Feds Make Arrests in Satellite TV Sting

Beware what you buy on the Internet; it could cost you a hefty fine and a jail term. An almost-two-year-long Federal investigation of phony satellite television access cards has led to several arrests.

"Operation Smartcard.net," as Justice Department and US Customs agents dubbed it, began in Blaine, Washington, in September 1998, after Customs officers noticed a huge increase in the number of counterfeit satellite access cards being seized at the Canadian border. The access cards allow users to activate DirecTV satellite receivers without paying a monthly fee for the service, and to enable the receivers to decode scrambled channels without paying a premium. Street price for the access cards is $325 to $425 apiece, officials stated.

Signal theft is a serious ongoing problem for satellite TV services and cable providers. The satellite TV industry estimates that it loses $6.2 million annually to signal pirates. "Buying and selling counterfeit products and services like satellite television access cost legitimate businesses and ultimately the consumer millions of dollars each year," said attorney general Janet Reno.

To find big-time violators, Customs Service investigators set up a website and began selling the "Eurocards" to dealers and to individual customers. By June 1999, 3195 bogus cards had been sold to dealers; an additional 382 cards were sold to individuals, for a total take of more than half a million dollars. (This money has been turned over to the US Treasury.)

The following month, DirecTV terminated all of the phony cards, using what agents called "electronic countermeasures." Four people have already pleaded guilty in the case: Linda Bauer of Hastings, Minnesota; Michael Poulsen of Mountain View, California; Mohammad Walid of Yorktown Heights, New York; and Brian Angell of Warwick, Rhode Island. Seven others have been arrested in widely separated areas of the country. Those convicted could face up to five years in prison and fines of up to $500,000.

In their announcement August 8, Justice Department officials emphasized that the investigation is continuing and that there may be other arrests. No explanation was given as to why more than a year elapsed between the time sales of the phony cards were halted and the first arrests were made.