By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

There is “overwhelming evidence” that the Bahamas’ leading satellite TV provider defrauded DIRECTV by pirating its programming and equipment to service over 5,800 local accounts, court documents are alleging.

The largest US satellite broadcaster, in documents filed in the south Florida district earlier this month, alleged that Satellite Bahamas and its principals - Michael and Peter Garraway - had used an elaborate scheme to “illegally obtain” its TV signal.

The complaint claims that the Garraways and their business, which is based at Top-of-the-Hill on Mackey Street, employed false customer and billing addresses to conceal the fact they were offering Bahamas-based clients DIRECTV’s programming.

The US satellite TV distributor, which supplies programming to more than 20 million US residential and business customers, alleged that Satellite Bahamas’ use of its signal - which is supposed to be confined to the US only - was “unauthorised”.

And it has asked the Florida court to attach a writ to Michael Garraway’s Florida-based assets, on the grounds that he allegedly owes DIRECTV more than $224,000 for use of its equipment and unpaid account balances.

And the total damages DIRECTV is seeking, while unspecified in the court papers, are likely to be much higher.

Michael Garraway declined to comment on the DIRECTTV lawsuit, or its implications for Satellite Bahamas’ business, when contacted by Tribune Business for comment yesterday.

He would not be drawn on whether this was potentially fatal for the company, but in an interview with Tribune Business earlier this year, said 5 per cent of customers had been refunded.

Mr Garraway admitted then that the service was unauthorised, and Satellite Bahamas was in “wait and see mode” over its restoration. That appears unlikely to happen for the company, which had been offering DIRECTV since 1995 to some 3,000 subscribers.

What seems clear is that Satellite Bahamas’ subscribers, many of whom are located in the Family Islands, will not be receiving DIRECTV any time soon.

“Michael Garraway, along with his brother, Peter Garraway, and their Bahamian companies, Satellite Bahamas and Garraway Enterprises, their Florida company (GEL Electronics, and currently unidentified John Doe defendants are engaged in a scheme to illegally obtain DIRECTV satellite television programming and equipment,” DIRECTV’s court filings alleged.

It further claimed the Garraways and their Bahamian companies were “engaged in repeated illegal and improper acts and practices for the purpose of fraudulently obtaining DIRECTV satellite television programming, and distributing that programming to residences and businesses in the Bahamas”.

DIRECTV alleged that the Garraways and their companies knew from 2001 that it did not authorise the sale of its programming outside the US, after they signed an agreement to act as its authorised agent.

This agreement stipulated that they could only sign-up US-based subscribers, but DIRECTV terminated the deal a year later on the grounds that the Garraways and their Florida company, GEL Electronics, were setting up “fraudulent subscription accounts”.

But DIRECTV alleged that the Garraway’s “evaded the effect of their termination” by continuing to set up accounts via other Florida-based dealers, through which they ultimately serviced their Bahamian clients

The scheme, DIRECTV alleged, employed false US-based subscriber and billing addresses to conceal the identities of Satellite Bahamas’ Bahamian customers. The accounts were paid by 52 credit cards, most of which belonged to the Garraways.

It claimed that subscriber addressed were falsified, while invoices and billings were sent to private mail forwarding addresses in Florida.

The US satellite broadcaster also claimed that the Garraways had been assisted in obtaining DIRECTV’s satellite receiving equipment, and activating it, by Florida companies they paid commissions to.

Jennifer Richardson, a senior analyst with DIRECTV’s Investigations Department, said she began investigating Satellite Bahamas in autumn 2012.

“That investigation led initially to the identification of eight common credit cards that were being used to make subscription payments to DIRECTV for television programming supplied to 308 DIRECTV receivers,” Ms Richardson alleged.

“Between September 17 and October 9, 2012, DIRECTV launched an on-screen display in an attempt to identify the location of the equipment associated with the common credit cards.

“In response to the on-screen display, DIRECTV received telephone calls from individuals who stated that they lived in the Bahamas and were customers of Satellite Bahamas.”

Ms Richardson alleged that she visited Satellite Bahamas’ Mackey Street store on November 14, 2012, and matched Michael Garraway to pictures on his Facebook page.

Michael Garraway, she claimed, confirmed to her that the company sold DIRECTV programming, providing her with a list of Satellite Bahamas’ pricing.

“I conducted further research and eventually identified 621 DIRECTV subscription accounts that I suspected were being used by defendants to provide DIRECTV television programming to customers of Satellite Bahamas,” Ms Richardson alleged.

“Many of those accounts had multiple ‘mirrored’ receivers that must be physically located at the subscriber’s service address to be eligible for the much lower rate charged by DIRECTV for mirrored receivers.

“In total, the 621 accounts were used to activate at least 5,803 receivers for reception of DIRECTV television programming.”

Ms Richardson said checks of the Florida or New York addresses for the 621 accounts showed they either did not exist, or did not take DIRECTV’s programming.

“I concluded, therefore, that the accounts had been created using false service addresses,” she claimed.

“My conclusion was confirmed when DIRECTV shut off service to the receivers listed on those accounts. DIRECTV received no calls from persons in Florida or New York who claimed their service had been improperly shut off.

“Additional research supported my conclusion regarding the improper use of the receivers activated on the identified accounts. For example, 581 of the accounts listed one of five common billing addresses in Florida. Those billing addresses were located in Plantation, Lauderhill, Tamarac and Sunrise, Florida. The use of common billing addresses for a large number of subscription accounts is consistent with my experience in investigating other fraudulent schemes.”

Ms Richardson said her checks of the Florida billing addresses showed that all were commercial buildings, and two were closed.

Two others were private mail facilities, and at one, an employee allegedly confirmed that Michael Garraway picked up the DIRECTV invoices every two weeks.

“I also investigated how subscription and other fees were paid on the 621 accounts. I learned that over 500 of those accounts were paid by 52 common credit cards,” Ms Richardson alleged.

“Defendants Michael Garraway and Peter Garraway were listed as the account holder for the majority of the credit cards with available account holder information.”

DIRECTV shut off programming to the receivers associated with the 621 accounts on January 22, 2013, and Ms Richardson said she called Satellite Bahamas on January 25, speaking to Michael Garraway and informing him of the subscription shut-off.

“Michael Garraway admitted to me that Satellite Bahamas accounts had been shut down, and stated that Satellite Bahamas had provided DIRECTV satellite television programming to residents of the Bahamas,” Ms Richardson alleged.

“Michael Garraway also admitted that he obtained DIRECTV satellite receiving equipment from the United States.”

And she claimed: “DIRECTV has sustained, and continues to sustain, multiple losses as a result of the defendants’ fraudulent scheme to unlawfully distribute DIRECTV satellite television programming in the Bahamas through the use of fictitious US residential accounts.

“Those losses to DIRECTV include the value of television programming that defendants resold at a significant mark up to customers of Satellite Bahamas.”

DIRECTV is alleging that the Garraways and Satellite Bahamas currently owe $717 in unpaid account balances; $159,320 for missing receivers; $46,887 in commissions paid on the fraudulent accounts; and $17,411 in installation fees.