DOJ: Leader of Illegal Copyright Infringement Scheme Sentenced to 5½ Years Imprisonment

The Department of Justice March 9 announced a 66-month prison sentence for YouTuber Bill Omar Carrasquillo, a.k.a. “Omi in a Hellcat,” for crimes arising from a wide-ranging copyright infringement scheme that involved piracy of cable TV, access device fraud, wire fraud, money laundering, and hundreds of thousands of dollars of copyright infringement.

In addition to prison time, 36-year-old Carrasquillo, who reportedly had more than 800,000 social media followers, was ordered to serve five years of probation upon release, in addition to forfeiting more than $30 million in assets and paying more than $15 million in restitution to victim cable operators and the IRS.

According to the indictment, from March 2016 until November 2019, Carrasquillo along with his co-defendants operated a large-scale internet protocol television (IPTV) piracy scheme in which they fraudulently obtained cable television accounts and then resold copyrighted content to thousands of their own subscribers, who could then stream or playback content.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The defendants also made fraudulent misrepresentations to banks and merchant processors in an effort to obtain merchant processing accounts. Carrasquillo converted a large portion of his illegal profits into homes and dozens of vehicles, including high-end sports cars. When agents attempted to seize those items pursuant to judicially-authorized warrants, Carrasquillo made false statements about and attempted to hide some of those vehicles, including a Freightliner recreational vehicle and a McLaren sports vehicle.

Carrasquillo was convicted of one count of conspiracy; one count of violating the Digital Millennium Copyright Act; one count of reproduction of a protected work; three counts of public performance of a protected work; one count of access device fraud; one count of wire fraud; one count of making false statements to a bank; one count of money laundering; one count of making false statements to law enforcement officers; and one count of tax evasion.

“Income gained from the infringement of copyrights is taken seriously, and the federal government will continue its commitment to protecting copyright holders and content creators,” U.S. Attorney Jacqueline Romero said in a statement. “Today’s sentencing reflect[s] the severity of his actions.”

Jacqueline Maguire, special agent in charge of the FBI’s Philadelphia Division, said the sentence should send a message that willfully stealing another party’s intellectual property is a serious crime.

“Making money off of someone else’s copyrighted work is theft, plain and simple,” Maguire said.

DOJ: Former MoviePass Executive Arrested for Allegedly Embezzling $260,000

A former executive at subscription movie theater ticket service MoviePass has been arrested on a federal grand jury indictment alleging he embezzled $260,000 from MoviePass’ parent company, New York-based data analytics firm Helios & Matheson Analytics (HMNY), to repay money he borrowed to produce an event at the Coachella music festival in Indio, Calif.

The Department of Justice reported that Khalid Itum, 42, of Los Angeles, was arrested by the FBI on Feb. 21, charged with two counts of wire fraud and two counts of money laundering.

Khalid Itum

At his arraignment in U.S. District Court in Los Angeles, Itum pleaded not guilty to the charges, and an April 18 trial date has been scheduled. He was released on $75,000 bond.

MoviePass was a New York-based company that charged subscribers a flat monthly fee in exchange for credits they could spend on movie tickets from any theater in MoviePass’s network of participating cinemas. The service and HMNY filed for bankruptcy in 2020 after blowing through hundreds of millions of investor dollars.

If convicted, Itum could face a statutory maximum sentence of 20 years in federal prison for each wire fraud count and up to 10 years in federal prison for each money laundering count.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

According to the indictment, Itum, who was hired in November 2017 to oversee daily operations at MoviePass before departing the company in March 2019, organized a party at the annual music festival, using MoviePass funds to pay for it. Neither MoviePass nor HMNY officially participated in the Coachella event.

According to the indictment, Itum allegedly submitted sham invoices to HMNY for services purportedly rendered by his production company and a third party. Itum allegedly had HMNY employees wire money from MoviePass and HMNY accounts to his production company’s bank account to pay the sham invoices. Itum allegedly concealed his scheme by lying to HMNY’s auditor that his production company had been used to pay legitimate MoviePass expenses from the 2018 Coachella festival.

Itum’s lawyer, in a statement, denied the charges, contending the executive had received clearances from MoviePass and HMNY regarding the funds.

“The prosecutors have got it wrong,” read the statement. “Khalid Itum worked earnestly and honestly for MoviePass. The only money paid to him or his consulting company was for genuine services provided to MoviePass and its corporate parent, and the money was spent in entirely legitimate ways.”

MoviePass, which has been acquired by its original founder, is attempting to relaunch the service.

Report: Dish, DirecTV Merger Getting Second Wind

U.S. satellite-based pay-TV operators Dish and DirecTV have oft been the speculation of a merger, with politics and government regulation impeding a deal. But with the satellite TV market continuing to decline due to ongoing consumer migration toward over-the-top video, the competing companies reportedly are keen again to consummate an agreement.

Indeed, DirecTV has seen a 40% drop in subscribers to 15 million from 25 million subs in 2017. Dish ended its most-recent fiscal period with 8.4 million subs — down from almost 9 million subs in the year-ago period.

DirecTV parent AT&T last year spun off a minority stake (and operational control) of the satellite operator, online platform AT&T TV and cable service U-verse to private equity firm TPG Capital for $8 billion. The consolidated companies were then rebranded DirecTV Stream.

“TPG is driving the conversations. They want their investment back,” a source close to the negotiations told The New York Post.

Dish founder/CEO Charlie Ergen has long advocated for a merger of the two companies — albeit on his terms.

“In terms of DirecTV and Dish, I mean obviously I think that those two companies go together, that’s inevitable,” he said on Dish’s most-recent fiscal call.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Ergen believes that in the current market, regulatory concerns have been minimized due to the continued rollout of broadband nationwide and ongoing competition from programmers themselves launching streaming platforms. In 2020, the DOJ reportedly quashed a merger between DirecTV and Dish, citing 5G’s sputtering rollout nationwide.

The next-generation wireless format is seen as a competitive alternative against any possible satellite TV market control DirecTV and Dish might wield.

“I think it’s a timing issue more than anything else,” said Ergen, who reportedly wants a seat at the head of the table of the merged distributors.

Regardless, with satellite distribution dying in the U.S., a combined DirectTV/Dish unit would be preferred, especially for rural and RV customers dependent on satellite service.

“The FCC and DOJ would likely both conclude that having one strong satellite competitor is better than none at all — and the future is not terribly bright even together, but especially alone,” Craig Moffett, analyst with MoffettNathanson, told The Post.

Federal Judge Blocks Trump’s TikTok Ban in the U.S.

With President Trump’s Aug. 6 executive order banning social media video app TikTok in the United States set to go into effect Sept. 27, a federal court judge in Washington D.C. has reportedly approved a preliminary injunction blocking the order.

Chinese-based TikTok owner ByteDance Sept. 23 filed for an expedited preliminary injunction against Trump’s executive order, calling it politically motivated and lacking in merit. The Trump Administration, which is involved in ongoing trade and ethnic Muslim disputes with China, argued the TikTok app posed a threat to national security. TikTok reportedly has more than 100 million U.S. users on a monthly basis.

U.S. District Court Judge Carl Nichols, who was appointed to the bench by Trump in 2019, reportedly felt TikTok had not been given the proper time to defend itself in court.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“This was a largely unilateral decision with very little opportunity for plaintiffs to be heard,” said the judge as reported by the Washington Post.

Trump had initially given his public approval (in a North Carolina campaign rally) for a proposed TikTok asset sale to Oracle and Walmart. But when it was revealed that Oracle and Walmart would collectively own just 20% of new entity TikTok Global, with China controlling 80%, Trump changed his mind.

This is the second legal setback for Trump, who saw a second executive order banning China’s WeChat app overruled by a San Francisco federal magistrate, which cited First Amendment issues in ruling against the president.

Texas Senator Calls for DOJ Investigation of Netflix Regarding ‘Cuties’ Movie

Netflix, a longtime target of right-wing boycotts, is now facing new pressure from some lawmakers looking to score political points in an election year.

Sen. Ted Cruz (R-Tex.) on Sept. 11 sent a letter to U.S. Attorney General Bill Barr asking the Department of Justice to investigate Netflix regarding its marketing and distribution of French film Cuties, a fictional story about an 11-year-old girl from Senegal living in Paris who joins a “twerking dance squad,” upsetting her conservative single mom. Cruz wonders whether distribution of the movie violated any federal laws against the alleged production and distribution of child pornography.

Sen. Ted Cruz (R-Tex.)

“I urge the DOJ to investigate … whether Netflix, its executives, or the individuals involved in the production and distribution of the film violated any federal laws,” Cruz wrote.

Specifically, Cruz alleges the film “routinely fetishizes and sexualizes” pre-adolescent girls performing dance sequences in provocative outfits simulating sexual conduct.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“These scenes in and of themselves are harmful,” Cruz wrote, suggesting the images could encourage pedophiles globally to imitate “this film in abusive ways.”

Sen. Tom Cotton (R-Ark.) joined the dispute, calling on the DOJ to take “swift” action.

“Like any parent, I find ⁦@Netflix⁩ decision to peddle child pornography disgusting,” Cotton tweeted Sept. 12. “And it’s criminal.”

Rep. Tulsi Gabbard (D-HI) is the lone Democrat criticizing the movie’s release, claiming it would “whet the appetite of pedophiles” and help “fuel” child sex trafficking.

“Netflix, you are now complicit,” Gabbard tweeted.

Netflix, which began streaming Cuties on Sept. 9, changed the film’s initial marketing after receiving criticism on social media. The service contends the movie criticizes — not endorses — the sexualization of minor girls in the media.

“Cuties is an award-winning film and a powerful story about the pressure young girls face on social media and from society more generally growing up — and we’d encourage anyone who cares about these important issues to watch the movie,” Netflix said in a media statement.

The Parents Television Council, a non-partisan education organization advocating responsible entertainment, this week said it stands by its earlier criticism that the TV-MA-rated Cuties sexualizes children.

“By removing the offensive poster and replacing it with a more innocuous one, Netflix might actually have made the situation worse by suggesting that Cuties is nothing more than a cute, coming-of-age movie,” Melissa Henson, program director for the Parents Television Council, said in a statement.

AT&T Drops ‘Watch TV’ Sign-Ups

AT&T has begun informing users that it will no longer offer its low-budget AT&T Watch TV service to new and returning subscribers.

“Standalone WatchTV is no longer available for new sign ups or to re-subscribe,” AT&T said in a statement. “Existing WatchTV customers who subscribe to the app or have a qualifying AT&T Unlimited plan can continue to use the service. Customers on a qualifying AT&T Unlimited plan with the WatchTV benefit can create a separate account.”

Launched in 2018 during AT&T’s contentious regulatory battle with the DOJ over its $85 billion acquisition of Time Warner, and targeting the younger high school and college-age demo using mobile devices, AT&T Watch TV is a $15 a month streaming service featuring select channels and no DVR.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

With the rebranding of DirecTV Now to $39.99 AT&T TV in March, the telecom-turned-media-giant is streamlining its streaming portfolio. AT&T TV also includes access to new subscription streaming video service, and company flagship, HBO Max.

Indeed, the telecom continues to struggle pitching standalone online TV (and linear pay-TV) to consumers. AT&T jettisoned 897,000 combined DirecTV and U-verse subs in the first quarter (ended March 31), in addition to 138,000 AT&T TV members. The one million+ sub loss was up 65.1% from the 627,000 subs lost in the previous-year period.

Guilty Pleas for Operators of Biggest Illegal Movie/TV Show Streaming Service in the U.S.

Two computer programmers in Las Vegas have pleaded guilty to multiple criminal copyright and money laundering charges related to operating one of the biggest illegal television show and movie streaming services in the United States.

The shuttered services iStreamItAll and Jetflix combined had more content than Netflix, Amazon Prime Video or Hulu, according to the U.S. Department of Justice, which made the announcement on Dec. 13.

Darryl Julius Polo, a.k.a. djppimp, 36, pleaded guilty in the U.S. District Court for the Eastern District of Virginia to one count of conspiracy to commit criminal copyright infringement, one count of criminal copyright infringement by distributing a copyrighted work being prepared for commercial distribution, one count of copyright infringement by reproduction or distribution, one count of copyright infringement by public performance and one count of money laundering.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

In a separate proceeding today, co-defendant Luis Angel Villarino, 40, pleaded guilty to one count of conspiracy to commit copyright infringement.

Sentencing for both defendants is set for next March.

iStreamItAll (ISIA) permitted users to stream and download copyrighted television programs and movies without the permission of the relevant copyright owners.

Defendant Polo admitted that he reproduced tens of thousands of copyrighted television episodes and movies without authorization, and streamed and distributed the infringing programs to thousands of paid subscribers located throughout the U.S.

Follow us on Instagram

Specifically, Polo admitted ISIA offered more than 118,479 different television episodes and 10,980 individual movies. Polo sent out emails to potential subscribers highlighting ISIA’s huge catalog of works and urging them to cancel those licensed services and subscribe to ISIA instead.

According to the DOJ, Polo obtained infringing television programs and movies from pirate sites around the world — including some of the world’s biggest torrent and Usenet NZB sites specializing in infringing content — using various automated computer scripts that ran 24 hours a day, seven days a week.

Specifically, Polo used sophisticated computer programming to scour global pirate sites for new illegal content; to download, process, and store these works; and then make the shows and movies available on servers in Canada to ISIA subscribers for streaming and downloading.

Polo also admitted to running several other piracy services, including a Usenet NZB indexing site called SmackDownOnYou — earning more than $1 million from his piracy operations.

Other defendants in the case are scheduled to go to trial starting on Feb. 3, 2020.

DOJ Files Motion to End Paramount Consent Decrees

As expected, the Department of Justice formally filed a motion in the District Court for the Southern District of New York to terminate the Paramount Consent Decrees, which for more than 70 years regulated how certain movie studios distribute films to movie theatres.

As part of the DOJ’s review of nearly 1,300 legacy antitrust judgments, the antitrust division Nov. 22 announced that after a thorough review, including a 60-day public comment period, it had determined that the Paramount decrees have served their original remedial purposes and no longer serve to promote or protect competition and innovation.

“The Paramount decrees long ago ended the horizontal conspiracy among movie companies in the 1930s and ‘40s and undid the effects of that conspiracy on the marketplace,” Makan Delrahim, assistant attorney general of the Justice Department’s antitrust division, said in a statement.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The Justice Department’s motion to end the Paramount decrees would allow a two-year transition period for block-booking and circuit dealing to allow the theatre and motion picture industry to have an orderly transition to the new licensing changes.

The bulk of domestic exhibition business is currently controlled by AMC Theatres, Regal Entertainment and Cinemark Holdings.

In 1938, the federal government filed an antitrust lawsuit against several major motion picture companies alleging that those companies had engaged in an industry-wide conspiracy to control the motion picture distribution and exhibition markets.

After several years of litigation, including a 1948 Supreme Court decision in United States v. Paramount, the government and the defendants entered into a series of consent decrees, collectively called the Paramount decrees.

These decrees required the movie studios to separate their distribution operations from their exhibition businesses. They also banned various motion picture distribution practices, including block booking (bundling multiple films into one theatre license), circuit dealing (entering into one license that covered all theatres in a theatre circuit), resale price maintenance (setting minimum prices on movie tickets), and granting overbroad clearances (exclusive film licenses for specific geographic areas).

The Paramount decrees, like other legacy antitrust judgments, have no sunset provisions or termination dates. They continue to govern how the film industry conducts its business, despite significant changes to the industry, including technological innovations, new movie platforms, new competitors and business models, and shifting consumer demand.

Unlike 70 years ago, the first-run movie palaces of the 1930s and ‘40s that had one screen and showed one movie at a time have been replaced by multiplex theatres that have multiple screens showing movies from many different distributors at the same time. New technology has created many different movie platforms that did not exist when the decrees were entered into, including cable and broadcast television, DVDs, and the Internet through movie streaming and download services.

“The [government] has concluded that these decrees have served their purpose, and their continued existence may actually harm American consumers by standing in the way of innovative business models for the exhibition of America’s great creative films,” Delrahim said.

 

DOJ Looking to End 1940s-Era Theatrical Movie Distribution Rules

The Department of Justice’s antitrust division is considering ending 1940s-era legislation that prohibits studios from owning movie theaters and controlling the exhibitor release slate, among other provisions.

Known as the Paramount decrees, antitrust efforts at the time led to the 1948 U.S. Supreme Court ruling against Paramount Pictures and other major studios that ended studio ownership of theaters and made it illegal for studios to mandate theaters screen all or none of their new releases, a practice known as “block booking.”

“As the movie industry goes through more changes with technological innovation, with new streaming businesses and new business models, it is our hope that the termination of the Paramount decrees clears the way for consumer-friendly innovation,” Makan Delrahim, the DOJ’s antitrust boss, Nov. 18 told the American Bar Association confab in Washington, D.C.

Delrahim led the Justice Department’s unsuccessful appeal of AT&T’s $85 billion acquisition of Time Warner, which led to the creation of WarnerMedia.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The DOJ, which would have to file a legal court motion to reverse the law, is seeking a two-year sunset period on several elements of the decrees, including block booking and select license agreements, according to The Wall Street Journal, which first reported the government move.

Observers contend the move could expedite consolidation among the three largest theatrical chains: AMC Theatres, Regal Entertainment and Landmark Holdings, while likely putting smaller exhibitors out of business.

The theatrical business remains under siege by over-the-top video and market domination by Disney, which continues to rule the box office through its Marvel Studios, Pixar Animation and Lucasfilm releases.

Trade group the National Association of Theater Operators suggested a reversal of existing theatrical distribution rules would enable major studios to dominate exhibitor release slates.

“If exhibitors were forced to book out the vast majority of their screens on major studio films for most of the year, this would leave little to no room for important films from smaller studios,” NATO said in a statement.

DOJ Drawn Into Comcast, Starz Carriage Dispute

With legacy pay-TV under siege from cord-cutting subscribers and high-profile alternatives such as Netflix, Amazon Prime Video, Hulu and now Apple TV+, the status quo for traditional carriage agreements has gone out the window.

And so it was that Comcast last month quietly announced it would soon end Xfinity subscriber access to Starz, the premium movie and TV service it acquired in 2016 for $4.4 billion.

The news was significant since Comcast represents about a third of Starz’ 24.4 million subscribers. Starz, which operates its own branded $8.99 monthly subscription streaming service, has been a profit vehicle for Santa Monica, Calif.-based Lionsgate.

Comcast reported it will replace Starz on Dec. 10  with Epix, the premium service owned by MGM and formerly Lionsgate, unless a new agreement can be reached. The news has contributed to a 9% drop in Lionsgate’s stock valuation — which is already down nearly 50% in the fiscal year.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

The negotiation impasse has reportedly caught the attention of the Department of Justice, which continues to have Comcast in its crosshairs ever since its acquisition of NBC Universal in 2009. Back then, regulators forced the cable giant to relinquish management input on its stake in Hulu, citing antitrust issues.

Earlier this year Comcast sold its Hulu stake to Disney after acquiring Sky satellite TV operator in the United Kingdom.

Comcast’s NBC Universal unit is readying its own SVOD service, Peacock, early next year.

The situation prompted Senators Dianne Feinstein (D-CA) and Susan Collins (R-ME) to contact Assistant Attorney General Makan Delrahim to investigate the situation. Delrahim played a significant role in the DOJ’s failed attempt to stop AT&T’s acquisition of Time Warner.

“These changes could lessen competition in the video programming market and limit choices for many thousands of consumers in Maine and millions more across the nation,” Collins wrote in a letter to Delrahim as reported by CNBC.

“I encourage both of you to seek a win-win solution and consider all options to keep Starz programming on the air,” Feinstein wrote in a separate letter.

Comcast is employing strategy out of Dish Networks’ playbook, which typically includes threats to halt access to third-party content distribution for more favorable distribution terms. Indeed, Dish currently has HBO blacked out to it subscribers.

Comcast, like Dish, contends its subs can access services such as Starz and HBO independently, thus negating what it considers to be excessive carriage fees.

“At the end of the day, this is a routine commercial negotiation that raises no conceivable antitrust concerns,” Comcast said in a statement.

Starz countered that Comcast is forcing its subs to pay more for its service.

“By unilaterally taking Starz out of its packages with no refund … Comcast is unfairly depriving them of relatable programming that reflects their cultural experience,” read a Starz statement.

Lionsgate reports third-quarter (ended Sept. 30) financial results Nov. 7.