A black market of pirated video games, movies and music sold openly at swap meets, trade shows and convenience stores in Hawai'i has become a multimillion-dollar industry.

A steady flow of counterfeit goods pour into the state from China, South Korea and the Philippines, and in recent years shipments from Cambodia and Hong Kong have spiked, according to U.S. Customs and Immigration Enforcement.

Statistics are unavailable, but the illegal market is so big that federal agencies are only targeting large networks.

"These cases are so prevalent that we go after people doing large-scale distribution of pirated software or copyrighted material," said FBI special agent Arnold Laanui Jr.

"It's tough to beat the economics," he said. "You have someone selling this stuff for far less than it would cost commercially. This stuff is everywhere, and certainly there is a huge demand for it. It makes it almost a moot point to enforce possession because almost every high school kid has some form of pirated media."

'LARGE-SCALE THIEVERY'

DVDs of movies still in theaters and "super game disks" containing hundreds of illegally copied video games are sold in swap meet stalls and in small convenience stores, according to police and federal agents.

Pirated software in Hawai'i "is large-scale thievery in which organizations have the potential to secure millions of dollars in illicit proceeds," said Wayne K. Wills, special agent-in-charge of the Honolulu division of the U.S. Immigration and Customs Enforcement, or ICE.

"The majority of pirated software we see retail in Hawai'i is at the swap meet," Wills said. "However, with the advent of the Internet, a person can now buy or sell pirated software in the privacy of their own homes through the Internet auctioneers."

In a quirk of the law, while it is illegal to sell such products, owning or buying unauthorized copies of video games, movies or music is not illegal in Hawai'i, according to Ho-nolulu police. And unless the owner of the intellectual property that is being copied comes forward and makes a formal complaint, police can't target the distributors.

The crimes also involve doctored video game consoles, authorities said. Individuals have been found at local computer trade shows selling the modified machines, also referred to as "emulators" for their ability to play software built for any platform.

A recent federal criminal conviction illustrates the growing sophistication of this crime.

A two-year investigation by the FBI's Cyber Crimes squad led to charges of copyright infringement against a Pearl City resident who was caught selling modified Xbox consoles for $600 apiece.

Don Perreira was sentenced to four months in federal prison, four months home confinement and three years probation last month, the FBI said.

MULTIGAME PLAYER

Each console could play Xbox games as well as games for Nintendo, Sega, GameBoy, TurboGrafix, Atari and others. Off-the-shelf consoles can only play one type of game. The consoles also came illegally preloaded with hundreds of music videos, movies, pornography and video clips.

An accomplice, John Oroyan, pleaded guilty to one count of copyright infringement and on July 31 was sentenced to five years probation, three months home confinement and 300 hours of community service.

"This case involving the sale of game computers loaded with pirated game software was very unusual. On the other hand, each modified game machine contained hundreds of pirated games, so in that respect, the selling of a single game computer was really no different from selling hundreds of pirated DVDs or CDs one at a time," said Tracy Hino, the assistant U.S. attorney who prosecuted the Perreira case.

"One of the primary reasons we prosecuted this case was to get the word out to the community that the distribution of pirated game software is a federal offense whether the pirated software is sold one game at a time or preinstalled on a modified game machine," Hino said.

LOSSES IN BILLIONS

Unauthorized copies of intellectual property cost U.S. music and motion picture companies billions in potential revenue every year, according to industry trade groups and the U.S. Department of Justice. The U.S. entertainment software industry alone lost $3 billion in 2004, not including losses attributable to Internet piracy, according to the Entertainment Software Association of America.

The Motion Picture Association of America estimates losses due to piracy total $3 billion annually.

"There is an entire host of harms related to piracy, starting with the harm to consumers who are getting substandard copies," said Chunnie T. Wright, senior anti-piracy counsel for the Entertainment Software Association, a Washington, D.C-based trade group. "If you have people purchasing modified Xboxes and copied games, that's fewer dollars for investment. The loss of the revenue harms the local economy."

Police officials said consumers ultimately have to beware of illegal media.

"If the movie is still in the theater and not released on DVD, it's not real. Use common sense and buyer beware," said Michelle Yu, public information officer for the Honolulu Police Department.

Reach Peter Boylan at pboylan@honoluluadvertiser.com.