A U.S. magistrate in Nebraska recommended dropping the bulk of the charges in the anti-piracy case against members of the Abboud family-an action that would seriously weaken the case against the long-pursued businessmen.
If the judge hearing the case accepts the recommendation, charges that carry the most significant criminal and financial penalties would evaporate, leaving primarily the cable-piracy counts.
That could be a blow to the anti-piracy effort. To combat the drug business, money-laundering statutes have been strengthened in recent years with increased jail time and greater asset-seizure powers. Cable investigators feel that the latter is important to cut the recidivism rate among pirates.
Left with assets, suspect businesses in the past have often reconstituted under new names.
Cable-security officials scrutinized the activities of the Abboud family's Omaha, Neb.-based operation through the 1990s. Ventures investigated included businesses operating under the names United Imports, G & A Distributing, Broadway Enterprises and M.D. Electronics.
After an investigation and raid by law enforcement, a grand jury last year indicted David, Joseph and Baron Abboud. The indictment listed 62 counts, including conspiracy, fraud, money laundering and cable piracy.
The grand jury heard testimony indicating that family members distributed set-tops worth at least $80 million since 1989. Bank accounts in the Cayman Islands were used to launder proceeds, according to testimony.
Family members have been prosecuted in Texas, Atlanta and New Jersey under varied business names.
Joseph also helped to found a lobbying group for third-party set-top manufacturers. That group shut down when members worried that cable investigators would use member lists and other shared data in prosecutions.
The Abbouds, through lawyers, have said that they were being persecuted for selling some of the same devices as RadioShack Corp.
In April, Abboud attorneys asked U.S. Magistrate Kathleen Jaudzemis to reduce the charges, citing a U.S. Supreme Court ruling that made "material falsehood" a required element in proving mail and wire fraud. Attorneys argued that the fraud charges don't meet that test.
Jaudzemis agreed last month, recommending that U.S. District Judge Lyle Strom dismiss 55 of 62 counts.
Mike Wellman, a spokesman for the U.S. Attorney's Office in Omaha, said prosecutors have objected to Jaudzemis' findings. He said Strom would likely rule within the next 60 days, adding that there may be "another fight in district court" over the charges.
