By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Satellite Bahamas received almost $8.8 million in revenues through its allegedly fraudulent scheme to ‘pirate’ the signal of the US’ largest satellite broadcaster.

The claim was made in a letter filed with the US south Florida district court last week, with DIRECTV alleging that efforts by the Bahamian satellite TV programming distributor, and its principals, Peter and Michael Garraway, to dismiss its lawsuit would merely “delay the day of reckoning”.

Providing arguments as to why Satellite Bahamas’ bid to dismiss its lawsuit should be rejected, DIRECTV described the size of its scheme as “nothing short of staggering”.

Its investigators alleged that “the volume of mail was so great”, in relation to account billings and the like, that one Florida mail facility ended up storing Michael Garraway’s mailings “in mail bins used by the US Postal Service”.

And, for the first time, details of how much Satellite Bahamas and its principals are estimated to have earned from using DIRECTV’s signal were revealed in court filings.

A February 22, 2013, letter to the Garraways from DIRECTV’s US attorneys noted that Satellite Bahamas was not authorised to download its signal and re-sell it to customers in the Bahamas. DIRECTV’s signal is meant to be for consumption in the US only.

The letter, which offered the Garraways a “comprehensive settlement” as an alternative to court action, said: “DIRECTV has reviewed the advertised rates ($75 to $143 per month) charged by Satellite Bahamas for television programming service.

“Based on its preliminary review of that and other available information, DIRECTV calculates that Satellite Bahamas collected $8.795 million in gross revenue from its unlawful activity, and caused hundreds of thousands of dollars in additional compensable losses to DIRECTV.”

These losses were pegged at $186,300 in commission payments and other dealer compensation paid on the false Bahamian accounts operated by Satellite Bahamas, plus $88,375 that the US satellite programmer should have earned from lease payments on 505 receivers.

When added to the $8.795 million in revenue, DIRECTV’s attorneys pegged the total sum involved at $9.07 million.

“Even accounting for the modest subscription payments ($47,598) made by you to continue to receive DIRECTV programming for your customers, Satellite Bahamas is liable for a disgorgement/compensatory loss claim of $8.582 million,” DIRECTV’s attorneys told the Garraways.

“A more precise calculation of the loss to DIRECTV requires additional accounting information regarding your unlawful sales.”

DIRECTV’s attorneys offered an out-of-court settlement that required Satellite Bahamas to agree “an immediate suspension of service” to all Bahamian subscriber accounts, and not to re-start this service in the future.

It also called on the Garraways to co-operate with DIRECTV’s probe into the unauthorised use of its signal in the Bahamas, and agree “to turn over your business records and/or testify in potential legal proceedings involving third parties, including authorised dealers that knowingly supplied account services and/or equipment for use in the Bahamas”.

DIRECTV also demanded compensation from Satellite Bahamas for losses suffered.

What is clear is that the settlement offer was not accepted by Satellite Bahamas and the Garraways, given the live proceedings now in the Florida courts.

DIRECTV’s latest filings show that its probe into Satellite Bahamas remains ongoing, with an affidavit from David Patterson, one of its investigators, alleging that hundreds of calls to its customer service centre came from four numbers belonging to either the Garraways or companies they owned.

The calls, Mr Patterson alleged, were to either activate/deactivate satellite receivers and accounts; change the television programming on accounts; and add or change passwords on the accounts.

“In summary, the four Florida telephone numbers were used to place 502 calls to DIRECTV customer service,” Mr Patterson alleged. “Those calls were used to make changes to, or inquiries about,238 unique DIRECTV subscription accounts.

“Of that total, 120 accounts listed service addresses in Florida. Based on my further research, I determined that 2,083 satellite receivers were activated for DIRECTV television programming service on the subscription accounts identified, including 1,031 satellite receivers.”

Since the DIRECTV lawsuit’s filing on July 2, 2013, Mr Patterson alleged that six credit cards identified as belonging to the Garraways had been used to make payments on 96 accounts, with 47 satellite receivers activated to service them.

The accounts in question were in the names of ‘Sean Hall’, ‘Drexel Rahming’, ‘Kendall Barr’, ‘Charles Thurston’ and ‘Frank Kahn’.

And Mr Patterson alleged that some 42 DIRECTV accounts, including those for these names, were accessed via two online sessions on September 26, 2013. The person accessing them would have to know the user name and password for all the accounts.

Another DIRECTV investigator, Jennifer Richardson, alleged that the Garraways had yet to respond to her July 9, 2013, demand letter requiring them to return 539 high definition, and 2,010 standard, receivers to the US satellite provider.

“None of the missing receivers has been returned to DIRECTV,” she alleged.

And, responding to the Garraways’ efforts to dismiss the lawsuit against them on technical grounds, DIRECTV alleged: “Defendants’ motion to dismiss can, at best, delay the day of reckoning for their lucrative scheme to acquire DIRECTV satellite television programming by elaborate fraudulent means, so [they] could sell that programming to their customers in the Bahamas where DIRECTV does not allow its services to be sold. “

The satellite programmer alleged that Satellite Bahamas created hundreds of fraudulent subscription accounts to mask the unauthorised use of its signal outside the Bahamas.

“The scope of defendants’ fraudulent scheme is nothing short of staggering,” DIRECTV alleged.

“The Garraway Brothers and their companies created at least 621 fraudulent DIRECTV subscription accounts – each listing a false subscriber name and false service addresses in the United States.

“Each account listed a service address in Florida or New York; 581 of the accounts also listed a billing address in Florida. Taking advantage of special rules that allow multiple satellite receivers to be activated on a single account, defendants obtained 5,803 satellite Receivers - including 539 High Definition Receivers and 2,010 Standard Receivers that were available only by lease from DIRECTV – and activated those receivers for programming service on the fraudulent accounts they created,” it added.

“The Garraway Brothers made use of their knowledge as former authorised dealers for DIRECTV to continue their fraudulent scheme to obtain DIRECTV equipment and programming services for illicit use in the Bahamas. In doing so, the Garraway Brothers took elaborate steps to conceal their scheme from DIRECTV.”