Here is mine. The company was going to pitch investors very soon but its product is not ready yet. The CTO copied our competitor's code (well, mangled javascript), replaced their name with ours, updated some public API to our company name. Then asked me to build upon that.
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.
If you can, refuse. Tell them that you believe that you get into a big trouble, if this comes out and you are not sure anyway that it does not.
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.
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.