LOS ANGELES (CN) - DirecTV says two of its retailers cooked up a scheme to sell TV packages on the cheap to college dorms, military bases and prisons, and pocketed money that should have gone to the corporation.
DirecTV sued Douglas De Leo and Thomas Stokowski in Federal Court. DirecTV says it hired De Leo's company, NWS, to help sell SmaTV (sic) subscriptions to businesses and institutions that offer short-term lodging, such as hotels, hospitals and college dorms.
DirecTV says the men based the scheme on the difference between its pricing methods for various types of customers. In a hotel, DirecTV calculates charges by multiplying a monthly package price by the number of rooms with televisions. In a 1,000-room hotel, DirecTV says it could make $2,700 per month.
But De Leo and Stokowski fraudulently reported that they had sold packages at rates set for TVs in staff lounges, doctors' waiting rooms and private offices, DirecTV says.
For instance, it says the men claimed they had sold Colorado State University a deal to play ESPN in a lounge, so DirecTV unknowingly charged only $67.99 per month to let the college show ESPN in 1,921 dorm rooms - which would have cost at least $79,866 under SmaTV pricing. The men allegedly pocketed the difference.
De Leo and Stokowski consistently won bidding wars with other DirecTV retailers and cheated DirecTV of "hundreds of thousands of dollars," according to the complaint.
DirecTV claims the men used the scheme to win contracts with the University of Illinois, University of Maryland, the Arizona Department of Corrections, the San Diego Naval Base, and Georgia's VA Medical Center, among others.
DirecTV wants damages for fraud and unfair business practices. It is represented by Michael Williams with Quinn Emanuel Urquhart.
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