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Feds Reveal Satellite TV Sting

August 8, 2000

WASHINGTON (AP) _ Federal authorities on Tuesday disclosed a 22-month undercover sting operation in which government agents sold thousands of counterfeit cards that allowed users to steal satellite television signals.

The investigation, dubbed ``Operation Smartcard.net,″ targeted individuals who bought counterfeit satellite television access cards providing DirecTV programming at no monthly cost.

The investigation, still under way, has resulted in charges against seven individuals, officials at the Justice Department and U.S. Customs Service said. They said another four have pleaded guilty to charges of violating laws protecting satellite television transmissions.

``Buying and selling counterfeit products and services like satellite television access cost legitimate businesses and ultimately the consumer millions of dollars each year,″ Attorney General Janet Reno said in a statement announcing the sting operation.

Officials said the investigation began in Blaine, Wash., in September 1998 after Customs officials noted a dramatic increase in seizures of pirated or counterfeit satellite access cards being smuggled into the United States from Canada.

The smart cards are used by satellite services such as DirecTV to select the television channels that can be received by an individual satellite dish at a customer’s home.

However, authorities said there is a large underground market for counterfeit cards, at a black-market price of $325 to $425.

To track down such users, undercover agents sold counterfeit access cards they called ``Eurocards″ through an Internet business created by Customs agents.

By the time the Customs Service terminated the undercover portion of the operation in June 1999, agents had sold 3,195 illegal cards to dealers and 382 cards to individuals, generating more than $516,000, which was turned over to the U.S. Treasury, officials said.

In July 1999, DirecTV used electronic countermeasures to shut down all of the pirated cards sold through the government’s Web site.

Customs Commissioner Raymond W. Kelly said those purchasing the cards ``thought they got away without paying for satellite TV. Instead, these cyber-pirates will pay in a way they hadn’t considered.″

Officials estimate that use of the illegal cards costs the satellite TV industry $6.2 million annually in lost revenue.

Reno said the investigation into cases uncovered by the sting operation was continuing and further cases could be prosecuted.

According to a joint release from the Justice Department and the Customs Service, the four who have pleaded guilty in the case are Michael Poulsen, Mountain View, Calif.; Mohammad Walid, Yorktown Heights, N.Y.; Linda Bauer, Hastings, Minn.; and Brian Angell, Warwick, R.I.

The agencies said felony charges have been filed against Dale Luster, Dallas; Kevin Greehey, Sarasota, Fla.; Tony Zielenski, Dallas; Larry Thompson, Shingle Springs, Calif.; Richard McCarty, Benzonia, Mich.; Ray Frost, Syracuse, Ind.; and Steve Ashline of St. Albans, Vt.

In all of the cases, those charged allegedly purchased and resold pirated or counterfeit access cards. Justice officials said it is a felony to distribute such electronic cards with the knowledge that the cards can be used without authorization to decode scrambled satellite television signals.

Violations of this federal statute carry a maximum penalty of five years in prison and a $500,000 fine.

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