Edward J. Wedelstedt, owner of Goalie Entertainment Holdings, Inc., a Colorado corporation, was indicted along with six other individuals, including his wife and his company, on Friday in the United States District Court for the Northern District of Texas, Dallas Division.
"You'll notice that it looks like this was filed right at the statute of limitations," remarked Andrew Chatham, a Dallas-based First Amendment attorney.
Chatham was apparently referring to the busts that took place over the weekend of August 12-13, 2000, at five Goalie warehouse locations, as well as the homes of Wedelstedt and his attorney. The U.S. Department of Justice convened the first of a series of federal grand juries shortly after that incident, and those juries were continuing their investigation at least into mid-2004.
The other defendants named in this indictment include three persons who are reportedly regional managers for Goalie, one Texas retailer (though there is some contention whether the man, Leroy Moore, Jr., is a retailer) and a woman who reportedly is the retailer's wife.
"What a cheap shot!" exclaimed Hank Asbill, attorney for Wedelstedt in this case. "Indicting her did not enhance the prospect of him rolling over. He's a fighter and this was a case – I didn't come into this case to do anything other than fight it. That's why I'm here."
Asbill is a Washington, D.C.-based defense attorney who has defended clients over a full range of criminal charges.
A trial in Leroy Moore, Jr.'s civil lawsuit to reacquire $226,031 in cash seized by the government in a civil forfeiture is also apparently being delayed pending the outcome of this criminal case.
Of the 23-count indictment, 18 of those counts refer to interstate transportation of obscene material by common carrier; interstate transportation of obscene material for purpose of sale or distribution; engaging in the business of selling or transferring obscene matter; and aiding and abetting those three alleged acts. The specific videos named in the indictments are 1 In The Pink, 1 In The Stink 5 (Red Light District), American Bukkake 7 and 8 (JM Productions); Cumshots 4 (Anabolic Video), Gangbang Angels 11 (Elegant Angel Productions) and Tits and Ass 8 (Devil's Films).
"There doesn't seem to be much distinction or difference between those first two charges with respect to them sending it across state lines," Asbill noted. "And the second allegation, 'engaging in the business of obscenity,' is preposterous. Even if, for the sake or argument, there are six titles that we've shipped somewhere where a jury did find them obscene, they would represent about .001 percent of the titles we've distributed over the last five years, so any allegation of 'engaging in the business of obscenity,' as opposed to engaging in the business of adult entertainment, is offensive to the extreme."
The defendants are also charged with enterprise corruption under the Racketeering Influenced and Corrupt Organizations statute (18 USC §1962(c)) (RICO), which alleges that the defendants conspired with 53 named companies and others in "the interstate transportation" of obscene materials for the purpose of display, distribution and sale"; "the distribution of the income, proceeds and property" of the members of the "enterprise" in order to "hide the source and to benefit the defendants in the form of cash, cashier's checks, money orders, salaries, dividends and interest payments"; and also to acquire "real estate for the purposes of distributing obscene, video films, and of profiting from the unlawful operation of the enterprise."
For those who don't read legalese, that last part means the defendants allegedly bought video stores in order to sell adult video tapes/DVDs, and warehouses in which to store and from which to ship the tapes/DVDs.
The taxable revenues claimed to be hidden allegedly were receipts from video arcades, which typically accept quarters or tokens, and the government will need to prove that store managers and/or Goalie employees willfully underreported such revenues for federal and state tax purposes. The indictment charges that various Goalie-owned stores filed fraudulent tax returns, understating income, with the revenue departments of South Dakota, North Dakota and Iowa, and with the Internal Revenue Service.
"When all is said and done, you're going to find that Eddie Wedelstedt and Goalie overpaid their taxes," Asbill categorically stated.
"We've given them all our records," he continued. "We've made all our employees available to speak to them. Anything they've got here, in large measure comes from things we've given them out of our own corporate records and making all the corporate employees, with the exception of people that they claim are targets – we've made everyone else in the company available to them, so far from impeding any investigation, without our assistance they couldn't even have commenced one."
In fact, far fewer individuals have been indicted than observers who have been following the situation over its many months expected – though one commented that more indictments of others are still possible.
The most onerous charges, of course, are the forfeitures.
"In order to have {Racketeer Influenced and Corrupt Organizations Act (RICO)}, you've got to have predicate acts for RICO, and the only legally available predicates are going to be obscenity or tax charges masquerading as mail fraud on the theory that there's something wrong with your tax return," Asbill explained. "So this is the phony excuse for elevating it to a RICO, and this investigation, which has been a tax investigation for four and a half years until now, now the tail starts to wag the dog and we get into obscenity or mail fraud, etc., so they can elevate it to a RICO, number one, and they can cover their failed tax investigation and try to gin up these charges. They act as if after four and a half years of tax investigation, they didn’t understand that Eddie Wedelstedt and Goalie were in the adult entertainment business, and now, what was a tax investigation for all this time has suddenly been converted into obscenity?"
At press time, Asbill had not yet seen a copy of the 52-page indictment, but said that one of the federal prosecutors had summarized it in an e-mail to him.
The final two counts of the indictment are RICO forfeiture, which ask for the forfeiture of millions in cash, all stock and other interests that Wedelstedt and Goalie have in 53 listed companies, 10 parcels of land, and an airplane, and obscenity forfeiture, which essentially asks for everything not named in the previous count also to be forfeited.
"Anything they want, they're going to have to take," Asbill said, "because we're not 'giving' them anything. If they're not entitled to it, they're not going to get it."
According to attorney Clyde DeWitt, AVN's legal columnist, this case has been assigned to Hon. Ed Kinkeade of the Northern District of Texas. Kinkeade is a graduate of the ultra-conservative Baylor University School of Law. (Baylor didn't allow dancing on campus until the late 1990s.) The Assistant U.S. Attorney in charge of the prosecution is reportedly Linda Groves. Everyone involved in the case expects the matter to take several months, if not years, to resolve.
"We deny these allegations and look forward to proving our innocence before an objective audience," Asbill summarized.
