I said this is not acceptable but they said it is ok because they are not releasing it publicly, it is just for demo for investors. I am sure we are either violating copyright or telling lie to investors, and am surprised no one in the company think it is a problem. After all I have to do it, because I was just an intern.
Based on your description they are looking for a scapegoat. If this comes out, they definitely point towards you while saying that they were not aware of this, must be interns initiative.