U.S. v. Gricco

Decision Date09 January 2002
Docket NumberNos. 00-2149,00-2179,s. 00-2149
Parties(3rd Cir. 2002) UNITED STATES OF AMERICA, v. ANTHONY J. GRICCO, APPELLANT. WILLIAM T. MCCARDELL, APPELLANT IN 00-2179
CourtU.S. Court of Appeals — Third Circuit

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (Dist. Court Nos. 99-cr-00202-1 and 99-cr-00202-2) District Court Judge: Clarence C. Newcomer

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] F. Emmett Fitzpatrick (Argued), 926 Public Ledger Building 610 Chestnut Street Philadelphia, PA 19106, for Appellant William T. McCardell (No. 00-2179).

Peter Goldberger (Argued), Pamela A. Wilk, Esq., 50 Rittenhouse Place Ardmore, PA 19003-2276, for Appellant Anthony J. Gricco (No. 00-2149).

Michael R. Stiles, U.S. Attorney, Walter S. Batty, Jr., Louis D. Lappen (Argued), Richard J. Zack (Argued), Office of the United States Attorney, 615 Chestnut Street, Ste. 1250 Philadelphia, PA 19106-4476, for Appellee.

Before: Alito and Mckee and KRAVITCH,* Circuit Judges

OPINION OF THE COURT

Alito, Circuit Judge

Appellants Anthony Gricco and Michael McCardell were convicted of conspiracy to defraud the United States, tax evasion, and making false tax returns. All of the charges related to the conspirators' failure to report on their personal income tax returns money that had been stolen from airport parking facilities. We affirm the appellants' convictions, but we vacate their sentences and remand for further sentencing proceedings and resentencing.

I.

From 1990 to 1994, Anthony Gricco was the regional manager for private companies that contracted with the Philadelphia Parking Authority to operate the parking facilities at the Philadelphia International Airport. Gricco was responsible for the general operation of the facilities, including the hiring of employees and the collection of parking fees. Michael McCardell, Gricco's brother-in-law, was Gricco's chief assistant. McCardell oversaw the day-to-day activities of the tollbooths and picked up money from the cashiers at the end of their shifts.

The parking facilities at the airport used automated ticket machines as well as cashiers. Upon entering a lot, a customer would take a ticket from a machine. The date and time would be printed on the ticket and encoded in the magnetic strip on the back. To leave the lot, the customer would drive to a tollbooth and the ticket would be put into another machine. This machine would read the date and time of issuance, calculate the length of time that the customer had parked in the lot, and display the parking fee owed. The customer would then pay the cashier in the tollbooth. At the end of a shift, each cashier would bundle together the tickets and cash received and put them in a brown bag labeled with the cashier's name and the number of the tollbooth. Each cashier would also place in the bag a tape from the ticket-reading machine that provided a record of the tickets that the machine had processed. The supervisors then would forward the bags to Gricco's assistants.

In early 1990, Gricco, McCardell, and others made a plan to steal money by substituting customers' real tickets with replacement tickets showing false dates and times of entry. A customer who had parked in the lot for a long period of time would have a real ticket reflecting a high parking fee. On leaving the lot, the customer would pay this fee to the cashier. However, instead of inserting the real ticket into the ticket-reading machine, a cashier participating in the scheme would insert a replacement ticket, and the machine would calculate the parking fee based on the false date and time stamped on the replacement ticket. This replacement ticket would indicate that the customer had parked for only a short period of time, and thus the parking fee would be much lower. The thieves would pocket the difference between the amount paid by the customer and the amount of the fee shown on the replacement tickets.

Michael Flannery, a technician for the company responsible for maintaining the ticket machines, provided the replacement tickets. Flannery also disabled the fare displays on the ticket-reading machines so that customers could not see that the parking fees that they were paying were higher than the fees recorded by the machines.

Flannery initially supplied Gricco with replacement tickets by removing tickets from the ticket-issuing machines and then resetting the counters on those machines. In the beginning, Flannery obtained 30 tickets a day using this method, and one cashier, enlisted by Gricco, used the replacement tickets to steal cash. Gricco scheduled either McCardell or David Million, another supervisor, to oversee the tollbooth plaza at which this cashier worked. Gradually, more corrupt cashiers were enlisted, and eventually Flannery began printing counterfeit tickets.

Gricco, McCardell, Million, and Flannery expanded their scheme over the next four years. At first, Gricco enlisted cashiers who had engaged in a similar but smaller scheme in 1988. Eventually Gricco recruited about 15 other cashiers to participate. Flannery delivered the counterfeit tickets that he manufactured to Gricco, McCardell, or McCardell's wife. McCardell then distributed the replacement tickets to the corrupt cashiers, and at the end of their shifts, McCardell picked up the stolen money and forwarded it to Gricco, who distributed the money among the participants. The cashiers received a portion of the proceeds stolen during their shifts, and the rest was divided into four equal shares for Gricco, McCardell, Million, and Flannery.

The leading participants in the scheme did not report their unlawful income on their federal income tax returns. Gricco kept his money in a safe, loaned cash to others and received repayments in the form of checks or money orders, gave cash to family members, and placed real estate under his family members' names. Through a real estate broker named Ludwig Cappozi, Gricco purchased several properties for cash. Capozzi also engaged in real estate transactions with McCardell's wife, who used cash to purchase properties under both her own and McCardell's name.

The cashiers involved in the scheme also failed to report their unlawful income on their income tax returns. They did not deposit their embezzled funds into banks for fear of being detected by the Internal Revenue Service. Gricco cautioned some cashiers not to put their money in banks, and he advised Flannery and Million to invest in real estate through Capozzi.

The scheme ended in September 1994, when the Philadelphia District Attorney's Office executed search warrants at the airport. In July 1996, the Commonwealth of Pennsylvania brought state charges of theft, forgery, and unlawful use of a computer against Gricco, McCardell, Flannery, Million, and numerous cashiers. The cashiers waived their right to a jury trial and were convicted in the Philadelphia Court of Common Pleas. After a three-day jury trial, Gricco, McCardell, and Million were acquitted, and the judge dismissed Flannery's case.

In April 1999, a federal grand jury returned an indictment against Gricco, McCardell, Million, and Flannery for conspiracy to defraud the United States by obstructing the lawful function of the Internal Revenue Service in the collection of federal income taxes, in violation of 18 U.S.C. S 371; tax evasion, in violation of 26 U.S.C.S 7201; and making false federal income tax returns, in violation of 26 U.S.C. S 7206(1). Prior to trial, Million and Flannery pleaded guilty and agreed to testify for the prosecution. Gricco and McCardell proceeded to trial.

The jury found Gricco and McCardell guilty on all counts. The government submitted a sentencing memorandum asserting that the total amount stolen between 1990 and 1994 was $3.4 million and that the tax loss was $952,000 (i.e., 28% of $3.4 million). The presentence reports adopted the conclusion that the tax loss was $952,000 and applied the base-offense level corresponding to that amount. Gricco and McCardell submitted written objections to these calculations, as well as to various other statements in the presentence report concerning their roles in the airport theft.

The district court held a sentencing hearing. The court first briefly paraphrased the parts of the presentence reports relating to the sentencing enhancements. The court gave Gricco and McCardell an opportunity to present evidence for sentencing purposes, but they declined and instead rested on their written submissions. The court then stated that it had read each party's arguments and would adopt the facts set out in the presentence reports.

The district court sentenced Gricco to 120 months of imprisonment and McCardell to 108 months of imprisonment. The court also sentenced each defendant to three years of supervised release, a $75,000 fine, and $700 in special assessments. Gricco and McCardell appealed.

II.

The appellants contend that their convictions for conspiracy are not supported by sufficient evidence. The appellants were convicted for a so-called "Klein" conspiracy1 -- a conspiracy to defraud the United States by obstructing the lawful function of the Internal Revenue Service in assessing and collecting federal income taxes. See United States v. Shoup, 608 F.2d 950, 956 (3d Cir. 1979).

In order for a Klein conspiracy to exist, an agreed-upon objective must be to impede the IRS. Ingram v. United States, 360 U.S. 672, 679-80 (1959). This need not be the sole or even a major objective of the conspiracy. Id. In addition, impeding the IRS need not be an objective that is sought as an end in itself: an intent to hide unlawful income from the IRS in order to conceal an underlying crime is enough. See, e.g., United States v. Furkin, 119 F.3d 1276, 1280-81 (7th Cir. 1997). Moreover, in a Klein...

To continue reading

Request your trial
59 cases
  • U.S. v. Jimenez
    • United States
    • U.S. Court of Appeals — Third Circuit
    • January 14, 2008
    ...foreseeable to Martell. See United States v. Himler, 355 F.3d 735, 740 (3d Cir.2004) (standard of review); United States v. Gricco, 277 F.3d 339, 356 (3d Cir.2002) (attributing loss arising from the total amount of money stolen by all of the participants to individual C. Giunta's Sentencing......
  • U.S. v. Mansoori
    • United States
    • U.S. Court of Appeals — Seventh Circuit
    • August 29, 2002
    ...applicable special assessment was raised from $50 to $100, only a $50 special assessment could be imposed. E.g., United States v. Gricco, 277 F.3d 339, 363-64 (3rd Cir. 2002); United States v. Prather, 205 F.3d 1265, 1272 (11th Cir.), cert. denied, 531 U.S. 879, 121 S.Ct. 188, 148 L.Ed.2d 1......
  • United States v. Concord Mgmt. & Consulting LLC
    • United States
    • U.S. District Court — District of Columbia
    • November 15, 2018
    ...impairment of lawful government functions, "an agreed-upon objective must be to impede the [government agency]." United States v. Gricco , 277 F.3d 339, 348 (3d Cir. 2002), overruled on other grounds, United States v. Cesare , 581 F.3d 206 (3d Cir. 2009). Impeding the government agency, how......
  • U.S. v. Root
    • United States
    • U.S. Court of Appeals — Third Circuit
    • October 29, 2009
    ...impeding the IRS was one of the conspiracy's objects, and not merely a foreseeable consequence or collateral effect. United States v. Gricco, 277 F.3d 339, 348 (3d Cir.2002). The Government presented ample circumstantial evidence to support the jury's finding that Root and McCracken had an ......
  • Request a trial to view additional results
4 books & journal articles
  • TAX VIOLATIONS
    • United States
    • American Criminal Law Review No. 58-3, July 2021
    • July 1, 2021
    ...and “attempting to evade . . . the payment of the tax,” but f‌inding that both satisfy the element). 111. See United States v. Gricco, 277 F.3d 339, 361 (3d Cir. 2002) (“[C]onduct may support an inference of a tax evasion motive even if a defendant proffers an innocent rationale for his or ......
  • Tax Violations
    • United States
    • American Criminal Law Review No. 60-3, July 2023
    • July 1, 2023
    ...to remove assets from IRS examination). 112. See United States v. Boisseau, 841 F.3d 1122, 1125 (10th Cir. 2016); United States v. Gricco, 277 F.3d 339, 361 (3d Cir. 2002) (“[C]onduct may support an inference of a tax evasion motive even if a defendant proffers an innocent rationale for his......
  • Interest, Penalties, Tax Crimes & Offshore Accounts
    • United States
    • James Publishing Practical Law Books Divorce Taxation Content
    • April 30, 2022
    ...Sansone v. United States , 380 U.S. 343, 351-52 (1965); United States v. Coppola , 425 F.2d 660 (2d Cir. 1969); United States v. Gricco , 277 F.3d 339, 351-52 (3d Cir. 2002); United States v. Boulware , 384 F.3d 794 (2004), 470 F.3d 931, 934 (9th Cir. 2006), reversed on other grounds, 128 S......
  • Tax Violations
    • United States
    • American Criminal Law Review No. 59-3, July 2022
    • July 1, 2022
    ...falsif‌ied W-4 forms to conceal from the government the accurate amount of their taxable income). 114. See United States v. Gricco, 277 F.3d 339, 361 (3d Cir. 2002) (“[C]onduct may support an inference of a tax evasion motive even if a defendant proffers an innocent rationale for his or her......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT