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article image'DJ pop gang' arrested in alleged iTunes royalty scam

By Alethea Borgman     Jun 11, 2009 in Crime
Nine people are being held in custody after allegedly earning £200,000 ($320,000) by buying their own records from iTunes and Amazon with stolen and cloned credit cards.
The Metropolitan Police and the FBI arrested six men and three women yesterday at addresses in London, Birmingham, Wolverhampton and Kent, UK.
The 9-strong collective allegedly paid an annual $30-per-album fee to US music distribution service, Tunecore who then uploaded their content to iTunes and Amazon.
The 'posse' then allegedly used 1,500 stolen or cloned British and American credit cards to set up bogus accounts on iTunes and Amazon. They are then accused of downloading their own content, thought to be worth $750,000 (£469,000) netting them royalties of around £187,500.
Amazon and iTunes, which were unaware of the fraud, paid $300,000 in royalties.
DCI Terry Wilson, of the e-crime unit, said in a report in the Guardian:
"This has been a complex investigation to establish what we believe to be an international conspiracy to defraud Apple and Amazon. This investigation, with its national and international dimension, exemplifies why we have set up this national response to e-crime.
"It shows the success that can be achieved through our close working relationship with the FBI”.
"We are now making it more risky for criminals who seek to exploit the internet and commit e-crime across national borders. We are working hard through partnership with industry and law enforcement to combat e-crime and are committed to pursuing those responsible."
They are all being held in custody in London and Manchester on suspicion of conspiracy to commit fraud and money laundering.
The gang is believed to have compiled 19 songs which were put on to the internet sites; some are thought to have attracted attention from music A&R bosses.
Nick Loss-Eaton of Tunecore, told Digital Journal in a statement this morning: “TuneCore is looking into these questions but we have no knowledge or information about them right now.”
Jeff Price, also of Tunecore added: ""wow, that was stupid of them"
"It sort of analogous to a group of people walking into Tower Records (when it was still open) and stealing from them. The distributor puts the music on the shelf, but what happens after that is known only to Tower."
Apple refused to comment on the story but it is believed that there is no standard fee for royalties and each deal is negotiated separately.
More about Tunecore, Itunes, Amazon, Fraud, Money laundering
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