -- estimated to be $25 million over the next five years -- to nonprofit organizations worldwide. Microsoft learned of the Westminster club through the Westminster Police Department, which has played a key role in anti-piracy efforts throughout Southern California.

"We are thrilled to make this donation to an organization as wonderful as the Boys & Girls Club of Westminster," says Anne Kelley, a Microsoft senior corporate attorney who is based in nearby Irvine, Calif. "We hope this donation will enable at-risk children to enjoy and benefit from the programs of the Westminster Club for many years to come."

During the ceremony, to draw attention to the magnitude of the software-counterfeiting problem in the U.S., a monster truck crashed through a wall of nearly 40,000 counterfeit CDs constructed by children who attend the club.

Worldwide Donations Stem From Software Piracy Busts

A few years back, Marcus Frank, who supervises the Special Investigations Unit of the Westminster Police Department, obtained a search warrant for a print shop that was producing counterfeit manuals. "We thought it would be quick," he says. "One search warrant, a single day." It turned into four search warrants at three different print shops. "We realized how much money the criminal organizations were making from this," he says.

The realization ultimately led the police to an unnamed, unmarked industrial unit where a dummy corporation had been set up. Inside, a single replicating machine was cranking out 30,000 CDs per month, generating counterfeit software in English, French and Spanish, to be sold locally and shipped internationally. The yield of the bust: $60 million in Microsoft products alone, making it the largest single seizure of counterfeit software in North America.

"Windows software, boxes, registration cards, everything that comes with software was being made right there," Frank says. "They were probably turning a profit of $50 per unit, which is a tremendous amount of money." As a result of the Westminster police department's anti-piracy work, 12 people were indicted on federal charges, including money laundering and counterfeiting related to the bust.

Frank says illegal software profits typically fund activities that hurt people. "We went after software piracy because it's a source of funding for other organized criminal activities," he says. "This operation was so hidden they figured law enforcement would ignore the problem." And as for the money saved by purchasing counterfeit software, Frank's answer is simple but timeless: "You get what you pay for." Legitimate software is manufactured in a "clean room." "The counterfeiters had set up a homemade clean room that wasn't clean by any stretch of the imagination," he says. "The software might load okay, but an unclean program can crash an entire hard drive. Is that really worth the 20 or 30 bucks you save? Besides, you're giving money to people who often fund other illegal activities."

Criminal counterfeiting has grown dramatically over the past few years, not only in California, but also around the world. The United States is a leading manufacturer and exporter of counterfeit software, with major counterfeiting rings based in California, Texas, Florida and New York -- operations that have produced hundreds of millions of software units annually. Between June 1998 and June 2000, authorities seized 9.3 million units of counterfeit Microsoft software in raids around the world. Counterfeit software is increasingly distributed over the Internet via online auctions and other Web sites. Consumers who purchase counterfeit software not only may find themselves with products that are missing critical code and plagued with viruses, but they are also ineligible for technical support and upgrades.

Donation to Strengthen Violence-Free Environment

As for the money donated to the Boys & Girls Club, Lawee plans to use the award -- which will be spread out over three years, in $100,000 increments -- to continue making the club a place for youth to learn and grow in a safe, violence-free environment.

"The kids duck bullets all the time," she says. "One child was shot at last summer and the bullet missed by only a couple of inches." Often the kids at the club don't even report violent incidents to Lawee until a week after it has occurred. "They're immune to the violence, because for them it's normal," she says.

Specifically, she plans to purchase a van the club will use for field trips and to transport participants from school to the club. The club's Learning Center, which includes the computer lab, is slated for an upgrade that includes the addition of a library that will feature a stage for performances. She's also going to increase the tutoring staff. "The days of the Boys & Girls Club being a goof-off center are over," she says. "It's becoming more of an educational center, focusing on building skills and competencies."

Providing a range of programs and activities suited to children of all ages, Lawee says, puts the club in a strong position to combat the epidemic of violence to which most of the children have become accustomed.

The Teen Center features weight training, weekly field trips to the beach, movies, dances at different clubs, and an occasional fishing trip in the nearby Pacific Ocean. The Teen Center also offers tutoring and Keystone, a leadership program with its own board of directors that focuses on community service, fundraising and interaction with other Boys & Girls clubs. There is also a full menu of sports. The Anaheim Angels collaborated with the Westminster club to sponsor Reviving Baseball in Inner-Cities (RBI), which was, according to Lawee, a big hit.

The Kindergarten Program has its own staff, and soon -- thanks to the donation -- will also have its own space. For the children between kindergarten and age 9, the Little Kid Program offers arts and crafts, reading, cooking, sports, dance and tutoring. For kids ages 9 through 12, the Pre-Teen Center offers age-appropriate activities and programs such as Smart Girls, Street Smart and Torch Club, which is a junior version of the Keystone leadership program.

The key to the club's success, according to Lawee, is collaboration among the Boys & Girls Club of Westminster, the Westminster Board of Education, the Orange County Department of Education and the Westminster Police Department, coupled with solid funding. "I am delighted that Microsoft is showing its support of what we're doing here," she says.

Officer Dave Bridgewaters, who works in the Westminster Police Department's Strategic Home Intervention and Early Leadership Development (SHIELD) program and serves on the board of directors at the Boys & Girls Club, calls the funding "a good shot in the arm." Bridgewaters says he has no doubt that programs at the club are having a positive impact on the community. "The services this club provides are helping this community in leaps and bounds," he says. "Kids who, in my mind, would have been gang members are now staffing the club and serving as role models."

Kids at the club say Microsoft's donation will strengthen the Boys & Girls Club's efforts to keep teenagers off the streets and away from violence. Gangs have always been a presence, but Johnny Pedroza, 18, says that thanks to the busy schedule he's kept at the Boys & Girls Club, he's never been tempted. "I always had better things to do," he says, adding that the club provides a place where children can see the reality of other options. For the past three years, Pedroza has been helping out around the club, volunteering in various programs where he's worked directly with the children who know the same streets he knew as a boy. "I know we've kept a few kids out of gangs," he says. "We keep them busy. We teach them that there are other options in life. By knowing us, they can see that there's another way, that it's possible."

Yadira DeLaCruz, 18, a member of the club's staff, who has been coming to the club since she was 6 years old, agrees. "There are a lot of gangs," she says. "But I like it here. It's my neighborhood." Even though she and her family recently moved to nearby Tustin, Calif., DeLaCruz says her heart remains in Westminster, due in large part to the Boys & Girls Club. "I remember being a kid, and as soon as you walked through those doors it meant you were safe," she recalls. "This club means the world to me."