U.S. v. Saada

• Citation: 212 F.3d 210
• Decision Date: 16 December 1999
• Docket Number: Nos. 99-5126,s. 99-5126
• Parties: (3rd Cir. 2000) UNITED STATES OF AMERICA, APPELLEE, v. NEIL SAADA AND ISAAC SAADA, A/K/A ZUCKIE, APPELLANTS. & 99-5148 Argued:
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 210

212 F.3d 210 (3rd Cir. 2000)

UNITED STATES OF AMERICA, APPELLEE, v. NEIL SAADA AND ISAAC SAADA, A/K/A ZUCKIE, APPELLANTS.

Nos. 99-5126 & 99-5148

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued: December 16, 1999

Filed May 15, 2000

Appeal from the United States District Court for the District of New Jersey D.C. Criminal No. 96-cr-00047 District Judge: Honorable John C. Lifland

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Edna Ball Axelrod, Esq. (Argued) 76 South Orange Avenue, Suite 305 South Orange, N.J. 07079.

Paul Brickfield, Esq. 70 Grand Avenue River Edge, N.J. 07661.

Norman Gross, Esq. (Argued) Office of the United States Attorney One John F. Gerry Plaza Fourth and Cooper Streets Camden, N.J. 08101-2098.

James F. McMahon, Esq. Office of the United States Attorney 970 Broad Street Newark, N.J. 07102-2535.

Before: Nygaard and Rendell, Circuit Judges, and Harris, District Judge.^*

OPINION OF THE COURT

Harris, District Judge.

This appeal arises out of a factual setting of unusual corruption, involving a flooded portion of a warehouse resulting from a broken sprinkler head; a fraudulent insurance claim filed by a father and son; a cousin who took part in the scheme, but later testified against his relatives as a government witness, only to be caught on tape by the government encouraging an individual to falsely implicate someone in a different crime; and the use at trial of a statement by a deceased state court judge who had been removed from the bench and disbarred for unethical conduct. It requires us to apply our standards governing new trials under Federal Rule of Criminal Procedure 33 and a prosecutor's vouching for the credibility of witnesses, and to interpret the intersection of two rules of evidence.

A jury convicted Isaac Saada and his son, Neil Saada (collectively "appellants" and sometimes identified by their first names), of one count of conspiracy to defraud an insurance company in violation of 18 U.S.C. S 371, two counts of mail fraud in violation of 18 U.S.C. S 1341, and one count of wire fraud in violation of 18 U.S.C.S 1343. The District Court sentenced Isaac to concurrent prison terms of 36 months, and Neil to concurrent prison terms of 30 months. Shortly after being sentenced, appellants filed a motion for a new trial on the basis of newly discovered evidence, which the District Court denied. Appellants challenge the District Court's denial of their motion for a new trial, a number of its evidentiary rulings made during the trial, and the propriety of certain statements made by the government during its rebuttal argument. We will affirm.

I. BACKGROUND

A. Factual Background

Appellants owned and operated a business named Scrimshaw Handicrafts ("Scrimshaw") in New Jersey that purchased, manufactured, and sold items made from ivory, jewels, gold, and other materials. Appellants faced significant financial difficulties. In August 1990, they were sued on a $6 million bank loan made to an entity named Kiddie Craft; each appellant had personally guaranteed the total amount of the loan, and each thus was liable for the amount of the subsequent settlement of the lawsuit-- $3.8 million. During this period, Scrimshaw was operating at a net loss, and ultimately it filed for bankruptcy in June 1991.

The government's evidence at trial showed that, in 1990, appellants contacted Ezra Rishty, Isaac's cousin, for help in an insurance fraud scheme. Rishty was a public insurance adjuster in New York City who had conspired with various clients in over 200 fraudulent insurance schemes in the past. Rishty agreed to assist Isaac in filing a fraudulent insurance claim, and enlisted the help of Morris Beyda, a former employee who by then owned his own business. Rishty also enlisted the help of Sal Marchello, a general adjuster for the Chubb Insurance Group ("Chubb"), which was Scrimshaw's insurer. Marchello assured Rishty that Chubb would assign him to handle the future Scrimshaw claim.

The basis of the fraudulent insurance claim was a staged flooding in Scrimshaw's warehouse caused by a broken sprinkler head. Beyda testified that, on November 28, 1990, he went to the warehouse and, with the assistance of Neil, broke a sprinkler head located above a caged area containing Scrimshaw's most valuable merchandise. When Neil and Beyda broke the sprinkler head, Isaac was in his office with Tom Yaccarino, a vice-president of Scrimshaw and former New Jersey state court judge. Breaking the sprinkler head caused a flood of dirty water to fall on the boxes in the cage, which triggered an automatic alarm and prompted police and fire fighters to go to the Scrimshaw warehouse. Neil told them the agreed-upon cover story --that he had accidentally broken the sprinkler head while moving a heavy box that was piled on top of other boxes in the storage area, near the ceiling. A few days later, Beyda returned to the warehouse and increased the damage by spraying water on boxes of merchandise that previously had not been damaged.

Appellants submitted an insurance claim and proof of loss to Chubb for the merchandise damaged by the purported accident. The proof of loss contained an inventory of the damaged items, which included items that had in fact not been damaged. Appellants retained Rishty's company, United International Adjusters, to assist them with this claim. Chubb assigned Marchello to investigate the claim, who in turn hired Kurt Wagner -- an insurance salver -- to assess the extent of damage and to valuate the merchandise. Wagner took part in the fraudulent scheme by vouching for the accuracy of the proof of loss, without actually inspecting the inventory listed.

Chubb hired an accounting firm to review the valuation in the proof of loss. Appellants were unable to provide invoices for certain merchandise valued at approximately $500,000 that was listed in their claim. Neil informed the accountants that they were having trouble locating these invoices because they were old and stored away in a trailer. Appellants thereafter submitted forged invoices indicating that Scrimshaw had purchased the merchandise in question from a jewelry wholesaler in New York. When the accountants became suspicious about these invoices because they were in "pristine" condition, Marchello told them to accept the invoices and not to investigate any further.

Chubb also sent an investigator to interview appellants regarding the water damage claim. In separate interviews, at which Rishty was present, appellants stated that their business was not facing financial difficulties. Isaac also stated that he had hired Rishty as a public adjuster because he had seen an advertisement of his company, but did not state that he was related to Rishty.

Chubb ultimately paid appellants $865,000 on the fraudulent claim, $270,000 of which appellants paid to Rishty for his role in the scheme. Rishty paid Beyda, Marchello, and Wagner for their roles in the scheme out of his share of the money.

B. Procedural Background

In December 1992, federal agents executed search warrants for the business offices of Rishty and Beyda in New York. Shortly thereafter, Rishty and Beyda agreed to cooperate with the government.¹ Between 1992 and 1997, Rishty spent approximately 3,000 hours, and Beyda spent over 1,000 hours, cooperating with the government in various insurance fraud investigations. In the course of this cooperation, Rishty admitted to having participated in over 200 fraudulent insurance claims. Rishty and Beyda also advised the government of the fraudulent water damage claim submitted by Scrimshaw. Pursuant to their cooperation agreements, Rishty and Beyda pleaded guilty to various fraud-related offenses in the United States District Court for the Eastern District of New York. Rishty also pleaded guilty to conspiracy to commit mail fraud in the United States District Court for the District of New Jersey for his role in the Scrimshaw claim.

In an indictment filed in the United States District Court for the District of New Jersey, appellants were charged with one count of conspiracy to defraud an insurance company, three counts of mail fraud, and one count of wire fraud.² Before trial, the District Court dismissed one of the mail fraud counts pursuant to a government motion. At trial, both Rishty and Beyda testified for the government, pursuant to their cooperation agreements, as to appellants' involvement in the fraudulent water damage claim. Appellants' defense was that Rishty and Beyda were falsely implicating them in order to receive the benefit of motions for reduced sentences on the charges to which they had pled guilty. The jury convicted appellants on the four remaining counts in the indictment. After being sentenced, appellants moved unsuccessfully for a new trial on the basis of newly discovered evidence. We now turn to the contentions raised in this appeal.

II. MOTION FOR A NEW TRIAL

Appellants first challenge the District Court's denial of their motion for a new trial under Federal Rule of Criminal Procedure 33. We review that decision for an abuse of discretion. See Government of the Virgin Islands v. Lima, 774 F.2d 1245, 1250 (3d Cir. 1985); United States v. Adams, 759 F.2d 1099, 1108 (3d Cir. 1985).

The new evidence forming the basis of appellants' motion consists of a crime committed by Rishty after appellants had been convicted. In July 1997, Rishty advised an individual named Robert Falack to give false testimony against an innocent third party, under the guise of cooperating with the government, in order to receive a reduced sentence on a pending criminal charge.³ Rishty's urging was captured on audio tape, as Falack wore a wire during the conversation. The tape reveals that Rishty also told Falack that he would "back up" his story"100 percent," that Rishty admitted to withholding information from the government during his cooperation, and that the government sometimes gave him information about...