, SecurityFocus 2004-12-10
A Canadian man was sentenced to seven years in a U.S. prison this week after admitting he led a sophisticated satellite TV piracy ring that produced and sold thousands of hacked smart cards in the U.S. and Canada.Martin Mullen, 50, was also ordered to pay DirecTV and its smart card provider NDS Ltd. $24 million in restitution. Mullen pled guilty in a federal court in Tampa, Florida last September to conspiracy to violate anti-piracy laws, and to entering the U.S. illegally after being deported on an unrelated matter years earlier.
According to court records, Mullen was an expert at cracking security on the smart cards DirecTV issues to subscribers to authorize access to television programming. In normal operation, a subscriber inserts the card into a slot in the DirectTV set top box, and a satellite signal from the company tells the receiver which channels, if any, the subscriber is allowed to watch, based on the unique identification number coded into each card.
In his plea agreement with prosecutors, Mullen stipulated to heading a network of over 100 distributors throughout North America that sold thousands of hacked cards granting free access to all of DirecTV's channels.
"The severe sentence handed down by the court is clearly warranted in this case and we applaud the judge's decision," said Jim Whalen, senior director of DirecTV's Signal Integrity Department, in a statement. "This sentence serves as a stark reminder that the sale and distribution of signal theft devices has grave consequences."
Under federal sentencing guidelines, Mullen's prison term was decided primarily by the amount of loss DirecTV suffered -- a matter that was left for the court to determine. After two days of evidentiary hearings, Judge Richard A. Lazzara accepted the government's claim that Mullen was responsible for at least 16,000 hacked cards, and that each card cost DirecTV and NDS $1,500 in financial losses, for a total of $24 million. DirecTV estimates that, in all, Mullen and his distributors put 68,000 cards on the street.
Mullen's attorney, Darlene Barror, is appealing the sentence, but did not return repeated phone calls on the case. In a posting to a Web forum, Mullen's daughter, Nicole McKenzie, said she believed the government coerced her father into pleading guilty by threatening to prosecute his family. "My parents have been married for 31 years and my dad is my two children's only father figure," McKenzie wrote. "You hear about these things on TV, but this is real life. In my opinion he was completely set up."
A long time foil of the satellite TV industry, Mullen was already embroiled in civil litigation with NDS when a private investigator working for the company found paperwork in Mullen's garbage indicating he was planning a summer trip to Florida under an assumed name, prosecutors say. The company tipped off U.S. law enforcement, and federal agents arrested Mullen at Tampa International Airport last June.
Mullen is now in custody at the Miami Federal Detention Center, and, in an odd reversal, NDS engineers are working to crack the encryption on a memory stick seized from him at his arrest, according to court records. They're hoping to find numbers for offshore bank accounts in which Mullen has allegedly stashed millions in earnings from his enterprise. Assistant U.S. Attorney Ernest Peluso, Mullen's prosecutor, says the government gave NDS the memory stick data and some other evidence because federal officials lacked the laboratory facilities to analyze customized smart card equipment.
Peluso says piracy is a serious business. "There's huge losses, really in the billions of the dollars, and they have to do with companies that provide important service to 20 million American families," he says. "These losses affect the financial viability of these companies."
By some estimates, piracy was costing DirecTV $1.2 billion a year when, in April, the company finished a wholesale swap-out of 17 million older access cards and shut down its legacy data stream, effectively slamming the door on signal pirates. Since then, a slow resignation has begun to settle over the pirate community, which has been unable to crack the company's fourth generation smart card, called the "P4."