Former banker arrested on cable TV fraud charges
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This is a digitised version of an article from The Cayman Compass's print archive. Occasionally, the digitisation process introduces transcription errors, or other problems.
See the article in its original context from July 1996.
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US District Attorney Faith Hochberg in Newark, New Jersey alleged that Mathewson used Guardian Bank to launder the money. Mathewson now lives in San Antonio, Texas, Ms Hochberg said, where he was arrested. The 92-count federal indictment alleged that the nine people arrested ran a piracy operation that included the manufacture and sale of illegal cable television converter boxes. The converter boxes provided customers with illegal but free access to more than 150 cable channels, prosecutors said. US customers normally pay about US$40-50 a month plus pay per view for a cable TV hook-up. The converter boxes sold for US$300 to US$500 apiece, federal prosecutors said. "This may seem like an insignificant crime, but it really isn't," said Hochberg.
Honest TV viewers, including those in the Cayman Islands and around the world, who pay for legal US cable service, must pay a higher price because of fraud such as this, said spokesperson Mr. Dick Lavinthal of the District Attorney's Office.
Much of the evidence was drawn from an FBI sting operation, which set up a cable company in New Jersey to buy the illegal. boxes, Mr. Lavinthal said.
FBI agent Barry Mawn, who was involved in that sting, said that one of the men investigated in the operation once said, "This is the perfect crime. It's better than drugs. You can't get caught."
Agent Mawn said "Now, we're showing them that not only do they get caught, but that more people will be getting arrested." He declined to say when more arrests would take place.
Those indicted included Francis Russo of North Miami Beach, Florida; his wife, Joann Russo; their son, Francis Russo; Joseph Russo and Joseph Olkowski.
The government is seeking forfeiture of more than US$10 million from Mathewson and the Russos, Mr. Lavinthal said. He did not know if the money was still in the Cayman Islands.
He noted that according to the indictment against Mr. Mathewson, it is alleged that on 15 December 1994, he accepted US$30,000 in cash to deposit in the Guardian Bank in the Cayman Islands, "although he was informed the proceeds were illegal," Mr. Lavinthal said.
Mr. Mathewson was charged with conspiracy, conspiracy to commit money laundering and actual money laundering, said Mr. Lavinthal. If convicted on all counts, he faces a maximum 30 years imprisonment and a maximum fine of US$1 million. The alleged money laundering and conspiracy took place between April, 1994 and March, 1995 Mr. Lavinthal said.
Others arrested by the US government last Thursday include the owners of Novaplex Inc., a California company that allegedly made and sold the illegal boxes.
Five people have already pleaded guilty to felony charges in this case, Mr. Lavinthal said, including a New Jersey computer expert who produced the computer chips used in the converter boxes. In January 1995, the Cayman Islands government took control of Guardian Bank for unspecified offences against the Banks & Trust Companies Law, 1989. The bank's licence was eventually revoked by government and Guardian was forced into a liquidation which is still ongoing at the present time, sources at the Financial Services Supervision Department say.
