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AT THE CENTER of the allegations is 31-year-old Christopher Tarnovsky. In the mid-1990s, Mr. Tarnovsky was a notorious hacker who, under the alias ?Big Gun,? helped pirates decode the satellite signal of DirecTV, which used antitheft technology supplied by NDS. Looking to contain him, NDS hired Mr. Tarnovsky in 1997.
That solved a problem for NDS. But last March, Vivendi Universal SA?s Canal Plus, a big satellite-TV operator in Europe, filed a lawsuit claiming that Mr. Tarnovsky continued to help pirates hack Canal Plus signals even after joining NDS. EchoStar Communications Corp., which runs the Dish Network satellite-TV service in the U.S., recently moved to join the suit, which was filed in U.S. District Court in San Francisco. The suit?s status is uncertain as Vivendi recently agreed to withdraw it as part of another deal with News Corp.
Meanwhile, Hughes Electronics Corp., the General Motors Corp. unit that is the operator of the DirecTV network in the U.S., plans to drop NDS as a supplier and filed a sealed suit in U.S. District Court in Los Angeles against the company that alleges breach of contract, fraud and misappropriation of trade secrets.
The controversy has been a major headache for NDS, which makes ?smart cards? that are designed to ensure the secure delivery of digital-TV programming. The London-based company has seen its American depositary receipts fall nearly 80% since the allegations first became public last March.
NDS, which has denied the allegations, has stood steadfastly by Mr. Tarnovsky, and a high-powered legal team at News Corp., which owns 80% of NDS, is keeping a close eye on the situation. An attorney for Mr. Tarnovsky, Pamela J. Naughton, denies that he has been involved in any piracy-related activities since joining NDS.
Mr. Tarnovsky, who declined to be interviewed for this article, started his career as a satellite-communications specialist for the U.S. Army based in Germany. Ms. Naughton, whose fees are paid by NDS, says he was a ?gifted? computer hobbyist who, in his spare time, fiddled with satellite TV smart cards to learn how they worked. He also joined an Internet discussion group where he met elite hackers who discussed their efforts to defeat satellite-TV security systems.
After leaving the Army in 1996, Mr. Tarnovsky moved to New Hampshire and worked for a semiconductor company in Massachusetts. On the side, however, he worked as a programmer for a Canadian man named Ron Ereiser, who operated a business selling counterfeit smart cards that allowed people to receive DirecTV for free. According to people familiar with the situation, when DirecTV and NDS deployed electronic countermeasures to disable counterfeit smart cards, Mr. Tarnovsky would program a fix that kept the bootleg cards functioning. These people say that Mr. Ereiser paid Mr. Tarnovsky more than $40,000 in cash and equipment in exchange for the work.
Ms. Naughton says Mr. Tarnovsky was ?never involved in manufacturing or helping someone manufacture? smart cards, but won?t comment on whether he played the role of programmer for Mr. Ereiser. But she acknowledges that Mr. Tarnovsky was indeed the ?Big Gun? who had become famous among satellite hackers.
In 1997, however, Mr. Tarnovsky became embroiled in a feud with a Quebec pirate who he thought was stealing his decoding work. ?I give you the TV, I can take away the TV,? Mr. Tarnovsky boasted in an e-mail signed ?biggun.? He threatened to switch sides to work at NDS, which was then called News Datacom. Ms. Naughton confirms that the e-mail came from Mr. Tarnovsky.
Later that year, Mr. Tarnovsky made good on the threat. After he ?looked at his life and future? and decided that he wanted ?a real job with a real company,? Ms. Naughton says, he joined NDS. Though she says that Mr. Tarnovsky approached the company, others familiar with his employment say that NDS had identified him as a ?problem? and persuaded him to go legit.
According to his attorney and others familiar with his employment, Mr. Tarnovsky was hired to play two roles. One was to act as in-house hacker, attacking NDS-made smart cards to figure out their weaknesses before others did. But he also was assigned to circulate in the pirate world under aliases, surreptitiously collecting information for NDS. Because of the sensitive nature of his work, Mr. Tarnovsky?s true identity was kept a secret even within NDS, where he was known as ?Mike George.?
Hiding Mr. Tarnovsky?s identity outside the company was trickier. He maneuvered in the hacker world under several nicknames. Working from his home in San Marcos, Calif., north of San Diego, Ms. Naughton says, he tried to keep the hackers he interacted with off balance by giving the impression that he was actually based in the East. So he maintained a mailing address near his father?s home in Manassas, Va., and later switched it to San Marcos, Texas, near his mother?s home after he tired of keeping East Coast hours as part of the ruse, Ms. Naughton says.
Mr. Tarnovsky navigated the hacker underground for more than three years without incident. But in August 2000, suspicious packages were intercepted at his Texas mail drop containing hollowed-out electronic devices stuffed with $40,000 in cash. The packages wound up in the hands of U.S. Customs agents, who believed they were connected to satellite-TV piracy, according to people familiar with the matter. A return address indicated the packages were sent from a Vancouver, British Columbia, business associated with Allen Menard, a friend of Mr. Tarnovsky and operator of a Canadian Web site known as DR7.com that was a hacker hotbed.
In February 2001, customs agents showed up at Mr. Tarnovsky?s home in San Marcos. But the agents were shooed away by attorneys brought in by NDS. An NDS representative says the company cooperated ?fully? with the customs investigation, conducted its own internal investigation and concluded there was ?no basis for taking any further action? against Mr. Tarnovsky. Ms. Naughton says that Mr. Tarnovsky doesn?t know who sent the packages and believes he was set up, perhaps by pirates with grudges against NDS.
The customs incident exposed one key fact within the pirate world, however: Chris Tarnovsky was an NDS employee.
Federal prosecutors in San Diego haven?t filed charges, but they continue to investigate Mr. Tarnovsky and NDS. The incident also put Mr. Tarnovsky under more intense scrutiny from companies like Vivendi and EchoStar ? both of which not only have satellite-TV systems but interests in smart-card makers that compete against NDS.
Since his cover was blown 20 months ago, Mr. Tarnovsky now spends 100% of his time on smart-card development for NDS, his attorney says. Even colleagues now know him as Chris Tarnovsky, though, Ms. Naughton says, ?Some people who knew him as Mike still call him Mike.?
Last edited by FreeUS at Oct 17 2002, 12:41 AM
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