BAY CITY, Mich. – Three Palestinian-American men who were found with nearly 1,000 cell phones were charged Wednesday with federal fraud conspiracy and money laundering after a county prosecutor backed off from terrorism charges filed earlier.
Maruan Muhareb, 18; Adham Othman, 21; and Louai Othman, 23, all of the Dallas area, were charged in Bay City with conspiracy to defraud consumers and telephone providers by trafficking in counterfeit goods. They also were charged with money laundering on suspicion that they used proceeds from the counterfeit cell phone transactions to buy more phones.
Magistrate Judge Charles Binder ordered the men held at least until a detention hearing Friday. They were arrested last Friday after buying dozens of cell phones at a Wal-Mart store in nearby Tuscola County.
The three in Michigan had been charged there with collecting or providing materials for terrorist acts and surveillance of a vulnerable target for terrorist purposes.
Prosecutor Mark Reene asked a judge Wednesday to dismiss those charges.
Nabih Ayad, an attorney for the three men, called the charges “outrageous” and accused state and federal officials of “scratching each other’s backs” by shifting jurisdictions.
“This is a clear indication of racial profiling: Picking someone up and holding them for days and trying to find something to charge them with. It’s supposed to be the other way around,” he said.
The federal complaint contains no mention of terrorism. It alleges that the three men defrauded consumers, TracFone Wireless Inc. and Nokia Corp.
Florida-based TracFone sells prepaid cell phones with a limited number of minutes at subsidized prices. It makes money when buyers purchase additional minutes.
The government alleges the men are part of a scheme to buy up phones that Nokia makes for TracFone and then remove TracFone’s proprietary software, enabling use of the handsets with any cellular provider.
When the phones are altered, they are no longer genuine Nokia products.
People involved in the trade of so-called “unlocked” cell phones maintain that the practice is legal.
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