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East Tennessee Residents Charged with Copyright Infringement and Social Security Fraud

Last week, a federal grand jury in Greeneville, Tennessee, returned a five-count indictment against Tennessee residents Richard and Melissa Arnold of Hampton, Tennessee, Kristen Bailey of Erwin, Tennessee, and Reginald Garner of Johnson City, Tennessee, for conspiracy to infringe copyrights and conspiracy to traffic in counterfeit labels. Richard Arnold was also indicted for defrauding the Social Security Administration.

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Criminal copyright infringement is primarily governed by 17 U.S.C. § 506, and counterfeit labels are addressed at 18 U.S.C. § 2318. Social Security Fraud is generally governed by 42 U.S.C. § 1383a and false statements related thereto are covered at 18 U.S.C. §1001(a).

The Indictment against these 4 defendants alleges that from in or about late 2004 or early 2005 to on or about May 24, 2010, two of the defendants made copies of copyrighted motion pictures and of the labels for said copyrighted motion pictures. These same two defendants would sell copies of copyrighted motion pictures and labels to various purchasers. Additionally, these two defendants would "front" copies of copyrighted motion pictures to the other two defendants,who would further distribute the movies to purchasers in exchange for money. The Indictment alleges that the copyrighted movies were obtained from a variety of sources, including rentals and internet downloads. Once obtained, the movies were burned on to DVD's and distributed to willing purchasers.

To make matters worse, one of the defendants, Richard Arnold, was charged with Social Security Fraud for allegedly defrauding the government out of nearly $60,000 in Social Security Disability Insurance ("SSDI") benefits, and making false statements related to same. Specifically, Mr. Arnold is accused of willfully making a false statement and
representation of material fact for use by the Social Security Administration in determining rights to SSDI payments. The Indictment alleges that via a letter in response to a request from SSA for completion of a Work Activity Report (SSA Form 820-F4), received by SSA on April 21, 2010, Mr. Arnold falsely stated "Have not worked since 2000," when in truth and in fact, the prosecution now claims that he had worked since at least late 2004 or early 2005 in the reproduction and distribution of copies of copyrighted material.