Student Arrested in DirecTV Piracy Case
The FBI arrested a 19-year-old Los Angeles man Thursday on suspicion of stealing and posting on the Internet documents that might have allowed consumers to pirate broadcasts from DirecTV Inc., the nation’s largest satellite-TV provider.
Igor Serebryany came across the information while working with his uncle, who is employed by a document-copying service, according to court papers. The service was hired by the Los Angeles office of Jones, Day, Reavis & Pogue -- one of the nation’s top law firms -- which is representing DirecTV in a civil dispute against a vendor over the misappropriation of company secrets.
Serebryany a student at the University of Chicago, was arrested at his parents’ Hollywood condominium and charged under the Economic Espionage Act of 1996, said Jim Spertus, an assistant U.S. attorney in Los Angeles.
Serebryany is accused of stealing blueprints of DirecTV’s latest P4 access card technology, a credit-card-like device that prevents free access to digital television signals by the company’s 11 million subscribers.
The information on the design and architecture of the technology, which cost DirecTV about $25 million to develop, allegedly was distributed by Serebryany to several Internet sites that cater to hackers. But hackers apparently were unable to crack the code underpinning the technology.
“Our P4 card was not compromised by the dissemination of this information,” said Robert Mercer, a DirecTV spokesman. He said the company, a division of El Segundo-based Hughes Electronics Corp., referred the case to the FBI after receiving tips. “We take piracy in any form very, very seriously.”
Investigators do not think Serebryany was trying to make money. During a December interview with FBI agents, Serebryany said that “he wanted to help the ... hacking community,” FBI Special Agent Tracy Marquis Kierce said in court documents.
Serebryany said he wasn’t even that familiar with DirecTV before he began copying the documents, Kierce said.
Federal prosecutors have invoked the 1996 espionage law in only about 30 criminal cases so far, Spertus said. Until March 2002, prosecutors needed approval from senior Justice Department officials to apply it.
“We used it because that’s what the defendant did. He stole information that was extremely valuable to the owner and gave it to the client that could injure the owner most,” Spertus said.
Serebryany, who was born in Ukraine, was released Thursday by a federal judge on a $100,000 bond put up by his parents. He was ordered not to use the Internet but was given some e-mail access so he could keep up with his studies, Spertus said. Serebryany was planning to return to Illinois this month, where he has done work as a computer technician on the University of Chicago’s Internet Project.
The allegations carry penalties of up to 10 years in prison and a $250,000 fine. The law often has been used in cases against foreign nationals charged with stealing domestic trade secrets and selling them to foreign companies or governments.
Serebryany got access to the documents while working with his uncle at Jones Day’s Los Angeles office, according to the court documents.
The law firm is outside counsel for DirecTV in its legal battle against NDS Group, a firm controlled by Rupert Murdoch’s News Corp. that makes “smart” cards that prevent the piracy of digital television signals. In September, DirecTV sued NDS in federal court, alleging fraud, breach of contract and misappropriation of trade secrets.
DirecTV at one point had contracted with NDS for its smart-card technology but has since moved its encryption technology in-house.
According to court documents, DirecTV delivered about 27 boxes of confidential material related to the case to Jones Day in August. To help its lawyers manage all the documents, Jones Day then hired Norwalk, Conn.-based Uniscribe Professional Services, which does imaging work for law firms, accounting firms, investment banks and universities and museums.
Because the documents were so sensitive, Uniscribe set up a special imaging center at Jones Day’s offices to which only a few people had access. One of those, according to court documents, was Michael Peker, Serebryany’s uncle and a Uniscribe employee.
Without Jones Day approval, Peker brought in his nephew -- and paid him -- to help after Jones Day ordered that the pace of the work be increased, according to court documents. Peker got Serebryany into the building using his badge for about two weeks of work in September.
Investigators said Serebryany took copies of many of the documents to his family’s home, and from his father’s home computer sent electronic copies to at least three Web site operators.
Executives at Uniscribe did not return phone calls.
Rick McKnight, partner in charge of the Los Angeles office of Jones Day, said the firm had used Uniscribe many times before and had a “good experience” with that vendor in the past.
“Those documents were under lock and key,” he said. But “as tight as the security was, obviously, it was breached,” McKnight said.
