17 Charged in Satellite TV Signal Piracy

Times Staff Writer

Seventeen people across the country have been charged with developing and distributing technology used to pirate signals from DirecTV and Dish Network, the nation’s largest satellite television systems, federal law enforcement officials said Tuesday in Los Angeles.

The yearlong FBI investigation targeted high-level computer hackers who have been costing the satellite TV companies and the motion picture industry millions of dollars a year in lost revenues, said U.S. Atty. Debra W. Yang.

She said the defendants included “some of the world’s best and most sophisticated hackers,” who exchanged information through Internet chat rooms on how to defeat the companies’ security measures.


Also targeted were manufacturers of decryption devices used to steal satellite signals.

The investigation, conducted by the FBI’s cyber crimes squad in Los Angeles, involved penetrating the pirates’ inner circle, said Assistant FBI Director Ronald Iden.

The defendants were charged with crimes that included violating the Digital Millennium Copyright Act, manufacturing a device to steal satellite signals, and conspiracy, each of which carries a maximum penalty of five years in prison.

Those charged are from California, Florida, Indiana, Kentucky, North Carolina, Ohio and Texas. Seven are fighting the charges, seven others have agreed to plead guilty and three already have entered guilty pleas, said Assistant U.S. Atty. James Spertus.

At a news conference announcing the results of Operation Decrypt, Spertus said the biggest profiteers in the signal piracy business are the manufacturers and distributors of illegal devices.

“Hardware sellers can make millions,” he said, noting that some distributors have been selling the devices by the thousands over the Internet at prices that normally range from $70 to $200 a unit. More sophisticated devices cost about $800, he said.

The FBI launched its investigation in December 2001, scoring an important breakthrough last summer when it raided the home of a Los Angeles area man who assembled and sold devices designed to intercept DirecTV signals.


The suspect agreed to help the FBI make contact with his suppliers. One of them, identified in an FBI affidavit as Dennis Megarry, 39, of Ostrander, Ohio, owned a 200-acre spread and an airplane and had just purchased a new home. Megarry was among five people arrested Tuesday.

Megarry unwittingly led an FBI undercover agent to another supplier in California who, in turn, led the agent to other suspects.

At its headquarters in El Segundo, DirecTV praised the FBI and the U.S. attorney’s office for the arrests, saying they “will help mitigate the spread of piracy now and weaken efforts to hack our conditional-access system in the future.”

DirecTV, in a statement, said the company will “aggressively pursue civil cases against manufacturers, suppliers, and end users of illegal devices.”

A division of Hughes Electronics Corp., DirecTV has invested $25 million in the design of a new “smart” access card that must be inserted into a customer’s satellite receiver. Three earlier versions of the company’s access card were compromised by hackers.

In September, however, top-secret technical information about the new access card’s coding was posted on pirate Web sites.


The FBI traced the information to a 19-year-old college student who allegedly swiped the data while working for a photocopying service under contract to DirecTV’s outside law firm. He has been charged with the theft of trade secrets.