February 11, 2003
FBI, DOJ Crack Satellite Piracy Ring
By Thor Olavsrud
Five people were taken into custody by the FBI Tuesday
morning as part of a complex sting operation. The bureau's
Computer Crimes Section in the Central District of California,
said it targeted hackers allegedly developing and distributing
software and hardware for pirating satellite television
signals.
Tuesday's arrests bring the operation's total tally to 17
people across 7 states, with a number of the accused
indicted for violating the anti-decryption provisions of the
Digital Millennium Copyright Act (DMCA) (define).
The indictments mark the first time the controversial DMCA
has been used in the Central District of California, and only
the second time that a grand jury in the U.S. has issued an
indictment under the statute. Other charges issued including
manufacturing a device for the purpose of stealing satellite
signals, and conspiracy. All three counts carry a maximum
possible sentence of five years in a federal prison. The first
two charges each carry a potential fine of $500,000, while
the conspiracy count carries a maximum fine of $250,000.
The arrests were part of a yearlong investigation called
"Operation Decrypt," which uncovered an alleged ring of
hackers that used secret online chat rooms to exchange
data and techniques to circumvent the security of Hughes
Electronics unit DirecTV and EchoStar Communications'
(Quote, Company Info) DISH Network.
"This case demonstrates our commitment to identifying and
prosecuting sophisticated computer hackers who steal the
intellectual property of others for their own economic
benefit," said United States Attorney Deborah W. Yang. "No
matter how sophisticated the criminals are, we will uncover
the devices they create and the strategies they use to
steal the lifeblood of the business community."
Yang said the alleged pirates caused millions of dollars in
losses to DirecTV and DISH Network, as well as NDS and
NagraStar, developers and suppliers of proprietary
encryption and smart card technology for DirecTV and DISH
Network respectively. Additionally, Yang said the Motion
Picture Association of America (MPAA) loses millions of
dollars every year in unpaid royalties when satellite
programming is stolen.
One of the accused, software and hardware developer
Randyl Walter, 43, of West Los Angeles, pleaded guilty on
Dec. 18, 2002, to manufacturing satellite signal decryption
devices and also admitted to causing more than $14.8
million in losses to satellite companies.
Among those charged with violating the DMCA are:
Chad Fontenot, 26, of Richmond, Kentucky, arrested
Tuesday morning on charges of conspiracy, satellite
signal theft and violating the DMCA for designing and
manufacturing hardware devices. Fontenot, a
software and hardware developer who was known by
the screen names "FreeTV" and "FreeTV2," was
indicted on Jan. 23, 2003, but the losses caused by
his alleged activities have not yet been determined.
Jason Hughes, 19, of Mocksville, North Carolina, who
has agreed to plead guilty to violating the DMCA for
developing and distributing software designed to
circumvent smart cards for DirecTV. Hughes, a
software developer who was arrested Tuesday
morning, said he made $50,000 selling his software to
individuals in Canada.
Edward Vanderziel, 35, of Ontario, California, was
indicted on Jan. 23, 2003, on charges of conspiracy,
manufacturing signal theft devices and violating the
DMCA. Losses caused by Vanderziel's alleged activities
remain undetermined. Vanderziel is a software
developer who allegedly sold monthly subscriptions for
software code for circumventing DirecTV's conditional
access technologies
Michael Whitehead, 37, of Boca Raton, Florida,
indicted on Jan. 23, 2003, on charges of conspiracy,
manufacturing satellite signal theft devices and
violating the DMCA for his alleged nationwide
distribution of devices for circumventing the
conditional access technologies in smart cards. Losses
caused by Whitehead's alleged activities remain
undetermined.
Peter DeForest, 30, of Seadrift, Texas, indicted on
Jan. 30, 2003, on charges of manufacturing satellite
signal theft devices and charges under the DMCA for
manufacturing "unloopers" which are used to
circumvent smart card technology.
Linh Ly, 38, of Rosemead, California, who agreed
Tuesday to plead guilty to violating the DMCA and
distributing decryption hardware that caused a loss of
$561,507.48.
Richard Seamans, 52, of Chino Hills, California, who
was indicted on Jan. 30, 2003 on charges of violating
the DMCA and distributing decryption devices.
Others arrested in Operation Decrypt include:
Software developer Daniel Wilson, 33, of Houston,
who has plead guilty to manufacturing satellite signal
theft devices. Wilson developed freeware for circumventing conditional access
technologies that was widely distributed on the Internet.
Stephen Thornton, 36, of Redondo Beach, California, 36, who has plead guilty to
developing satellite signal theft devices by writing software to circumvent smart
card technology.
Christopher Humbert, 20, of Terre Haute, Indiana, who has plead guilty to creating
software code used to circumvent smart card technology.
Gary Bumgardner, 46, of Kernersville, North Carolina, who has plead guilty to
manufacturing and distributing satellite signal theft devices including hacked
access cards. Bumgardner admitted his actions lead to a loss of $68,732.16.
Thomas Sprink, 41, of Cocoa, Florida, who has plead guilty for selling hardware
devices. Sprink admitted to causing a loss of $24,547.20.
Dennis Megarry, 39, of Ostrander, Ohio, who was arrested Tuesday morning based
on a criminal complaint filed against him for distributing illegal hardware devices.
Robert Walton, 37, of Temple City, California, who was arrested Tuesday morning
on charges of conspiracy and manufacturing satellite signal devices.
Thomas Emerick, 33, of Ontario, California, who has plead guilty to distributing
decryption devices and reprogramming smart cards, and has admitted to causing
$70,000 in loss to the satellite companies.
Joseph Bolosky, 30, of Panorama City, California, who has agreed to plead guilty to
charges of manufacturing decryption devices and admitted causing a loss of
$245,472.00.
Yang said Tuesday that Operation Decrypt is an ongoing investigation being handled by
the Cyber Crimes Squad in the FBI's Los Angeles Field Office, and is part of the
Attorney
General's Computer Hacking and Intellectual Property program.
"There is definitely a strong possibility of others getting charged in the future," a
spokesman for Yang told internetnews.com.
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Dave Emery N1PRE, [EMAIL PROTECTED] DIE Consulting, Weston, Mass.
PGP fingerprint = 2047/4D7B08D1 DE 6E E1 CC 1F 1D 96 E2 5D 27 BD B0 24 88 C3 18
