PHOENIX – The pre-sentence report on Five Star Video and Five Star Video Outlet was remarkably honest.
Under "Sentencing Recommendation," Senior U.S. Probation Officer Shawn T. Shear, after advising that no fine be levied, though recommending a "special assessment" of $400 per count – "special assessments" are recommended in all cases – and putting the two corporations on two years' probation each, Ms. Shear wrote, as "Justification" for her conclusions, "In an effort to prosecute JM Productions and [Jeff Steward] for obscene material somewhere other than California, the Obscenity Task Force conducted an internet search and came upon the Five Star entities in Arizona. After ordering and receiving certain JM Productions videos via the www.Fivestardvd.com website, several FBI agents conducted a search on the Five Star premises. It was determined JM Productions videos constituted less than 1 percent of Five Star's inventories. Following the search, Five Star owners purged their warehouse of any stock which was similar in nature to the JM Productions videos."
There it was in the pre-sentence report, the primary fact that it took hours of questioning for an FBI agent finally to admit from the witness stand: The government had targeted JM Productions, and realizing it likely could not find 12 jurors in the state of California willing to convict the company for producing "obscene" materials, looked around for an out-of-state patsy.
Then, after managing to get Five Star Video to send the targeted JM videos to an FBI agent in Virginia, and after browbeating then-U.S. Attorney Paul Charlton into filing charges against the companies – recall that Obscenity Prosecution Task Force head Brent Ward claimed that Charlton and another U.S. attorney were "unwilling to take good cases we have presented to them," a charge that led directly to Charlton's firing in December, '06 – the government not only failed to produce enough evidence to try JM and Steward, but was unable to produce enough evidence to keep Five Star's owners in the case after the prosecution had rested.
Officer Shear also noted in her report that Five Star's owners had ordered employees more than a year before indictment to purge inventory of material they felt might violate "community guidelines related to adult pornography," and that the owners had agreed to testify against JM and Steward as part of a plea arrangement, but because the government had waited until the day trial was to begin to accept the offer, they were unable to make the deal work.
"In consideration of all of the above ... a two-year term of probation is recommended," Shear wrote, "as there is no history of prior misconduct, no threat to the community, and no need of deterrence."
And as to the "Victim Impact" of the defendants' actions?
"There are no identifiable victims of the offense," the report reads.
"That's the key to it: You draw a good probation officer; she was fair, she understood; she listed all the debts in the report and she recommended no fine, and the judge bought it," summarized Richard Hertzberg, attorney for the corporations. "There's a fee that everybody's got to pay, and the judge felt my clients would have to pay it as corporate officers, and it's $800 per corporation, so it's $1600. She inquired of them their finances, and they're going to pay it at $25 a month, but those federal fines can be hundreds of thousands of dollars."
In fact, the now-depleted corporations could have been fined up to $500,000 for each count, for a total of $2 million.
"If they'd been ordered to pay a fine, I don't know what we would have done," Hertzberg said. "We couldn't have paid it. They could have forced us into receivership or bankruptcy. They still could go into bankruptcy because nobody's getting paid. The business is closed."
"You know, that was the deal we offered them months ago," Hertzberg continued. "[Assistant U.S. Attorney] Paul Rood and I had it all worked out: If you let my guys go, we'll close the businesses. We weren't doing that well anyway. Just to escape the possibility of going to prison. And Paul Rood, who was real sharp, knew that was the way to go."
And that, of course, was the ultimate government victory: Even though the government spent, at minimum, several hundred thousand dollars to bring the JM/Five Star case to trial, and though it failed to convict JM, Steward, and Five Star's owners, it nonetheless got almost exactly what it wanted: Two more adult businesses closed, and six more defendants forced to pay hundreds of thousands of dollars to defend themselves against charges that at least one (now former) U.S. Attorney was savvy enough to realize should never have been brought.
Reflected Hertzberg, "I would think this would be the kind of jury [verdict] that would tell the government, 'Maybe we ought not go back to Arizona, because they weren't that totally offended, as bad as those films were, that they had to nail everybody'."
