Pirates of the Internet

updated 03/01/2004 AT 01:00 AM EST

originally published 03/01/2004 AT 01:00 AM EST

Last June a friend working on an ad campaign for The Hulk gave Kerry Gonzalez a copy of the movie before it even opened. Gonzalez, a 25-year-old film buff, uploaded it onto the Internet. By the time he clicked "send," he says, "I started having nightmares about the FBI coming to get me. I'd wake up in the middle of the night and feel guilty about the whole thing."

Good guess. A week later Gonzalez's pal phoned to say FBI agents had come to the ad agency to question him. Panicked, Gonzalez, an insurance underwriter from Hamilton Township, N.J., turned himself in. On June 25 he pleaded guilty in a Manhattan federal court to making an unauthorized copy of the film and uploading it. Although Gonzalez avoided a potential three years in prison and a $250,000 fine, he was sentenced to six months house arrest and ordered to pay $7,000 in fines and restitution. "This has ruined my life," he says.

If the Motion Picture Association of America (MPAA) has its way, others may soon be as rueful as Gonzalez. The film industry's advocacy group is on a crusade against uploaders and down-loaders and has not ruled out lawsuits similar to those the music industry filed last September. If the MPAA does decide to make legal action a priority, "we will prosecute with great speed," says president Jack Valenti. Movie studios lose more than $3.5 billion annually due to all forms of piracy, according to the MPAA, and that figure is likely to rise as software improves and more people get high-speed Internet access. And whereas music down-loaders had their high-profile champions, such as David Bowie, movie downloading faces almost universal opposition from the film community.

Stealing a film can be as easy as sneaking a digital video camera into a multiplex, recording a film and uploading the info onto the Internet. Studios have even posted guards with night-vision goggles to scan audiences at movie screenings for camera-wielding crooks. Last year, in a widely publicized move, the MPAA announced a ban on the practice of sending Academy Award screeners (video and DVD copies of the year's noteworthy films) to the 5,803 members of the Academy of Motion Picture Arts and Sciences who vote on the Oscars.

After a battle over that ban—many studios and production companies argued that screeners were necessary to promote independent films—the MPAA relented and allowed screeners to be sent out, albeit ones coded with electronic tags. In January copies of Mystic River and The Last Samurai turned up online. They were traced to Carmine Caridi, 70, a West Hollywood, Calif., actor who appeared in The Godfather, Part II and on NYPD Blue. On Jan. 22 FBI agents, acting on information from Caridi, raided the Home-wood, Ill., home of his friend Russell Sprague, 51, a drug-testing company employee. Authorities discovered DVDs, duplication equipment and DirecTV access boxes in Sprague's home. Caridi told agents that he had sent as many as 60 videos a year, including the Oscar screeners, to Sprague to make copies. Sprague says he was simply doing favors for a pal. "He asked me, 'Would you make a copy for my family and a copy for yourself,' " Sprague says. "I couldn't say no."

While Sprague admits copying the films, he says he never uploaded them. He was eventually charged with copyright infringement among other offenses. The charges carry a maximum penalty of five years in prison and $250,000 in fines. Warner Bros.—the studio behind Mystic River and The Last Samurai—and Columbia Pictures, which is seeking damages for infringement of its films Something's Gotta Give and Big Fish, are also suing Caridi and Sprague, seeking $150,000 for each copyright infringement. Sprague is defiant. "Thousands of people are doing this," he says of copying first-run movies. "They are making me a scapegoat." The MPAA doesn't deny that it's trying to send a message. "People should be asking themselves if it's worth it," says spokesman Rich Taylor. "Wouldn't it be easier to buy a $6 ticket?"

Kerry Gonzalez thinks so. Fired from his job, he's now working as a car salesman. Wearing an electronic ankle monitor 24 hours a day, he is allowed to go to work but otherwise stays in his small apartment, mostly playing video games (one favorite: The Hulk) and contemplating his fate. "The price for free movies has been my freedom," he says. "I never thought in a million years this would happen to me."

Thomas Fields-Meyer. Matt Birkbeck in Hamilton Township, Shia Kapos in Chicago, Frank Swertlow in Los Angeles and Carolyn Ruff Spellman in Washington, D.C.

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