The Riverside County Sheriff's Department said that it seized more than $280,000 worth of pirated software along with 15 computers and $13,000 in cash from the home of Gad Zamir.
Zamir is accused of selling counterfeit copies of Microsoft Server SQL 2000 Enterprise and Adobe Photoshop CS2 over a six-year period at a profit of more than $750,000.
Server SQL 2000 is a database management program, and Photoshop is a popular image-editing application.
The Sheriff's department alleged that Zamir used several online auction sites to sell the pirated software. Copies of Server SQL 2000, which retails for $25,000, and Photoshop CS2, which retails for $500, were sold for $7,750 and $280 respectively.
Authorities were alerted to Zamir's activities in 2002, when Microsoft and Adobe began to receive complaints of counterfeit software being sold online. Police classified Zamir's outfit as a "mid-level piracy operation".
Microsoft praised the arrest in a written statement: "Microsoft strongly supports the professional investigators working behind the scenes to stop fraudulent and illegal behaviour.
"Their work has a direct impact on helping to protect consumers from counterfeit software and the risks associated with its use."
The arrest was made after an eight-month investigation by a special high-tech crime task force in Riverside County. Four other Sheriff's departments in the state have similar programmes.
Software piracy and fraud investigations have led to several major arrests in California recently. Federal investigators in northern California uncovered a $60m software fraud operation in December.
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