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Government, Alleging Fraud, Sues Cable Operator

December 15, 1993

PHILADELPHIA (AP) _ The federal government is moving in a new direction in copyright protection with a lawsuit seeking $2.4 million in royalty restitution from a cable operator.

It’s the government’s first lawsuit in a cable television royalty case, said Assistant U.S. Attorney Catherine Votaw.

The lawsuit filed Tuesday accuses Suburban Cable TV Co. Inc. and its parent, Lenfest Communications Inc., both of suburban Pottstown, of cheating producers of programs carried on the cable systems by underreporting income by more than $154 million.

Under federal copyright law, cable systems retransmitting television programs are required to pay royalty fees based on the total amount collected from viewers.

U.S. Attorney Michael R. Stiles said Suburban and Lenfest have underreported the rate they charged each subscriber by up to $10 a month for the past five years.

″What we’re saying here is that the voluntary reporting system has been manipulated to defraud copyright holders,″ Votaw said.

″We’re hoping people who are not reporting truthfully will learn about this case and start to report truthfully,″ Votaw said.

Suburban owns and operates 12 cable systems in eastern Pennsylvania and southern New Jersey.

Sam Morris Jr., Lenfest’s vice president and general counsel, declined to comment on the allegations.

Dennis Lane, a Washington, D.C., attorney who represents the motion picture industry and television and film producers, said the government’s involvement lends credence to the effort to stop copyright violation.

The Motion Picture Association of America has been in court since 1986 seeking unpaid cable royalties and has recouped more than $25 million, Lane said. He said the industry receives about $190 million in annual royalties from cable operators.

Votaw said the government pursued the case through a lawsuit instead of a criminal indictment to obtain restitution. The lawsuit accuses the companies of mail fraud and making false statements to federal authorities.

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