## Facts

- Kah Choon Chay, a Malaysian citizen living in the United States, participated in an international computer-software piracy scheme beginning in 1996.
- Chay bought newly released computer games in the United States and sent them to a contact in Malaysia to be copied.
- He received multiple counterfeit copies with realistic packaging and instructions and sold them online using aliases on auction and bulletin-board sites.
- A former roommate recovered Chay’s discarded business records and gave them to the FBI; an undercover agent then purchased counterfeit games from Chay online.
- The FBI searched Chay’s apartment and seized his computer, sales records, and counterfeit games, including items with Malaysian postmarks.
- Chay confessed and pleaded guilty to one count of trafficking in counterfeit documentation/packaging for computer programs in interstate commerce, in violation of 18 U.S.C. § 2318(a).
- The plea agreement contemplated restitution for losses tied to the offense of conviction and the same course of conduct.
- The district court imposed 8 months’ imprisonment, 3 years’ supervised release, and $49,941.02 restitution to the rights holders, calculated from Chay’s gross income from illegal sales in the United States.

## Issues

1. Whether restitution was invalid because the government did not submit victim impact statements from the rights holders.
2. Whether the district court failed to adequately consider Chay’s financial resources and earning ability when setting restitution.
3. Whether restitution was improperly calculated using Chay’s gross receipts rather than net profit after deducting his operating costs.

## Decision

- The Seventh Circuit affirmed the restitution order.
- Victim impact statements were not required because losses were supported by other reliable evidence, including Chay’s records and investigative proof.
- The district court sufficiently considered statutory financial factors and did not abuse its discretion.
- Using gross income from illegal sales as the restitution measure was permissible; Chay could not reduce restitution by claiming expenses incurred to carry out the offense.

## Legal Principles

- Restitution may be based on reasonably reliable documentary and testimonial evidence; the law requires a reasonable determination of loss, not exact precision.
- Victim impact statements are not a prerequisite to restitution when the record otherwise supports the loss calculation.
- In setting restitution, courts must consider the defendant’s financial resources, needs, and earning ability, but restitution is not limited to what the defendant can immediately pay.
- Restitution is victim-focused; a defendant generally may not offset victims’ losses by deducting the costs of committing the crime.
- In piracy and similar intellectual property offenses, a defendant’s gross illegal receipts may serve as a reasonable proxy for victims’ losses when tied to documented sales.

## Conclusion

The Seventh Circuit upheld a restitution award in a software piracy case where losses were proven through sales records and investigation, holding that individualized victim statements were unnecessary, financial considerations were adequately addressed, and gross illegal receipts could be used without deducting the defendant’s criminal operating expenses.


United States v. Kah Choon Chay, 281 F.3d 682 (7th Cir. 2002)