Cable Boxes Are Seized in Massive Raid : Sun Valley: Police say the equipment, worth millions of dollars, is part of a fraud scheme.

Los Angeles police seized at least 40,000 cable television decoding boxes Monday from a Sun Valley warehouse and six other locations, saying they were for use in a massive conspiracy to defraud cable companies out of millions of dollars in fees.

The decoders found during a surprise raid at the warehouse and electronics laboratory in Sunland alone were worth more than $4.5 million on the market, said police Lt. Al Corella.

Once hooked up to TV cables and sets however, the decoder boxes could enable cable customers to watch millions of dollars’ worth of pay channels such as Home Box Office and Showtime for free, as well as increasingly popular pay-per-view concerts and sporting events, Corella said.

Corella and other investigators estimated that the boxes, if sold, would allow buyers to receive more than $100 million worth of illegal services.

“It’s the largest seizure of its kind that I can recall,” said Los Angeles police Lt. John Dunkin. He said the potential “losses to cable companies are substantial.”

The boxes are designed for use by customers who already subscribe to a basic cable TV service. They enable users to receive services they do not pay for, by unscrambling the coded signals--already present in the cable--that carry the costlier channels.

Police said customers pay anywhere from $100 for basic “pancake” decoders to $400 for deluxe models.

It is illegal to sell or use unscrambling boxes to watch pay TV and pay-per-view events without paying, said Corella and Michael C. Bates, a Continental Cablevision security director and a Los Angeles police consultant.

Also raided were five other locations in the San Fernando Valley and one in Rancho Cucamonga in San Bernardino County.

None of the two dozen or so workers at the warehouse at 8818 Bradley Ave. were arrested Monday, and police would not discuss whether they had any suspects or whether arrests were imminent.

Members of a Los Angeles Police Department task force said their investigation into cable signal theft is continuing, and that the Monday seizures marked the second successful crackdown on cable pirates in four months.

In June, authorities raided a smaller warehouse in Irwindale and seized 10,000 allegedly illegal devices worth an estimated $1 million. Last week, six people were charged in that case in Los Angeles Superior Court with conspiracy to commit cable fraud, a felony, according to Corella, head of the task force from the LAPD Burglary Special Section.

Other locations raided were: 13149B Sherman Way, North Hollywood; 8607 Canoga Ave., Canoga Park; 6447 Ellen View Ave., Woodland Hills; 14621 Titus St., Van Nuys; 5312L Derry St., Agoura Hills, and 10572 Acacia St., Rancho Cucamonga.

But police said the Sunland warehouse, an unobtrusive structure in a busy industrial area, was the primary location for a sophisticated, nationwide cable fraud ring.

Throughout the day, police investigators and cable television officials, working as their consultants, tallied up the seized decoding boxes and carted them off to a police warehouse in moving company trucks. Also seized were workbenches used to install unscrambling devices in the cable boxes, according to Corella.

By day’s end, however, they had made little progress in clearing out the supplies from the warehouse and adjacent laboratory.

William Prevost, 25, also spent the day wandering the massive structure, grumbling about the seizure of the equipment.

As head of the Gage Systems company, which leases the warehouse, Prevost said he was only making and selling the same kind of cable television boxes that can be legally bought at stores throughout the country. He said there is no law against changing the boxes so they can unscramble cable television signals, as long as the customer pays for those signals, and he said he only sells the equipment to retailers and has no control over who eventually uses them.

Police would not comment on whether they thought Prevost played any role in suspected illegal activities.

Investigators at the site also conceded that cable piracy laws are confusing and complex at best. But they said there were clear signs of illegal activity at the warehouse, including evidence of tampering with legal equipment to reprogram it.

In this case, unidentified suspects would buy legal cable boxes, change the electronics so the boxes can unscramble the scrambled signals sent out by cable firms, and then sell them on the retail market, said Corella.

Police said it is hard to prosecute cable fraud cases because many cable customers buy the decoder boxes from ads in magazines and don’t even know they’re breaking the law by decoding pay-per-view cable signals and not paying for them. In addition, Corella said, authorities are hesitant to arrest employees, such as those found working at the Sunland location, unless they can prove the employees knew they were engaged in illegal activities.

Police will now comb the financial records seized Monday to determine who, if anyone, will be arrested, he said.

In addition to lost revenue for cable companies, cable theft results in potential multimillion-dollar losses to cities such as Los Angeles, because cable operators pay the city a fee of 5% of gross receipts.

“If we don’t realize the revenues, we don’t pay the city for those revenues,” said Ron Cooper, of Continental Cablevision.