Monday, Feb. 4, 2002 | 11:13 a.m.
Las Vegas cable television operator Cox Communications wants a federal judge to impose more than $1 million in civil penalties against seven of 39 Las Vegas Valley residents accused of cable theft to drive home its message that cable piracy is a serious crime.
Cox stepped up its anti-cable piracy campaign with a lawsuit in March accusing the 39 defendants of violating the federal Communications Act -- which prohibits the unauthorized reception of cable television programming -- when they allegedly used bootleg "pirate" converter-decoder devices to steal its services.
Cox said it identified the 39 Las Vegas-area residents as buyers of illegal decoding devices through business records surrendered by Millenium Enterprises, a Texas distributor of pirate cable television decoding devices, after Millenium was sued in Texas by the Showtime cable network. Cox said Showtime obtained a civil judgment that required the Millenium to turn over its records to Cox and several other cable franchises.
Julie Cohen Lonstein, Cox's New York-based attorney, said the company wants a default judgment of about $1.18 million to be assessed against the seven defendants because they "showed willful disregard of the laws of our country and Cox's claims by (allegedly) failing to answer the complaint against them."
She said Cox dismissed its lawsuit against 27 of the 39 defendants after they signed confidential settlement agreements with the cable operator. The operator said it dropped its lawsuit against five defendants it wasn't able to locate.
Cox said in court filings it wants the maximum statutory damages of $110,000 plus 9 percent interest to be assessed against each of the seven defendants not only as "restitution for the wrongs perpetrated on its rights ... but also to deter similar acts."
Stan McGinnis, president and CEO of Denver, Colo.-based Secure Signals International, who represents Cox in pursuing cable piracy claims, cited market erosion as a factor justifying maximum statutory damages.
"The $33 billion-a-year cable industry nationwide is losing in excess of $12 billion a year through cable theft. And cable theft isn't perceived as a serious crime by most citizens and law enforcement officers," he said, noting local governments also lose out on franchise fee payments because of piracy.
Cox's Director of Business Operations Bob Kijowski said Cox in Las Vegas loses annual revenues of about $4 million to $5 million to cable theft.
McGinnis said his firm has helped Cox identify at least 1,000 Las Vegas-area residents as illegal cable users in the past six years.
"People complain about high cable service rates but a lot of those costs are due to the substantial amount of cable theft," McGinnis said. "Illegal decoding devices also create signal leakages, that if severe enough, may interfere with police and fire department communications."
"We're filing just civil charges at this point and not criminal charges as well because we feel the civil charges are punitive enough. If you get a $100,000 judgment against you, you'll get the message too," he said. "The only time we file criminal charges is if we are going after a distributor of illegal devices."
But defendant Todd Van Dewerker, who said he was a subscriber of Cox's services since 1996, disputed Cox's claims, saying "Why would I steal Cox's services when I've been paying about $30 a month for it since 1996?"
Van Dewerker, who said he was shocked by Cox's attempt to have $165,255 in civil penalties assessed against him for alleged cable theft, said he bought a cable television decoding device for a friend through a mail order advertisement by Millenium Enterprises.
"I bought the device for a friend because he wanted it but I didn't use it. I know it's illegal to use it but it isn't illegal to buy one," he said. "I received a summons in May notifying me of the lawsuit and I called Julie Lonstein's office a few days later and left a message with them. But no one called me back, so I thought it was all a hoax."
Van Dewerker, who said he earns an annual salary of about $30,000, said he doesn't know how he's going to pay for the proposed judgment. "I don't know what to do about this. I don't have the money to pay for a lawyer. I might have to file bankruptcy."
But Lonstein, who argued civil judgments were "non-dischargeable claims," said the defendants may not be able to avoid the enforcement of a judgment even if they were to file for bankruptcy protection.
"Whether this is a debt that can be discharged is up to the bankruptcy judge to decide," she said. "But case law prohibits a debt such as the one incurred in this case from being discharged because of the nature of the claim. This is not a consumer debt, but a debt incurred as a result of the defendants being found to be in violation of federal statutes that allege intentional acts that are quasi-criminal in nature."