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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.

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. I don't for a minute believe people would buy trac phones without a battery charger and pay 18 bucks more than they could get them from Wal-Mart with a charger.

These people are lying and I hope they are prosecuted for whatever crimes they can get them on.

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.

I don't for a minute believe people would buy trac phones without a battery charger and pay 18 bucks more than they could get them from Wal-Mart with a charger.

I thought I was the only one thinking about that one!

Could the FBI be so stupid as to miss that? Something stinks to high heaven about all these "coincedental" mass cell phone purchases. It ain't anywhere near a legitimate business enterprise.