Operation CableTrap Gets Boom from Banker

The Cayman Islands banker lassoed by federal authorities as
part of the "Operation CableTrap" anti-piracy sting has provided investigators
with information on his financial deals that could lead to the recovery of as much as $300
million in unpaid taxes and penalties by the government, according to prosecutors.

Because of his cooperation, John Mathewson of San Antonio
will receive a reduced sentence of six months' house arrest and five years of
probation. But cable-piracy investigators said the banker's cooperation would provide
interesting information that could be used in other indictments related to the CableTrap

According to information from the office of the U.S.
Attorney for the District of New Jersey, which issued the indictments in the CableTrap
operation, Mathewson has provided detailed information on how money was laundered by
individuals and corporations through his Cayman Islands business, Guardian Bank Trust Ltd.

The services were provided not only to cable pirates, but
also to otherwise legitimate professionals in New York and New Jersey who used the
offshore bank to hide assets.

The indictment said Guardian received payments from
depositors in the United States and, in return, it provided inflated sales invoices to
create the appearance that goods were legitimately purchased. The invoices allowed U.S.
depositors to take fraudulent tax deductions.

Mathewson also helped to create the illusion that U.S.
businesses were borrowing money from legitimate foreign lenders, and he issued gold Visa
credit cards that permitted depositors to use their offshore money.

Indeed, one of the undercover investigators who worked for
the cable industry, Phil Deming, was given one of the cards, as well as other perks, as
payment for his assistance in obtaining set-tops for the pirates.

Operation CableTrap began in 1993, when General Instrument
Corp. signed a memorandum of understanding with the FBI to provide technical and other
assistance in piracy investigations.

Soon thereafter, an alleged pirate tried to bribe GI's
director of security, Stan Durey, with $2 million if he would facilitate a large purchase
of set-top boxes. Durey refused, but the pirates eventually set up a deal with Deming, who
is actually a security consultant working for GI.

The FBI set up the deals with the pirates, and its
investigators "followed the money." That led them to Mathewson and to piracy
retailers on both coasts, some of whom have already been sentenced.

Investigators said other information may be used in the
prosecution of members of the Abboud family -- principals of M.D. Electronics in Omaha,
Neb. -- who are under indictment there on piracy-related charges.

"In two-and-a-half years [the term of the
investigation], he probably helped to launder between $20 million and $25 million,"
Deming said. "Follow the money and cable piracy is a significant business."