In Depth

How One Small Business Fought Piracy

A look at how a small Mom-and-Pop operation took the offensive against criminals who were stealing their media products.

By Scott Berinato

something about this it's only going to get worse." (Attempts to reach Binion for this article were

unsuccessful.)

This time, authorities were after the printing machine the perpetrator must have used to print the

fraudulent checks. Because they weren't trying to get the suspect to accept stolen goods, Pignotti didn't

have to send any of her inventory blank discs. Instead, she boxed up blocks of wood and sent them

overnight. The shipping company put a fraud investigator dressed as a delivery man in the truck on the

ground in LA.

The suspect picked up the delivery, opened the boxes to find the wood, tossed them in his car and

drove off. Detectives followed. He found a pay phone and called US Digital Media. "He was angry at

first," Pignotti recalls. "We told him it must be a mistake, that box was supposed to go in the trash.

We're very sorry. He said, Fine, just send another. I mean, it never occurred to him."

Pignotti immediately called one of the detectives tailing the suspect, and the officers laughed

when they found out the pay phone call was to the company. They kept following the suspect until he

parked and went into a house, where they arrested him. Two hours later, the detective called Pignotti

with the good news.

But there was bad news too. The police never found a printing machine or evidence of access to

other people's accounts. They couldn't link the suspect to the cashier's checks. At that point, if they

were going to charge the suspect with anything, it would have to be accepting stolen goods, but he had

only accepted blocks of wood. Not only that: Paperwork sent to Pignotti to testify in court mistakenly

went to her bank and she did not receive word in time to testify. So the suspects who were charged in

the case went free through a combination of litigious technicalities and procedural missteps. "The

whole thing fell apart," Pignotti says.

Since then, Pignotti has instituted more controls, deployed more fraud-seeking software, and the

company has even deliberately shifted its business model to deal with more large business-to-business

transactions to avoid fraudulent transactions with smaller, unknown players.

Still, if it came to it, she'd participate in another sting, despite the fact that the two she was part of

weren't fully successful.

"Even if they're not in jail for it, if it helps to stop them somehow, to be honest, I'm happy," she

says. She fought back. "Someone's got to do it."

Send feedback to Senior Editors Sarah D. Scalet and

href="mailto:sberinato@cxo.com">Scott Berinato.

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