Proof of guilt or innocence on charges of money laundering, wire and mail fraud are best determined by a jury, a federal judge in Omaha ruled in refusing a defense motion to drop 55 of 62 charges against alleged cable pirates.
Senior U.S. District Court Judge Lyle Strom on Nov. 30 rejected U.S. Magistrate Kathleen Jaudzemis' recommendation that charges against David, Joseph and Baron Abboud be dismissed. The family members have done business under various names in Omaha, including United Imports, G & A Distributing, Broadway Enterprises and M.D. Electronics.
These three men, plus Gene Abboud and employee Susan Germer, were indicted by a grand jury in Omaha in May. The indictments came after a two-year investigation by the FBI, the Secret Service and the Internal Revenue Service.
According to the indictment, the government wants to recover about $27 million agents believe was laundered through a bank in the Cayman Islands. The grand jury also heard testimony alleging that the accused had sold an estimated $80 million worth of altered set-tops and related electronics since 1989.
The Abbouds are well known to cable investigators. Family members have been prosecuted in Texas, Georgia and New Jersey.
In the late 1980s, Joseph Abboud helped found a short-lived lobbying group for third-party set-top manufacturers. The organization died quickly because members were worried investigators would get hold of its list of supporters.
The family has always asserted its innocence, stating through attorneys that they have been prosecuted for selling the same kind of hardware readily available through RadioShack Corp. stores.
Their attorneys appealed the indictments to the magistrate, Jaudzemis, citing a recent U.S. Supreme Court evidentiary precedent. In an unrelated wire-fraud case, the high court ruled that "material falsehood" is a required element in successful fraud prosecutions.
According to the Abbouds' attorneys, that means prosecutors must prove the alleged pirates planned, lied about or made some other representation leading to fraud.
Jauzdemis agreed with the defense arguments and in June recommended the bulk of the charges be dropped. Strom overruled her.
The wire-fraud and money-laundering charges are important to cable investigators because they have been strengthened this decade and carry better asset forfeiture authority.
Investigators call forfeiture key to curbing repeat offenses. In the past, alleged pirates appeared to have viewed financial sanctions as a cost of doing business. Left with assets, they would move, rename their operation and resume business.
But Nov. 30, Strom countered the magistrate's recommendation. He believes prosecutors have "sufficiently alleged" that the Abbouds made what he termed misrepresentations to converter-descrambler manufacturers in an effort to defraud them. The materiality of this information is best left to a jury, he wrote.
The case will be heard in U.S. District Court for Nebraska.