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FOUR men have been jailed for their parts in a sophisticated international scam to defraud TV giant Virgin Media of up to £32 million.
The fraud involved distributing set-top boxes which allowed customers to pick up Virgin Media television channels without paying a subscription.
The Derby gang operated from a house in Littleover where they received programmes through a legitimate subscription.
These were decoded and sent via the internet to accomplices in Hong Kong who then beamed the signals back to the fraudulent set-top boxes.
Derby Crown Court was told that Paul Hartrick, 51 was the head of the city branch of the conspiracy.
He imported a type of set-top box from Korea that could be modified to receive the Virgin Media channels without a subscription.
He sold these boxes to customers for a one off payment of up to £120 the court was told.
He and his accomplices Melvin Howard, Anthony Ginnivan and Amber Ahmed all pleaded guilty to conspiring to defraud the company.
Ginnivan, 48, owned the house in Fernwood Crescent, Littleover, and rented a room which was used for the scam to Howard, 62.
Prosecutor Martin Hurst told the court that this bedroom was the "nerve centre" of the operation.
Inside the room Ginnivan and Howard under the instruction of Hartrick had set up 44 set top boxes connected to the Virgin Media
network through 13 legitimate subscriptions for which they paid.
This system was used to "decrypt" the signals sent from Virgin Media and these decoded signals were then transmitted over the internet to Hong Kong.
An operation in Hong Kong then sent Virgin Media channels back over the internet to customers who bought the Korean set-top boxes The fourth fraudster Ahmed was responsible for ordering the legitimate subscriptions called Smartcards from Virgin Media.
Police estimated that ringleader Hartrick would have made more than £100,000 from selling the set-top boxes.
And Virgin Media said the scam could have cost the company up to £32 million in lost revenue from subscription charges both from the activities of the Derby gang and the operation in Hong Kong.
Hartrick, of Sharpe Street, Tamworth was jailed for five years yesterday.
Howard, of Stoney Lane Spondon was jailed for two years and ten months.
Ginnivan received two years and one month and Ahmed, of Dover Street, Derby was sent to prison for a year.
Ahmed was also given an extra six months for a separate fraud offence.
Detective Constable Adam Govan investigating officer in the case said:
"This was a sophisticated fraud, taking place on an international scale.
"The jailing of these four men sends out a message that people who involve themselves in this kind of crime can be tracked down and will be brought to justice.
"This may be seen as a faceless crime but in the end it is Virgin Media customers who lose out because the company has to raise prices to make up for its losses."
The men were caught after Virgin Media became aware that there was a large scale fraud happening in the UK.
The company said it came to light through "intelligence" and it became apparent that some people were viewing the channels without having paid a subscription.
The firm set up its own Starview set-top boxes in homes across the UK to try to pick up the illegal signals.
Then it switched off sections of its Virgin Media output in sequence to find out the source of the illegal operation.
Eventually experts pinpointed where the signals were being decoded to be the house in Littleover and contacted the police.
The men were arrested and the full scale of the fraud came to light.
A fifth man Korean national Jeong Woo You was also arrested and charged with the fraud.
He was released on bail and then absconded.
Sentencing the four Judge Michael Fowler said:
"Hartrick you are the senior of the defendants in front of me.
You are clearly in commercial terms management.
"You had direct benefit through your business from the sale of the boxes.
You were directly involved in setting up the operation.
"The benefit you received is in dispute but there is no dispute that it is in excess of £100,000.
The benefit you expected to be achieved by fraud was far more no doubt.
"In addition you recruited others to become involved with this fraud."
He said the loss to Virgin Media was "extremely difficult" to estimate but that he was satisfied it ran into millions of pounds.
Speaking for Hartrick, Dean Kershaw said his client had always maintained he had sold the boxes for £65 each and had not sold more than 1,500.
Hartrick said he was not the person who had physically set up the operation in Littleover but accepted he had recruited Howard who then recruited others said Mr Kershaw.
Dean Bower, for Howard accepted he had brought Ginnivan and Howard into the scam but did not oversee them.
"He received very little reward for his role," said Mr Bower.
The court heard that Ginnivan was the caretaker for the premises and Ahmed was at the bottom level of the small gang.
How the scam works
VIRGIN Media supplies a digital cable TV service to subscribers in the UK.
In order to receive the service customers are given a set-top box and a smartcard which determines the channels that can be watched depending on what has been paid for.
The TV signal sent to the boxes is scrambled but the card together with the box decodes these signals and gives a clear picture and sound.
The Littleover set up with its 44 set top boxes and 13 legitimate subscription smart cards was arranged so that the scrambled messages sent to it were intercepted and uploaded via the internet to a server in Hong Kong.
From Hong Kong they were broadcast to users who had special set top boxes that they had bought with one off payments.
The users had no smart cards and had not paid for the service.
These boxes were manufactured in Korea by company Irumtek which is suspected to be the main beneficiary of the fraud.
Virgin Media estimated that up to 22,000 people were receiving free channels through this operation but defendant Jeong Woo
You told police he believed there were up to 12,000 customers.
Ringleader Paul Hartrick who imported the Starview set-top boxes maintained in his plea that he had sold no more than 1,500 of them.
Irumtek also sent a software engineer over to the Littleover property to spend weeks working on the set top boxes and improving the system.
The fraudulent operation ran between February 2010 and February last year.
Paul Hartrick, Melvin Howard, Anthony Ginnivan and Amber Ahmed ave been jailed for their parts in a sophisticated international scam to defraud TV giant Virgin Media of up to £32 million. | This is Derbyshire