Grand Jury Indicts Four in Piracy Case

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A federal grand jury in Omaha, Neb., has returned an
indictment against four members of the Abboud family, charging them with distributing
millions of dollars worth of illegal set-tops since 1989.

The family name is familiar to cable-security
investigators, who for years have pursued the men and their various companies, including
United Imports, G&A Distributing, Broadway Enterprises and M.D. Electronics.

Indicted were Joseph; his father, Gene; Gene's
brother, David; and David's son, Baron Abboud. Also named was Susan Germer of
Ralston, Neb. Sources said Germer helped the family to set up their various businesses.

Attorneys for the family members said the defendants have
been hounded by the cable industry and noted that federal law will require that cable
set-tops be made available for sale to the public in the next decade.

"We definitely expect that the type of devices sold by
United Imports will be available at RadioShack," lawyer Alan Stoler (who represents
David Abboud) said. He described his client as a successful businessman and community
member who was "basically an investor" in the indicted businesses.

Stoler added that United Imports was liquidated in a
bankruptcy proceeding in 1996. "I don't know why they indicted now," he
said.

Sources in the cable-security community said the Omaha
indictment might be fueled with information collected in a 1997 raid of a cable-piracy
ring pursued by the New Jersey attorney general's office.

That investigation, called "Operation CableTrap,"
resulted in multiple arrests and, more important, access to a paper trail to offshore
money laundering in the Cayman Islands and elsewhere.

One of the defendants in that operation, Trey Prevost, was
sentenced earlier this month to 60 months in jail. Sentencing guidelines call for a
96-month term, but sources said his term might have been trimmed in return for continued
cooperation.

Prevost, who did business in California as Novaplex Inc.,
was also fined $500,000.

Joe and Gene Abboud are on probation following a 1997
felony cable-theft conviction in U.S. District Court for the Northern District of Georgia.

As a result of that 1997 conviction, Joseph was fined $1
million, Gene was fined $50,000 and their business, M.D. Electronics, was fined $50,000.
They also forfeited $633,000 in cash seized during federal raids in Omaha.

The recent indictment charges that the two continued to
engage in cable piracy even after their conviction.

The latest indictments are the result of a two-year
investigation by the FBI, the Secret Service and the Internal Revenue Service. According
to the indictment, the government wants to recover at least $27 million that investigators
believe the defendants laundered through Cayman Islands banks.

"We're encouraged by the action of the U.S.
Attorney's Office, and we believe that this conspiracy has gone on for over 10
years," General Instrument Corp. director of security Stan Durey said.

Regarding Stoler's assertion that private set-top
ownership is a gray area, Durey countered that federal rules and orders would not overturn
policy on unauthorized devices.

"This has never been about [private] ownership: This
is about stealing," he said of the Abboud case.

Although he was happy with the results of the Omaha
investigation, Dan Backo, director of the National Cable Television Association's
Office of Cable Signal Theft, said piracy remains a $5 billion problem annually.

Backo added that a recent Internet search for "cable
descramblers" returned 1.5 million results.

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