9 Charged in Large-Scale Cable TV Piracy Ring

Federal prosecutors Thursday charged nine people, including the owner of a Sun Valley manufacturing firm, with participating in the nation’s largest cable television piracy scam, a conspiracy that allegedly bilked cable companies and taxpayers out of hundreds of millions of dollars.

Federal officials said the accused cable pirates traded in “black boxes,” illegally modified converter devices used to receive encoded television signals--which generally require monthly premiums or pay-per-view fees--for free.

The alleged scheme included the theft of more than 16,000 cable converter boxes, including 3,500 that were stolen from a Los Angeles Police Department evidence room in July 1994. The 92-count indictment also included charges of offshore money laundering and bribery.

LAPD Det. Steve Howe said he had investigated a burglary of the cable boxes from an LAPD evidence facility in Lincoln Heights, but declined to comment on it, citing a pending civil case. Federal officials put the value of the stolen LAPD evidence at $250,000.

The lengthy indictment, which grew out of an FBI sting operation called Operation Cable Trap, names Francis Russo, 48, and Joseph Russo, 50, both of North Miami Beach, Fla., as ringleaders of the piracy scam.

“For the first time, we’re not talking about the individual selling on street corners,” said Assistant U.S. Atty. John J. Carney. “These are individuals who are manufacturing. If you take out the people who make the technology, you more directly strike at the problem.”

Also charged were William Prevost, 29, of Studio City, the owner of Novaplex Inc. in Sun Valley, and Anthony Lee Marinaccio, 42, of Princeville, Hawaii, the firm’s chief financial officer.

The company, which manufactures products ranging from hearing aids to cable boxes, had been barred in an earlier federal civil lawsuit from manufacturing or distributing signal descrambler parts, including one type known as a “pancake.”

But under the direction of Prevost and Marinaccio, the firm continued production of the components, shipping them to Russo, who used them in descramblers that were marketed and sold by another conspirator, according to the indictment.

Prevost and Marinaccio received $165,000 in cash for one pancake shipment, the indictment states, and directed employees to deposit $115,000 in a bank and disguise the funds as loan payments.

Five people pleaded guilty in federal court earlier this week to participating in the scam and are cooperating with prosecutors. FBI agents were to serve arrest warrants Thursday on suspects in California, Texas, Florida and Hawaii.

“Cable piracy, while it could be looked at as a form of shoplifting, causes billions of dollars in losses,” prosecutor Carney said. “This crime is so lucrative that these guys will stop at nothing, including robbing an LAPD facility.”

Jim Allen, head of the National Cable Television Assn.’s office of signal theft, said the cable black market cheats the industry out of $4.7 billion annually.

And because most cable franchises pay a percentage of their revenue to the city where they operate, the pirates were also duping municipalities out of millions, he said.

An employee of Novaplex, the Sun Valley company, said federal agents had visited the firm early Thursday, but that Prevost, the owner, was not there.

Prevost is negotiating with federal authorities for his surrender and will enter a not guilty plea to the charges, said his attorney, Brian A. Sun.