U.S. v. LaBarbara, 808

• Decision Date: 31 October 1997
• Docket Number: D,No. 808,808
• Citation: 129 F.3d 81
• Parties: 156 L.R.R.M. (BNA) 2748 UNITED STATES of America, Appellee, v. Michael LaBARBARA, Jr., Defendant-Appellant. ocket 96-1391.
• Court: U.S. Court of Appeals — Second Circuit

Page 81

129 F.3d 81

156 L.R.R.M. (BNA) 2748

UNITED STATES of America, Appellee, v. Michael LaBARBARA, Jr., Defendant-Appellant.

No. 808, Docket 96-1391.

United States Court of Appeals Second Circuit.

Argued Feb. 6, 1997.

Decided Oct. 31, 1997.

Arthur J. Viviani, New York City, for Defendant-Appellant.

William Gurin, Assistant United States Attorney, Eastern District of New York (Zachary W. Carter, United States Attorney, Susan Corkery, Assistant United States Attorney, of counsel), Brooklyn, NY, for Appellee.

Before: WINTER, Chief Judge, OAKES and CABRANES, Circuit Judges.

WINTER, Chief Judge:

Michael LaBarbara, Jr., appeals from a conviction after a jury trial for conspiracy to steal union welfare benefits in violation of 18 U.S.C. § 371, theft from an employee-benefit plan in violation of 18 U.S.C. § 664, embezzlement of union property in violation of 29 U.S.C. § 501(c), and seven counts of mail fraud in violation of 18 U.S.C. § 1341. LaBarbara was sentenced by Judge Spatt to 108 months imprisonment and five years supervised release, ordered to make restitution of $8,300,000, and charged a special assessment of $550.

We hold that the evidence of the use of the mails was legally insufficient on three of the mail-fraud counts. Otherwise, we affirm.

BACKGROUND

We view the evidence in the light most favorable to the government. See Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942). During all One member of the Association and a signatory to the agreements with Local 66 was Strathmore Concrete Company ("Strathmore"), a company owned by one Al Barone. To avoid Strathmore's contractual obligations to contribute to the Local 66 Funds, Barone engaged in a practice known as "double breasting." This practice involved the use of a second corporation owned by Barone, Ju-Lin Building Corporation ("Ju-Lin"), which was not a party to agreements with Local 66. Under this practice, employees would receive a weekly check from Strathmore for working up to thirty hours, and a corresponding contribution would be made to the Funds. For all hours worked over thirty, employees would receive a weekly check from Ju-Lin, and no contribution to the Funds would be made. As a result, Strathmore avoided paying roughly $100,000 per year due the Funds from 1986 through 1990. To secure Local 66's cooperation in double breasting and LaBarbara's cooperation in other unlawful schemes described infra, Barone agreed to pay LaBarbara $250,000, of which $130,000 was actually paid.

pertinent times, LaBarbara served as the principal officer of Local 66, General Building Laborers' International Union. In that capacity, he negotiated collective bargaining agreements with the Concrete Contractors of Long Island ("Association"), an association of contractors who employed members of Local 66. Under these agreements, the employers were obligated, inter alia, to make contributions to various Local 66 Fringe Benefit Funds ("Funds") based on the number of hours worked by members of Local 66.

LaBarbara also abused for profit his position as administrator and trustee of the Local 66 Training Program, an employer-funded benefit program subject to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. LaBarbara proposed to the other trustees that the Training Program pay $785,000 for an eleven-acre parcel of land for use as a training facility for Local 66 members. LaBarbara did not disclose to the trustees that the land was to be purchased from Barone through Ju-Lin or that Barone had purchased the land for only $449,500 three weeks earlier. As an employer of Local 66 members, Barone was deemed under ERISA to be a "party in interest" to the Training Program. 29 U.S.C. § 1002(14)(c). ERISA prohibits transactions with a party in interest absent express authorization from the United States Department of Labor. 29 U.S.C. § 1106. No such authorization was obtained.

During the construction of the training facility, LaBarbara caused yet more ERISA-prohibited transactions. He awarded a number of overpriced construction contracts to Strathmore and to Eastern Landscaping Services ("Eastern"), a company in which LaBarbara's father was an officer. LaBarbara awarded the construction manager's agreement to Strathmore without bidding. Under that agreement, Strathmore's fee was a percentage of the final cost of construction, giving Strathmore an incentive to make the project as costly as possible. Not surprisingly, the evidence at trial revealed numerous acts of overpricing. For example, there was testimony that the amount of concrete purchased for the project far exceeded that which could have been poured into the relevant space. Moreover, Strathmore paid wages to certain individuals designated by LaBarbara. Barone did not know who they were and had no knowledge of whether they had performed services on the project. These payments were ultimately borne by the Training Program.

To finance construction of the training facility, LaBarbara obtained money from the Funds by obtaining a high-interest $4 million mortgage on Local 66's headquarters from the Friesch-Groningsche Hypotheekbank Realty Credit Corporation ("FGH"). To obtain this mortgage, LaBarbara falsely represented to FGH that the trustees of Local 66 and an entity known as the Local 66 Building Corporation had agreed to pledge the union's headquarters as collateral. The Building Corporation was a not-for-profit corporation owned by Local 66, established to shield the union from liability.

In connection with the closing on the mortgage loan, LaBarbara signed documents containing false representations. One was a certification representing that the trustees of Local 66 and the Building Corporation had In connection with these transactions, LaBarbara submitted false statements to the Department of Labor in reports required under ERISA. Specifically, he omitted mention of the prohibited transactions and misstated the financial position of the Training Program.

met on November 15, 1989, and approved the borrowing. The Funds' attorney, Jeffery Dubin, testified that he obtained from LaBarbara or his personal secretary the information contained in two other false certifications, one again asserting a meeting of trustees on November 15 and another listing as officers of the Building Corporation two individuals who did not know they were officers. Dubin testified that no minutes of a meeting on November 15, 1989, exist and that there is no record of any vote authorizing mortgaging of the union's headquarters. In connection with the loan, Dubin mailed a so-called "scorecard" letter--describing the Training Program, Local 66, and the Building Corporation--to FGH before the closing. After the closing, FGH mailed a letter to National Westminster, which had provided interim financing on the project, settling accounts between the two institutions.

Finally, LaBarbara conspired to steal union funds through dealings with Strathmore Commercial Operations Ltd. ("Strathmore Commercial"), part of Barone's overall Strathmore organization. For example, Strathmore Commercial made payments in the form of discounts, loans, credits, and free services to LaBarbara's son, a Local 66 business agent, in connection with the construction of the son's residence.

DISCUSSION

On appeal, LaBarbara argues that: (i) the evidence of his use of the mails was legally insufficient on three of the mail-fraud counts, (ii) the union's headquarters was not union property, (iii) the district court erred in its treatment of prior convictions as criminal history rather than as relevant conduct in determining his base offense level under the Sentencing Guidelines, and (iv) the evidence was insufficient on several other counts. ¹

A. Proof of Mailings

Three of LaBarbara's mail-fraud convictions turn on the alleged mailing by the Training Program of three checks to Eastern. LaBarbara's challenge to the sufficiency of the evidence faces a heavy burden, because we must view the evidence in the light most favorable to the government and ask only whether a rational jury could find beyond a reasonable doubt that LaBarbara caused the three mailings. See, e.g., Glasser, 315 U.S. at 80, 62 S.Ct. at 469; United States v. Pipola, 83 F.3d 556, 564 (2d Cir.), cert. denied, --- U.S. ----, 117 S.Ct. 183, 136 L.Ed.2d 122 (1996); United States v. Giraldo, 80 F.3d 667, 673 (2d Cir.), cert. denied, --- U.S. ----, 117 S.Ct. 135, 136 L.Ed.2d 83 (1996). Nevertheless, we agree that the evidence of mailing on those counts was legally insufficient.

There is no direct evidence that the Training Program mailed the three checks to Eastern. However, use of the mails may be established by circumstantial evidence, see, e.g., United States v. Srulowitz, 785 F.2d 382, 387 (2d Cir.1986); United States v. Toliver, 541 F.2d 958, 966 (2d Cir.1976); United States v. Fassoulis, 445 F.2d 13, 17 (2d Cir.1971), but the standard of proof is, as with every element of a crime, beyond a reasonable doubt. Srulowitz, 785 F.2d at 386-87; see also United States v. Baker, 50 F.2d 122, 123 (2d Cir.1931). For example, in Srulowitz, a mail-fraud conviction was overturned for insufficient proof of mailing where the letter in question was found only in the files of someone other than the addressee. That person speculated that he might have gotten it from the addressee, who in turn speculated that, if the letter had been in his files, it would have arrived by mail. 785 F.2d at 387. However, there was no envelope, date stamp, or testimony from the addressee's secretary who normally opened the mail. We held that the evidence was "entirely too thin" to support a conviction for mail fraud. Id.

Furthermore, inferences drawn from circumstantial evidence such as routine practice have been held insufficient in cases where there is evidence of alternative methods of delivery. In Baker, for example, there was testimony that the letters involved...