But rather than deal with its security breach, NDS hired Tarnovsky and other pirates who had compromised its system to help the company hack and pirate its competitors' cards and even out the playing field, it is alleged.

In addition to Tarnovsky, the company also hired Oliver Kommerling, a hacker known for writing the primer on cracking smartcards. Kommerling has acknowledged in an affidavit that he helped NDS set up a research lab in Haifa, Israel, where NagraStar's smartcard was allegedly cracked by NDS engineers.

NDS didn't hire only hackers, however. According to EchoStar/NagraStar, it also hired a handful of other people with colorful pasts who they say had a role in hacking and pirating EchoStar/NagraStar. There was Reuven Hazak, who had been deputy head of Israel's Shin Bet during the notorious Bus 300 incident (when two Palestinian terrorists who hijacked an Israeli bus were killed in custody by a Shin Bet agent. Hazak eventually blew the whistle on the subsequent cover-up).

NDS also hired a former U.S. Navy intelligence officer named John Norris and a former Scotland Yard commander named Ray Adams. Finally, it hired a former would-be terrorist, Yossi Tsuria, who became chief technical officer of its lab in Israel. Tsuria was part of a radical group of Jewish Israelis in the 1980s that plotted to bomb the Dome of the Rock -- a shrine that sits on the Temple Mount in Jerusalem, a holy site for both Jews and Muslims.

NDS has maintained in public statements that Hazak, Norris and its other security officers were hired to help it track down hackers and pirates and get them arrested. But EchoStar and NagraStar allege that Hazak and Norris played central roles in committing hacking and piracy as well.

In late 1997, NDS researchers in Israel reportedly cracked the NagraStar card after about six months of effort, using an electron microscope.

NagraStar became aware its card was hacked in late 1998 when meeting with DirecTV to discuss the pay-TV company's desire to switch from the hacked NDS cards to NagraStar's cards. But DirecTV employees surprised NagraStar at the meeting when they informed NagraStar that its cards had also been hacked.

EchoStar/NagraStar claim that NDS, aware that DirecTV was about to abandon its cards in favor of NagraStar cards, cracked NagraStar's card to discourage DirecTV from making the switch.

After NDS cracked its rival's card, Tarnovsky and his associates allegedly created and sold counterfeit NagraStar cards through a piracy site based in Canada, among others, that allowed pirates to access Dish Network programs for free. Tarnovsky is also accused of later posting on the Canadian site the code, secret keys and instructions for hacking the microprocessor on EchoStar's access cards, allowing pirates to flood the market with even more cards. He has denied the allegations. Hazak and Norris are accused of providing Tarnovsky with the code so he could post it online, but NDS maintains this didn't happen.

According to court documents, the sabotage scheme worked remarkably well throughout 1998 and 1999 as counterfeit NagraStar cards flooded the market.

It was around this time, however, that a German hacker in Berlin known as Boris Floricic, aka Tron, disappeared while walking home from his parents' home one day. He was found several days later hanging from a belt in a park.

Among his possessions, authorities found correspondence from NDS. NDS later said it had offered Boris a job, which he had rejected. Prior to his death, Boris had obtained source code and information about hacking access cards that were being used in a German satellite TV system. His friends in the German hacker group, Chaos Computer Club, were convinced that he'd met with foul play.