Feds Will Aid California Piracy Probe - Multichannel

Feds Will Aid California Piracy Probe

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The U.S. Secret Service will participate in a continuing investigation into a cable set-top piracy business raided recently by Glendale, Calif., police.

"We're looking to go federal" with this prosecution, Glendale Police Det. John Genna, a member of the department's financial crimes unit, said last week. "That will give us a lot more options."

The police moved in on the local pirate operation March 3, acting on a tip from a disgruntled customer.

Officers raided a local home, arresting two brothers: 18-year-old Arthur Karanfilian and 26-year-old Vardkis Karanfilian, according to police.

Both men were released after each posted $20,000 bail. Genna said the pair has not yet been to court.

The entire family appears to have been involved in marketing pirated hardware nationwide, said Genna. He described the operation as a "major dealer" and investigators found evidence indicating the venture has been in operation for nine years.

"They were moving a lot of money through there," he added. "We're following the paper trail."

Investigators seized $250,000 in cash, including $100,000 hidden in a Godiva chocolate box.

Local police and the Secret Service will execute random search warrants on customers of the set-top operation, which sold doctored hardware on eBay.com and its own Web sites, Genna said.

Security investigators for the local operator, Charter Communications Inc., were on to the operation for two years, according to Michael Asghari, director of audit security. Charter even did a few sting operations, but didn't net this pirate, he said.

"We only had a first name and no address," Asghari said, until the angry customer provided the information the police needed.

Officers recovered 3,300 descramblers from the Glendale home. Investigators arrived before the operation's scheduled overnight delivery pick-up and stopped the day's shipment of 30 boxes to customers throughout the country.

The original cable converters appear to have been purchased offshore, then altered in the U.S. for resale, Asghari said.

"I was surprised by the sophistication. They were importing seven different boxes from different countries, buying the boards and chips separately. They were importing Panasonic VCRs and turning them into descramblers," he said, adding that cable personnel would have never suspected the hardware had they encountered it in use in the field.

The raid also netted six desktop computers and three laptops. The Secret Service has been enlisted to help recover the computer databases.

The local pirate also had aspirations toward digital piracy. Asghari said Karanfilian's Web sites boasted that as soon as cable's current digital technology was compromised, he'd be the first one to offer it for sale.

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