Though the trial is ongoing, federal prosecutors formally dismissed all charges against one of the several Idahoans accused of producing and selling counterfeit cellphones and accessories online while based in Ada County.
All charges against Gennady Babichenko — one of the members of the Babichenko family charged in the alleged conspiracy — were dropped last Thursday after jurors were excused for the day, according to court records. A judge ruled Gennady’s charges were not substantiated, and ordered prosecutors to file a motion for dismissal.
There are eight others in the Babichenko family who still face charges: Pavel, Piotr, Timofey, Kristina and Natalya Babichenko; David Bibikov; Anna Iyerusalimets; and Mikhail Iyerusalimets.
The Babichenkos are accused of a conspiracy to smuggle counterfeit electronics from other countries into the United States before selling the products on websites like Amazon and eBay as if they were authentic.
On Aug. 21-22, 2018, federal authorities raided multiple properties the Babichenkos owned, including warehouses, homes and other properties, including a Boise church. Authorities seized over $2 million from three dozen bank accounts, as well as: $53,380 in cash; seven residential and business properties in the Treasure Valley; seven buildings in Brazil; vehicles owned by the defendants; and other items. Investigators allegedly found roughly 60 pallets of counterfeit “cellphones, wrappers and packaging” in warehouses.
In total, 10 were charged following the raids. One defendant, Artur Pupko, pleaded guilty in September 2019, and he has yet to be sentenced.
Defense attorneys for some of the remaining nine argued family members are entrepreneurs working the secondary cellphone market, believing their businesses were legitimate. Attorneys have also claimed some charges were the result of misunderstandings by federal investigators.
When the trial began in late June, prosecutors said in opening statements that the group allegedly took the profits and laundered the money to different businesses and entities, including the construction of apartments in Brazil.
However, those allegations of money laundering were unable to withstand scrutiny.
In the same hearing late last week that included Gennady’s dismissed charges, all money laundering charges for the other eight on trial were also dismissed.
Court records show that prosecutors rested their case on Thursday afternoon, meaning defendants in the case can begin calling their own witnesses.
Outside the presence of the jury, all nine defendants made oral Rule 29 motions, which means attorneys for each of the defendants were able to argue why the government did not present sufficient evidence to justify the charges.
After arguments from attorneys representing each defendant, Judge B. Lynn Winmill ruled the government offered sufficient evidence of a conspiracy for all defendants except Gennady, and he ordered the dismissal of all his charges. Winmill also ruled to dismiss all money laundering charges against the eight remaining defendants before adjourning for the day.
With no trial dates on Friday, Winmill informed the jury just after 9 a.m. Monday of Gennady’s status and the dismissed money laundering charges.
Gennady’s attorney, Jeff Brownson, explained during his opening statement in June that Gennady was one of two people charged who were not involved in any of the undercover buys that preceded the charges. Brownson said Gennady was charged in the conspiracy because of investigators’ suspicion he was a means of laundering the alleged illegal profits.
According to Brownson, Gennady was not a part of the cellphone business and instead built a denture business from scratch. Gennady used the profits from his business to buy and develop properties in Brazil, Brownson said.
While authorities believed Gennady was doing this as a means to launder money from his family’s potentially illegal cellphone businesses, Brownson explained the developments were part of a religious prophesy that centered around the mass migration of Slavic Pentecostals to Brazil. The Babichenkos are originally from Georgia, formerly part of the Soviet Union.
Brownson said Gennady diverted roughly $2.4 million in funds to the Brazil developments.
With Gennady’s charges and the money laundering charges dropped, it appears federal authorities were unable to prove the Brazil land purchases and construction were used as a means of laundering money.
Charges of conspiracy, wire fraud, trafficking counterfeit goods and other alleged illicit actions remain active against the remaining defendants.
If convicted, they could face up to 20 years in prison and $250,000 fines on wire fraud and mail fraud charges; and up to 10 years in prison and $5 million fines on counts of counterfeiting trademark goods.
The trial will continue throughout the coming weeks at the James A. McClure Federal Building and Courthouse in Boise.