Defense attorneys outraged as terror case switches to fraud (Michigan Mackinac Bridge case)

The Saginaw News ^ | Thursday, August 17, 2006 | JOE SNAPPER

[idsujmxzcg]

BAY CITY -- Lawyers for three Texas men once accused of plotting to blow up the Mackinac Bridge claim the government is bailing out an overzealous prosecutor by bringing unprecedented charges.

Until Wednesday, even the FBI said the business of buying and altering cell phones -- as the men claim was their only motive -- was a legal enterprise, and that the only issue was whether proceeds end up in terrorist coffers.

But now, the FBI and U.S. attorneys in Bay City say the entrepreneurial behavior of three Americans of Palestinian descent amounts to fraud, not terrorism.

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[Politicalmom]

Oh, good grief. That term is used to denote ancestry, as in "African American".

[Ecliptic]

If they were really resaling the phones, why didn't they just get a license and buy direct from the factory. They could probably pay 9 dollars each instead of 20 something??

[LachlanMinnesota]

Guilty of attempted serial retail sales and scalping by selling for a higher price than the purchase price. Very series!

[duckln]

Who cares how the boxes were opened

Columbo, Sherlock Holmes. All these little things add up. Why not use a matt knife? Where did they get box cutters, basic training?

[dasboot]

Easy....no!

[Boiler Plate]

Great, where are their books, have they paid quarterly estimated taxes, have they paid self employment tax? Otherwise prosecute them for tax evasion.

[CindyDawg]

Yep. There are enough of them that own stores that could have ordered them wholesale. There is no reason for them to be driving across the country to collect them. These phones may just be for money but I really believe there is something much more sinister going on.

[LachlanMinnesota]

The batteries wear down too fast, so they substitute longer lasing batteries, so that it can sit for a week and still work.

[conservative in nyc]

This is only a legal enterprise if the people involved had a business license and a resale license and were paying excise tax. Other wise it is tax evasion, both federal income and state excise tax.

How is there any federal income tax evasion as long as the men report their income on their tax returns? And what state excise taxes do these men owe? They paid any applicable sales taxes at Wal*Mart, and likely wouldn't owe any sales taxes if they resold the phones to a retailer, since they didn't sell to the end purchaser. And I don't think that Texas requires cell phone sellers to have a business license - cell phone sales usually aren't the type of regulated business that requires a license. No special skill is involved.

What these men appear to have been doing is buying Nokia Tracfones, which only could be used with Tracfone's service, and unlocking them to allow them to be used on ANY network. This increases the value of the cell phones because customers are no longer locked into a losing network plan and can buy whatever cell phone service suits their needs. Cell phones are usually sold at a loss in order to lock customers into contracts in the future.

That this is the first time a fraud case is brought in this area doesn't mean that the prosecutor's theory is incorrect. Two California store owners and an accomplice were recently charged with copyright fraud for modifying Xboxes to play pirated video games. The theory here would be similar - the men changed the software of the phones in order for them to be able to do something that they otherwise were unable and not intended to do - work on other networks, defrauding Tracfone of expected revenue from future phone use. Whether the theory holds any water is for a judge and jury to decide.

[Smokin' Joe]

So they sell them. Lather, rinse repeat. There is a reason someone will pay considerably more than they would at their local WalMart for a phone with no paperwork.

[FreedomCalls]

They claimed it was a business enterprise, were they keeping books?

Yes, they sent all the receipts to the Caro, MI PD.

Lina Odeh, 20, is married to one of the suspects and she ... says her husband buys and sells the phones to make a living. She says he does business with a shop on Harry Hines in Dallas.

“He gets receipts for those (cell phones), so we have all of those and we've already sent them down to Caro County,” Odeh said.

[ArmstedFragg]

"Walmart.com will ship the TracFone Motorola GSM C139-4 right to your door for $24.94"



...and an unlocked Motorola C139 sells for 69.99
http://www.worldelectronicsusa.com/Merchant2/merchant.mvc?Screen=PROD&Store_Code=WEU&Product_Code=MCDBUGCP591&Category_Code=M5

Starting to see the arbitrage potential here?

[FreedomCalls]

You wanna put a bomb together and rely on an on/off switch while you're putting it together? Or your buddy next to you?

Dunno. I've never wired a bomb before. Is that how you do it? I'm unfamiliar with bomb-wiring techniques.

[conservative in nyc]

The men were allegedly reprogramming the phones so that they could work on more than just TracFone's network. An unlocked phone is worth more than a locked phone because you can switch networks by switching SIM cards, and aren't locked into a (somewhat crappy) pre-paid plan.

TracFone likely loses money on its phone sales and hopes to turn a profit by selling its service.

[ndt]

Read post #15 it looks like they had a history of doing exactly what they said they were doing.

As far as tax evation, you are assuming they had no license, which they very well might not have had, but you and I dont know at this point.

[ndt]

"Great, where are their books, have they paid quarterly estimated taxes, have they paid self employment tax? Otherwise prosecute them for tax evasion."

So even though it seems that they actually were doing exactly what they said they were doing and there was no connection to terror, you want to throw the book at them. For what, because you got caught up in your emotions and had them convicted without evidence. Not good at admitting your mistakes are you.

[FreedomCalls]

Two California store owners and an accomplice were recently charged with copyright fraud for modifying Xboxes to play pirated video games.

That case though was different in that they sold the X-Box consoles with pirated games included on the harddrives. It wasn't just about the modification.

This case began when the Entertainment Software Alliance contacted federal law enforcement and reported that undercover private investigators had purchased a modified Xbox game console, pre-loaded with several copyrighted games, from ACME Game Store in May 2005.

During the investigation, undercover agents with U.S. Immigration and Customs Enforcement say they paid $265 to have a modification chip a hard drive and 77 pirated games installed in an Xbox.

[Caesar Soze]

Arabs rule Michigan.

Actually, Ms. Granholm is Canadian. But that's beside the point. The point appears to be that several savvy young men familiar with high technology in an expanding marketplace saw an opportunity for profit and took it, and the ruling class (be they Arab or Canadian), unfamiliar with the frontiers of self-employment, stomped down on them. Do something sufficiently clever, and it's assumed that you're a terrorist. I wonder what the FSF/EFF/SlashDot crowd will have to say once some headline writer comes up with, "Mod Your Cell Phone, Get Charged with Terrorism?"

[freepatriot32]

Libertarian ping.To be added or removed from my ping list freepmail me or post a message here

[ArmstedFragg]

If they were really resaling the phones, why didn't they just get a license and buy direct from the factor

Because the factory phone costs more. Cellular carriers sell their phones for less than cost, hoping to make up the difference in air time.