United States v. Abboud (165 F. Supp. 2d 987, 2000)

ORDER

STROM, Senior District Judge.

This matter is before the Court on defendant, Joseph Abboud’s, amended motion to dismiss Count 1, Count 36 and Counts 54-62 of the Superseding Indictment (Filing No. 148). The magistrate judge held a hearing on the motion which lasted several days: April 3, 2000, April 5, 2000, April 26, 2000, and May 31, 2000. On August 21, 2000, the magistrate judge issued a report and recommendation that Joseph Abboud’s motion to dismiss be denied (Filing No. 268). The defendant filed a timely objection to the magistrate judge’s report and recommendation (Filing No. 271).

Pursuant to 28 U.S.C. § 636(b)(1)(C), the Court has conducted a de novo review of the defendant’s amended motion, the transcripts of the hearings (Filing Nos. 221, 231, 239 and 253), the report and recommendation of the magistrate judge, the defendant’s objections, and the parties’ briefs.

DISCUSSION

The magistrate judge has carefully and meticulously set forth the background facts and circumstances applicable to a proper disposition of defendant’s amended motion. Having reviewed the transcripts, the Court is satisfied that the magistrate judge’s background and factual findings are correct and that the law has been properly applied. The Court finds that the report and recommendation should be approved and adopted in its entirety. Accordingly,

IT IS ORDERED:

1) The report and recommendation of the magistrate judge (Filing No. 268) is approved and adopted.

2) Defendant Joseph Abboud’s objection (Filing No. 271) is denied.

3) Defendant Joseph Abboud’s amended motion to dismiss (Filing No. 148) is denied.

REPORT AND RECOMMENDATION

JAUDZEMIS, United States Magistrate Judge.

This matter is before the court on the amended motion of defendant, Joseph Ab-boud, to dismiss Counts 1, 36, and 54 through 62 of the superseding indictment (# 148). An evidentiary hearing was held on April 3, 2000 (#221), April 5, 2000 (# 231), April 26, 2000 (# 239), and May 31, 2000 (#253). The final post-hearing brief was received on June 23, 2000, at which time the motion was deemed submitted.

On September 30, 1996, Joseph Abboud pled guilty in the Northern District of Georgia to three felony counts and two misdemeanor counts of Unauthorized Reception of Cable Television Services in violation of 42 U.S.C. § 553. A conspiracy count was dismissed as part of the Georgia plea agreement. See United States v. United Imports Corp., et al., case No. 1:96-CR-61-JEC (N.D.Ga). Judge Julie E. Carnes presided over the Georgia prosecution.

In the instant motion to dismiss, Mr. Abboud contends that he has been charged with the conspiracy alleged in Count 1 of the Nebraska superseding indictment in violation of the Fifth Amendment’s Double Jeopardy Clause. He further contends that, by indicting him in this case, the government breached the negotiated plea agreement accepted in the Northern District of Georgia.

For the reasons discussed below, I shall recommend that the motion to dismiss be denied.

I. BACKGROUND

A. The Georgia Investigation

In approximately May 1992, electronic equipment manufacturers approached the U.S. Attorney’s Office in Atlanta, Georgia, complaining that there were companies obtaining their devices, altering them, and selling them in a state that enabled people to illegally receive premium cable television programming. The U.S. Attorney asked the manufacturers to provide more specific information.

Scientific Atlanta, a major manufacturer of cable converter boxes, was a complaining manufacturer. In August or September of 1992, Scientific Atlanta participated in a meeting with the U.S. Attorney and FBI in Atlanta and described certain information they developed regarding the activities of M.D. Electronics in Omaha. As a result of this meeting, the Atlanta division of the FBI opened an undercover investigation in late summer 1992 and began working with Denver Mock, a Pinkerton investigator retained by Scientific Atlanta.

Mock’s role in the investigation was to pose as an unauthorized distributor of cable converter boxes and make contact with buyers in Omaha. Accordingly, Denver Mock contacted Gene Abboud and offered himself as a person with access to the type of cable converter boxes sold by M.D. Electronics. Mock described himself as an “unauthorized” distributor of Scientific Atlantic equipment. Gene Abboud subsequently purchased equipment from Denver Mock for shipment to Omaha.

Between September 1992 and February 1993, Mock sold 2,200 cable boxes in four different sales to Gene Abboud. Scientific Atlanta provided the descramblers to Mock for purposes of the investigation. The devices were shipped to Omaha and Denver Mock received total payment of $325,000 in cashiers checks from Gene Ab-boud. The cable boxes were specially marked so they could be identified as having come from Denver Mock and sold to Gene Abboud.

FBI Special Agent Robert Goffi testified that local FBI offices participate in various investigations as requested. For example, the Omaha FBI office will provide assistance if part of another office’s investigation had to be done in Omaha. The Nebraska FBI office assisted and supported the Atlanta investigation in this capacity.

The four undercover purchases of equipment from Denver Mock resulted in a search warrant being obtained and executed in February 1993 for M.D. Electronics in Omaha. Agent Goffi assisted as a “worker bee” during the 1993 search. Pursuant to the search warrant, the FBI seized business records and about 10,000 cable descramblers from M.D. Electronics. The items seized were all sent to Atlanta.

tí. The Georgia Indictment

On February 6, 1996, Joseph Abboud, Gene Abboud, United Imports Corp. a/k/a M.D. Electronics, and G & A Distributing, Inc. were indicted in the Northern District of Georgia on 12 counts of wire fraud, five counts of unauthorized interception and reception of cable service, four counts of money laundering, one forfeiture count, and one conspiracy count (Ex. 1). The conspiracy count (Count 13) alleged:

37. Beginning approximately August, 1992 and by continuing through February 1993, in the Northern District of Georgia and elsewhere, the defendants, UNITED IMPORTS CORP., a/k/a/ M.D. ELECTRONICS, G & A DISTRIBUTING, INC., JOE ABBOUD, and GENE ABBOUD, and others, known and unknown to the Grand Jury, did combine, conspire, confederate, agree and have a tacit understanding with each other and with others known and unknown to commit certain offenses against the United States, to wit:

1) That they would devise a scheme and artifice to defraud cable companies of money and use interstate wires and communications in execution of the scheme and artifice, all as fully set forth in Counts One through Twelve and incorporated herein by reference, in violation of Title 18, United States Code, Section 1343; and

2) That they would willfully and for the purpose of commercial advantage or private financial gain assist in the unauthorized interception and reception of basic, premium, and pay-per-view cable service transmissions by modifying and distributing for sale to their retail customers certain equipment intended by defendants to be used for the unauthorized reception of communications services offered over a cable system, all as fully set forth in Counts Fourteen through Eighteen, and incorporated by reference, herein, in violation of Title 47 United States Code, Section 553(a).

The Atlanta indictment summarized the conspiracy as follows. Between August 1992 and February 8, 1993, Gene Abboud and G & A Distributing arranged for purchases of cable boxes and descramblers by using interstate wire communications, with the objective of making retail sales of electronic equipment primarily useful for the unauthorized interception of electronic communications. Defendants Joe Abboud and M.D. Electronics modified the cable boxes and descramblers sold to them by G & A and Gene Abboud, rendering the equipment primarily useful for the unauthorized reception of cable signals. Joe Abboud and M.D. Electronics then sold the modified boxes and descramblers to retail customers through an interstate “1-800” telephone number with the objective of making retail sales of electronic equipment primarily useful for the unauthorized interception of electronic communications.

The indictment, at paragraph 39, described approximately 30 overt acts committed between August 17, 1992 and February 1993 in furtherance of the conspiracy, including four purchases of Scientific Atlanta converter boxes and decoders by Gene Abboud and G & A Distributing from the “cooperating witness,” now known to be Denver Mock; Gene Abboud’s corresponding purchases of cashier’s checks from Hawkeye Bank of Council Bluffs, Iowa and delivery of the cashier’s checks to Denver Mock in payment for shipments of cable equipment; Gene Abboud’s acceptance of each shipment of cable boxes; Gene Abboud’s deliveries of cable boxes to M.D. Electronics; M.D. Electronics’ corresponding issuance of checks drawn on its account at First National Bank of Omaha to pay G & A Distributing for the cable boxes; modification of cable boxes by M.D. Electronics and Joe Abboud; shipment of modified cable boxes to customers via United Parcel Service (UPS) and to a Scientific Atlanta employee in the Northern District of Georgia posing as a customer; interstate wire communications between Gene Abboud and the cooperating witness on October 12 and 13, 1992; shipment of a modified Scientific Atlanta box via UPS from Texas to Gene Abboud and G & A Distributing on February 9, 1993; the sale of modified cable boxes to retail customers Paul Harr, Ronald Hardaway, Larry Clem-mons, Gregory Panasuk, Richard Carrier and Sam Billingsley; assisting in the unlawful interception and reception of premium and pay-per-view cable service by retail customers Hardaway, Clemmons, Panasuk, Carrier and Billingsley; cable theft by retail customers; and bank deposits related to the sales of the cable boxes.

C. The New Jersey “Cable Trap” Investigation

During the time of the Atlanta investigation, the New Jersey FBI office was conducting an ongoing operation in New Jersey called “Cable Trap.” In the New Jersey investigation, Joseph Abboud was identified as a person having business dealings with John Mathewson, the president of Guardian Bank & Trust (GBT), located in the Cayman Islands. Mathewson was arrested in July 1996 and began cooperating in the Atlanta investigation at that time (see Ex. 12).

D. Guardian Bank & the “Shelf’ Corporations

The Cayman government took control over Guardian Bank & Trust in January 1995 and had control over the bank’s records as of that time. After his arrest in July 1996, Mathewson cooperated in the Atlanta investigation. Mathewson advised that most of his clients opened a GBT account to “have assets outside the system and save on taxes.” (Ex. 12). He told the Atlanta investigators that he organized “shelf’ corporations in the Cayman Islands and sold the corporations to clients at GBT. The clients would then maintain their bank accounts in the names of the Cayman Islands shelf corporations.

Mathewson verified that Joseph, Barry, David and Gene Abboud all had accounts at GBT. Mathewson dealt mainly with Joseph Abboud, who reportedly purchased Script Corporation from Mathewson in April 1989.

Curt Mantz, who acted as general manager of United Imports from the fall of 1992 through September 1996, testified as to United Imports’ business operations, including use of the Script Corporation account. Mantz testified that 90 to 95% of United Imports’ business involved the sale of television converters and descramblers. Everquest was the wholesale division and M.D. Electronics was the retail division of United Imports; they did not have offices separate from United Imports. Everquest acquired equipment for sale to retail customers by M.D. Electronics through use of an “800” number. United Imports advertised the converter/descramblers and its 800 number in national publications. The orders were shipped via UPS.

In the wholesale operation, Mantz would purchase equipment either overseas or domestically for the purpose of selling it through M.D. Electronics. Mantz testified that it was “a constant thing” for United Imports to buy from and sell to Gene Abboud’s company, G & A Distributing. In summary, from 1992 through 1996, United Imports engaged in purchasing equipment for resale from both overseas and domestic sources. It purchased de-scramblers from business competitors and, on occasion, sold such equipment wholesale to competitors. It made retail sales of converter descramblers. United Imports purchased “800” numbers from competitors who were going out of business. The structure of United Imports did not change during the term of Mantz’ employment.

Mantz testified that United Imports was associated with the accounts held at Guardian Bank & Trust for Script Corporation. He explained that suppliers would manufacture and sell converter de-scramblers for the use of United Imports. The suppliers would initially bill Script Corporation. Script would then bill United Imports. United Imports would send checks to Script Corporation in the Cayman Islands for payment of the equipment. The checks from United Imports ranged from $50,000 to $400,000. Mantz testified that United Imports began sending checks to Script Corporation shortly after fall 1992. The process continued in this manner throughout Mantz’ employment with United Imports.

E. The Georgia Plea Agreement

The Georgia indictment against Joseph Abboud, Gene Abboud, United Imports Corp. a/k/a M.D. Electronics, and G & A Distributing, Inc. had been indicted in Georgia on February 6, 1996. The defendants were represented by counsel, as follows:

Joseph Abboud Bobby Lee Cook (Summerville, GA)

Branch Connelly (Summerville, GA)

United Imports F. Joseph Warm (Washington, DC)

Charles Asher (South Bend, IN)

Gene Abboud James Martin Davis (Omaha, NE)

G & A Distributing James Martin Davis

Assistant U.S. Attorney Martin J. Wein-stein was lead counsel for the government.

Mr. Davis was the only member of the defense team called to testify in conjunction with the pending motion. Davis testified that there were numerous meetings among defense counsel in the Georgia case. Plea negotiations accelerated as the result of John Mathewson’s July 1996 arrest. Davis testified that he first learned from Mr. Warin that the government was threatening prosecution for international money laundering based upon information received from Mathewson. Shortly thereafter, Davis learned from Mr. Weinstein that the government was considering pursuing an international money laundering case against Gene Abboud. (# 221, 44:14-45:8). The original Georgia indictment only had domestic money laundering counts. Davis stated that he was “shocked” to hear this information from Mr. Warin. According to Davis, the charges against Gene Abboud involved only $30,000; however, the Cayman Islands bank accounts identified by Mathewson were much larger and would substantially affect the offense level under the Sentencing Guidelines.

Davis testified that, to avoid confusion and duplication of effort, Mr. Warin acted as lead defense counsel in the plea negotiations. Mr. Warin summarized the status of the plea negotiations in a letter dated September 26, 1996 addressed to defense counsel and Joseph Abboud (Ex. 14). Warm’s letter explained that “[t]he underlying motivation remains that the defendants will be not incarcerated.” In particular,

1. All defendants would plead guilty to Count 1 and Counts 14 through 18.

2. The pleas would be admissions of guilty by the defendants.

3. Total fines imposed would be comprised of: forfeiture of $633,000 previously seized; forfeiture of $800,000 in equipment previously seized; transfer to the government of decoder equipment owned by M.D. Electronics valued at $2 million to $2.5 million; payment by the defendants of a $1.1 million fine to the government, the allocation of which to be determined by the government.

4. Government to stipulate that the fraud loss for the Sentencing Guidelines would be $38,000. “The government’s willingness to stipulate to the modest amount of $38,000 fraud loss is a major concession.”

5. Government to stipulate that the sentencing should be controlled by Sentencing Guideline 2B5.3 (Criminal Infringement of Copyright or Trademark) and not the fraud loss guideline, 2F1.1, another “major concession.”

6. Parties agree that the Guideline level for Joe Abboud is 10.

7. Defendants to remain free pending sentencing.

8. Mr. Weinstein to return as a special Assistant U.S. Attorney for the sentencing hearing.

9. “These pleas will resolve all matters arising out of the bank accounts in the Cayman Islands” except for Title 26 offenses (criminal/civil tax) and the remaining counts of the indictment will be dismissed.

10. Although the government and defendants will stipulate to collective fines of $1.1 million, “this is not a Rule 11(e) agreement that the Court must accept the recommended disposition of the case or the defendant may withdraw the guilty plea.”

Among other things, Mr. Warm stated that defense counsel “should try to extract a commitment from the government that it will seek to dissuade other prosecutors from pursuing additional charges against all of the defendants in this investigation.” He also advised that Judge Carnes would “specifically inquire of each defendant what promises have been made to induce them to plead guilty.”

On September 27, 1996, Judge Carnes held a conference in chambers with counsel concerning the status of the plea negotiations (see Ex. 15 transcript). Mr. Davis participated by telephone. Mr. Weinstein initially explained that the parties wished to advise the court that plea negotiations were substantially completed. Mr. Wein-stein outlined for the court certain issues relating to the plea agreement, specifically: (a) the defendants would plead guilty to the felony and misdemeanor charges involving unauthorized interception of cable signal; (b) guideline calculations based on economic loss; (c) allocation and payment of an approximately $1 million fine; (d) pending forfeiture actions; and (e) the government’s view that this was a “nonin-carceration matter.” Counsel agreed with Judge Carnes’ assessment that the defendants were “first offender businessmen-type people” who were willing to “go higher than what the fine range might be in hopes that I will think that is enough, so that even though I always have the power to send somebody to jail that I might think that is not a very good idea in this case.” Judge Carnes then said it sounded like counsel had worked out a reasonable agreement. Mr. Connelly told Judge Carnes that the defendants would be “leaving the nonaddressable cable de-scrambler business.”

Mr. Davis testified that he spoke with Mr. Weinstein on September 27 and September 30, 1996. On both occasions, Weinstein reaffirmed that no international money laundering charges would be filed against Gene Abboud, but that Gene had to plead guilty if Joseph Abboud was to get the benefit of the plea bargain.

Pursuant to the plea agreement, Joseph Abboud and the other defendants pled guilty in the Northern District of Georgia on September 30, 1996 (see Ex. 17 transcript). Joseph Abboud appeared with his attorneys and stated on the record that he wished to change his plea to Counts 14 through 18 of the indictment from a plea of not guilty to a plea of guilty (3:5-11). Mr. Abboud and Mr. Asher verified that they had signed the negotiated plea agreement on behalf of United Imports (3:21^4:5). Joseph Abboud and Mr. Connelly then verified that they had signed the negotiated plea agreement on behalf of Joseph Abboud individually (4:11-5:8). The procedure was repeated with respect to defendants Gene Abboud and G & A Distributing. Defense counsel then agreed it would be acceptable to conduct the four arraignments simultaneously instead of individually (7:13-17). In this regard, the court cautioned:

The fact that we are doing the questioning together with both of you [Joseph Abboud and Gene Abboud] should not indicate that you shouldn’t listen carefully to my questions. We are not trying to rush through this in any way, gentlemen. And if either of you have any questions about what I am asking you and you don’t understand something, please let me know so that I can give you all the time you need to confer with your counsel.

(7:19-25). Both Joseph and Gene Abboud told the court they understood.

In response to the court’s questions, Joseph Abboud stated that he was 34 years old, had two years of college, and attended the University of Nebraska. He had not taken any narcotic drugs, medicine or pills in the last 24 hours. He consumed one beer the previous night, but did not feel impaired in any way at the time of the plea hearing. Joseph Abboud stated that he did understand what they were doing in the proceeding. Mr. Cook told the court he was “thoroughly apprised” that Joseph Abboud was quite competent to plead guilty.

After eliciting similar information from Gene Abboud, the court advised the defendants as follows:

THE COURT: First, under the Constitution and laws of this country you are each entitled, as is the company, to a trial on these particular charges in front of a judge or a jury, and you would be entitled to the assistance of counsel at such a trial. Do you understand that you would be pleading guilty you obviously give up the right to a trial? Mr. Joe Abboud?

MR. JOE ABBOUD: Yes, I do.

THE COURT: Do you all understand that at a trial you would be presumed to be innocent and the government would have to prove you guilty beyond a reasonable doubt. Further, neither of you would have any obligation to prove anything, including your own innocence. Do you understand that, Mr. Abboud?

MR. JOE ABBOUD: Yes, I do.

# * * * * *

THE COURT: Now, if you’ve watched any TV at all, I’m sure you understand that the procedure is generally that the government has witnesses come to court. They testify in front of you and everybody. Your attorneys can cross-examine them if they want to. Your attorneys can object to evidence the government offers if they’ve got anything to object to. Your attorneys can introduce evidence on your behalf if they have any helpful evidence that they could introduce.

Do you understand that by not having a trial, you of course give up those things as well? Mr. Abboud?

MR. JOE ABBOUD: Yes.

# * * * *

THE COURT: All right. Now, if we were to have a trial, you would have the right to testify if you wanted to, but nobody could make you testify if you didn’t want to do that. Do you understand that, Mr. Abboud?

MR. JOE ABBOUD: Yes, I do.

‡ # # Hí # #

THE COURT: ... Because you are pleading guilty, however, the situation is a little different. I will have to ask you in a moment some question about what it is that you did, and I would expect, since you are standing here pleading guilty, you are probably going to tell me that you did something wrong, that is, that you violated the law. So in the context of pleading guilty, you will be asked questions, the answers to which likely will incriminate you. Do you understand that, Mr. Abboud?

MR. JOE ABBOUD: Yes, I do.

❖ * * * * *

THE COURT: In summary, are you willing to waive and give up your right to a trial and the other rights we have just discussed?

MR. JOE ABBOUD: Yes.

(Ex. 17, 10:17-13:17). Mr. Weinstein then recited the factual basis for the guilty pleas:

Your Honor, were this case to go to trial, the United States would provide evidence that would show the following:

That in 1992, and for some period of time before and both after these particular charges, Mr. Joseph Abboud was the president of a company by the name of United Imports which did business as M.D. Electronics.

Mr. Gene Abboud was the officer, in fact in many ways the sole proprietor, of a company by the name of G & A Distributing which also did business in the Omaha, Nebraska area. M.D. Electronics, United Imports, was in several businesses, one of which was the procuring and distribution of cable converter boxes. And the cable converter boxes were sold into various districts, various parts of the United States through an 800 number.

The primary purpose of the cable converter boxes was to assist in the unlawful interception and reception of premium and pay per view cable service.

Mr. Gene Abboud, in this particular instance, your honor, was responsible for procuring certain cable converter boxes which were then transferred or sold to M.D. Electronics, United Imports, and these boxes were altered at M.D. Electronics so they were made ready and primarily useful in the purpose of interception and assisting in the interception of cable television signal.

The specific counts that we are dealing with and the specific crimes that are the subject of the pleas dealt with the sale of certain of these boxes into the Northern District of Georgia on the dates set forth in the indictment, that being October 31, November 9, December 15, January 20, February 4th of the years 1992 and 1993.

With regard to these specific charges, that the defendants, Mr. Gene Abboud and his company and Mr. Joe Abboud and his company, for the purpose of commercial advantage and unlawful interception and reception of premium and pay per view cable service transmissions, did procure, manufacture, and distribute for sale to retail customers this equipment, being these cable converter boxes. And that this was part of an attempt to assist the retail customer in the unauthorized interception of cable signal; that is, basically attaching the box to their television and receiving cable television signal without paying for it.

The individuals who received the boxes are set forth in the indictment. They are in the Northern District of Georgia. And that is the sum and substance of the counts. And obviously these actions were done willfully and with the appropriate venue in the Northern District of Georgia.

(Ex. 17, 13:22-15:18). Mr. Cook, on behalf of Joseph Abboud, stipulated and agreed that the offer of proof was entirely correct and there was indeed a factual basis for the plea.

The court found that there was a factual basis for the plea (17:5-7). The court then inquired of Joseph Abboud:

THE COURT: ... Mr. Joe Abboud, has anyone threatened or forced you to plead guilty?

MR. JOE ABBOUD: No, they haven’t.

THE COURT: Other than the plea agreement that we will talk about in just a minute, has anyone told you that if you don’t plead guilty something bad might happen to you or other charges might be brought against you?

MR. JOE ABBOUD: No, your honor.

(Ex. 17, 17:8-15). The court then explained that plea agreements were perfectly permissible, provided that the court understand what all the promises and the terms are:

THE COURT: ... And by that I mean that if you all believe that there have been any side agreements or side promises made by anybody to you with regard to this plea and the sentence the court will impose in the future, you need to let me know right now. Because if you don’t let me know right now what your understanding of all the promises are, you will never be able to enforce those particular promises. Do you understand that, Mr. Abboud?

MR. JOE ABBOUD: Yes, I do.

(Ex. 17, 18:1-9). Joseph Abboud then advised the court that Mr. Weinstein’s proffer was correct and accurate. (18:20).

The court then reviewed the written plea agreements (see Ex. 16, Negotiated Plea). Mr. Weinstein summarized the most important points, describing the offenses as copyright or intellectual property cases. He indicated that the government agreed to recommend credit for acceptance of responsibility and agreed that Sentencing Guideline section 2B5.3 should apply because it was appropriate for criminal copyright or patent violations. Because of the difficulty in calculating fraud loss in such a case, the parties agreed that the appropriate fraud loss for the crimes charged was $39,569.77. The defendants agreed to waive all their rights in related forfeiture proceedings involving $633,000 in currency and certain cable converter boxes. It was recommended that G & A Distributing not pay a fíne, that Gene Ab-boud pay a $50,000 fine, that United Imports pay a $50,000 fine, and that Joseph Abboud pay a $1 million fine (22:10-15). The defendants agreed to waive their right to appeal except in certain circumstances set forth in the written plea agreement. The agreed fine exceeded what the guideline range would require but did not exceed the statutory amount.

In response to the court’s questions, Joseph Abboud and his attorney both indicated that Mr. Weinstein had completely and correctly summarized the terms of the plea agreement.

The court granted defense counsel’s request that it incorporate by reference the transcript of the September 27,1996 status conference. (25:2-6).

The court next discussed sentencing issues including a maximum possible jail term of 10 years and a maximum possible fíne of $250,000 per count or a total of $1,250,000 per defendant. Mr. Weinstein informed the court that the two defendant corporations were “not doing real well” financially. The court advised the defendants that it had the power to sentence them up to 10 years’ imprisonment, a three-year period of supervised release, and a maximum fine of $1.25 million for each of the four defendants. The defendants might also be ordered to make restitution to any victim of the offenses.

Joseph Abboud indicated that he understood this information, that he was aware of the sentencing guidelines, and that he had discussed the operation of the sentencing guidelines with his attorney. Mr. Cook advised that he and Mr. Connelly had discussed “best case, worst case” scenarios with Joseph Abboud and with Mr. Weinstein. The court advised that neither the attorneys nor the court were in a position to promise a certain sentence; the calculation could be done only after the presentence report was completed. The court might determine that the fraud loss amount exceeded $39,569.77. For these reasons, it was important for the defendants to understand that they would not be allowed to withdraw their pleas if the sentence turned out to be harsher than they anticipated. Joseph Abboud indicated that he understood. (31:10-34:5). Joseph Abboud also acknowledged that the proposed $1 million fine might exceed the requirements of the sentencing guidelines. (34:21-25). He indicated to the court that he had discussed with his attorneys all matters involving his right to appeal and that he wished to waive his right to appeal as set out in the plea agreement. (36:2-22).

The court then accepted the defendants’ pleas of guilty. (40:12-17).

The written negotiated plea agreement was signed in the courtroom on September 30,1996.

Joseph Abboud testified concerning his impressions of the September 30, 1996 plea hearing. He recalled that in late August or early September 1996 there was a possibility that a superseding indictment would be returned in Georgia charging him with money laundering in the Cayman Islands. He participated in a meeting with defense counsel in a conference room at the Atlanta airport to discuss issues regarding the potential money laundering charges. After this meeting, Mr. Abboud received Mr. Warm’s September 26, 1996 letter. He was out of the country, but returned to the United States to discuss the letter with his attorney, Branch Connolly.

Mr. Abboud testified that he participated in several meetings with Mr. Davis and Gene Abboud in Davis’ office, where they discussed plea negotiations with the other attorneys. Mr. Warm proposed that if the defendants all pled guilty, the government would not prosecute the allegations of international money laundering involving the Caymans. Joseph Abboud agreed to accept the offer and communicated that decision to “all of the attorneys.” He did indeed understand that it was a “package deal.” There were several times when Gene Abboud did not want to negotiate, but the government “would have no part of that.” The defendants ultimately accepted the plea agreement.

Joseph Abboud characterized the plea negotiations as “rushed.” He flew to the United States, flew to Atlanta the morning of the plea, arrived in the courtroom around 9:30 or 10:30 a.m., held the hearing and signed the papers. He acknowledged that the written plea agreement (Ex. 16) does not mention money laundering in the Cayman Islands. He relied on his attorneys to make sure the matter was taken care of.

Joseph Abboud testified that he had not expected to be asked about “other inducements” during the September 30,1996 plea hearing. He stated that he was “shocked” that the question was asked and didn’t know what to say. Nor did Mr. Abboud expect to be asked if he had been “threatened” into pleading guilty. He testified: