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Undercover Web site nabs dealers selling illegal satellite TV cards

From CNN Producer Terry Frieden

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WASHINGTON (CNN) -- An undercover Web site operated by U.S. Customs agents has led to charges against dealers who sold counterfeit "smart cards" providing free access to the satellite television service DirecTV.

Four people pleaded guilty to knowingly buying and reselling counterfeit access cards. Seven others face charges stemming from the 22-month investigation dubbed Operation Smartcard.Net. Officials told CNN additional charges were likely.

The Customs Service front company made clear in its Internet advertisement that use of its cards for unauthorized purposes was illegal, but it had no problem finding customers. Agents said they sold 3,195 illegal cards to dealers and 382 cards to individuals.

Dealers frequently purchased hundreds of the access cards for as little as $175 each and usually sold them for as much as $425. Their customers were then able to watch satellite TV programming indefinitely without paying for it.

"They thought they got away without paying for satellite TV; instead, these cyberpirates will pay in a way they hadn't considered," said Customs Commissioner Raymond Kelly in a written statement Tuesday announcing the operation. Kelly credited the undercover Web site with defeating "a new breed of criminal."

DirecTV provides programming to customers for a periodic flat fee. When customers sign up for the service, they receive a small plastic access card to activate the service.

Modified cards available on the black market give users free access to all television programming, including pay-per-view programs.

The felony of distributing devices that assist in the unauthorized decoding of satellite programming carries a maximum penalty of five years in prison and a $500,000 fine.

Those who pleaded guilty are Linda Bauer of Hastings, Minnesota; Brian Angell of Warwick, Rhode Island; Michael Poulsen of Mountain View, California; and Mohammad Walid of Yorktown Heights, New York.

Charges also have been filed against people in Sarasota, Florida; Syracuse, Indiana; St. Albans, Vermont; Benzonia, Michigan; Shingle Springs, California and Dallas.

Although most of the search warrants in the case were carried out in mid-July, the Customs Service kept its operation under wraps while it interviewed dozens of dealers targeted by the probe.

The investigation began in Blaine, Washington, in September 1998.

"There are many legitimate uses for the Internet, but carrying out schemes like this is not one of them," said U.S. Attorney General Janet Reno.

Prosecutors from the Computer Crimes and Intellectual Property Section of the Justice Department's Criminal Division were working with U.S. Attorneys offices to bring the cases to federal court.

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