DIRECTV, Inc.

DIRECTV, Inc.

March 03, 2005 13:50 ET

DIRECTV Targets Canadian Suspects in Extensive Fraud Scheme; Nine Locations in Canada Raided; Lawsuit Claims $20 Million in Damages; Grey Market Piracy Also Alleged


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: DIRECTV, INC.

NYSE SYMBOL: DTV

MARCH 3, 2005 - 13:50 ET

DIRECTV Targets Canadian Suspects in Extensive Fraud
Scheme; Nine Locations in Canada Raided; Lawsuit
Claims $20 Million in Damages; Grey Market Piracy Also
Alleged

EL SEGUNDO, Calif.--(CCNMatthews - Mar 3, 2005) -

DIRECTV, Inc. announced today that it has filed a lawsuit in Ontario,
Canada against 19 Canadian citizens and five of their businesses that it
believes were participating in a scheme to activate fraudulent DIRECTV
accounts that enabled individuals to receive DIRECTV programming without
authorization by or proper payment to DIRECTV.

In connection with the lawsuit, DIRECTV executed civil seizure orders at
nine separate locations in southern Ontario and recovered a significant
volume of computer files and business records related to the activation
fraud scheme and grey market activity, as well as equipment used in the
past to modify DIRECTV access cards to enable theft of DIRECTV
programming.

The culmination of a six-month investigation by DIRECTV's Office of
Signal Integrity and Legal department, the raid was the largest ever
conducted by DIRECTV on a single day.

The defendants who DIRECTV believes played the most prominent role in
the fraud include: Paul Arthur Cater, Waterloo, Ontario; Mile Turkalj
(aka Mike Turkalj), Kitchener, Ontario; Martyn Gillott (aka Martin
Gillott), Beamsville, Ontario; Theresa Patterson, Kitchener, Ontario;
and Karen Gauthier, Shakespeare, Ontario. The defendants were affiliated
with a number of businesses that were also identified or named as
defendants in the lawsuit including Zed Marketing, Inc. and Huworks.tv,
which DIRECTV believes are the biggest players in the scheme. The two
companies, along with several key defendants in this case, have a long
history of pirate activity and several of them have been charged
criminally in other signal theft cases. Other businesses allegedly
playing prominent roles in the fraud were Eonme.com. Inc. and
Satonline.cx.

The lawsuit alleges that the defendants perpetrated the scheme through a
complex network of companies and Web sites used to provide bogus U.S.
addresses and other false information to establish DIRECTV accounts,
which were then used to illegally activate programming for individuals,
who then paid the defendants to receive DIRECTV® programming without
authorization by or proper payment to DIRECTV.

Through their sale and distribution of piracy technology and
activations, including DIRECTV access cards to dealers and consumers in
the United States and by facilitating the unauthorized reception of
DIRECTV programming, DIRECTV alleges the defendants violated provisions
of Canada's Radiocommunication Act. Under the provisions of the Act,
DIRECTV is entitled to damages, which DIRECTV estimates is in excess of
$10 million. DIRECTV also claims punitive damages of $10 million.

"Since DIRECTV secured its signal from pirates with new generation
access cards in June of last year, these individuals turned to other
illegal means to receive DIRECTV programming without our authorization,"
said Dan Fawcett, executive vice president, Legal and Business Affairs,
DIRECTV, Inc. "We were able to detect the fraudulent activity, and
through an extensive investigation we have identified these individuals,
who we believe have engaged in various forms of piracy, including grey
market activity, over a long period of time."

He added, "Through this action we believe we have broken the
piracy-fraud ring, and where grey market activity is involved, it also
demonstrates our commitment to respect the territorial limitation of our
programming service and prevent those in Canada from using false U.S.
addresses to receive DIRECTV service."

DIRECTV recently filed a lawsuit in U.S. District Court in Florida
against seven individuals it claimed created false subscription accounts
and illegally activated hundreds of access cards and receivers. It also
recently settled a claim with a Utah couple it took legal action against
in September of last year for similar fraudulent activity.

DIRECTV is the nation's leading and fastest-growing digital multichannel
television service provider with more than 13.9 million customers.
DIRECTV and the Cyclone Design logo are registered trademarks of
DIRECTV, Inc., a unit of The DIRECTV Group Inc. (NYSE:DTV). The DIRECTV
Group is a world-leading provider of digital multichannel television
entertainment and broadband satellite networks and services. The DIRECTV
Group is 34 percent owned by Fox Entertainment Group, which is
approximately 82 percent owned by News Corporation. For more information
visit www.directv.com.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    DIRECTV, Inc.
    Robert Mercer, 310-726-4683