U.S. v. D'Amato

Decision Date15 November 1994
Docket NumberNo. 1440,D,1440
Citation39 F.3d 1249
PartiesUNITED STATES of America, Appellee, v. Armand P. D'AMATO, Defendant-Appellant. ocket 93-1756.
CourtU.S. Court of Appeals — Second Circuit

John L. Warden, New York City (Robert J. Giuffra, Jr., Sullivan & Cromwell, Stephen P. Scaring, Stephen P. Scaring, P.C., Garden City, NY, of counsel), for defendant-appellant.

Miriam R. Best, Asst., U.S. Atty., E.D.N.Y., Brooklyn, N.Y. (Zachary W. Carter, U.S. Atty., Peter A. Norling, David C. James, Asst. U.S. Attys., E.D.N.Y., Brooklyn, N.Y., Joshua R. Hochberg, Sr. Litigation Counsel, Fraud Section, U.S. Dept. of Justice, Washington, DC, of counsel), for appellee.

Peter C. Hein, George T. Conway III, Arthur L. Liman, New York City, G. Robert Witmer, Jr., New York State Bar Ass'n, Albany, NY, Gerald M. Labush, Nat. Assn of Crim. Defense Lawyers, New York City, William I. Aronwald, New York State Ass'n of Crim. Defense Lawyers, Garden City, NY, Austin V. Campriello, Richard A. Greenberg, New York Crim. Bar Ass'n, Stephan H. Peskin, New York State Trial Lawyers Ass'n, New York City, for amici curiae New York State Bar Ass'n, Nat. Ass'n of Crim. Defense Lawyers, New York State Ass'n of Crim. Defense Lawyers, New York Crim. Bar Ass'n, and New York State Trial Lawyers Ass'n.

Arthur N. Eisenberg, New York Civ. Liberties Union Foundation, Burt Neuborne, New York City, for amicus curiae New York Civ. Liberties Union.

Before: WINTER and JACOBS, Circuit Judges, and POLLACK, District Judge. *

WINTER, Circuit Judge:

Armand P. D'Amato appeals from his conviction by a jury before Judge Mishler. D'Amato was convicted of seven counts of mail fraud in violation of 18 U.S.C. Sec. 1341 and sentenced principally to a term of five months imprisonment, two years of supervised release including five months of home detention, and payment of $7,500 restitution. D'Amato's conviction arises from services he provided to the Unisys Corporation ("Unisys"). 1 The government claimed at trial that D'Amato was hired by a "rogue" Unisys employee, Charles Gardner, and that D'Amato, with Gardner's aid, defrauded Unisys in two ways. First, the government maintained that D'Amato committed mail fraud by structuring his billings to conceal from those in control of corporate funds the nature of his relationship with Unisys and the fact that his actual services involved lobbying his brother, a United States Senator and member of the Senate Appropriations Committee. We will style this theory the "right to control theory." The government maintained, second, that D'Amato committed mail fraud by contracting with Unisys to provide written reports on Senate proceedings while never intending to provide those reports. We will style this theory the "false pretenses theory."

Because the evidence of criminal intent was insufficient on either theory, we reverse the judgment of conviction and order the indictment dismissed.

BACKGROUND

We of course view the evidence in the light most favorable to the government and draw all reasonable inferences in its favor. United States v. Nersesian, 824 F.2d 1294, 1302 (2d Cir.), cert. denied, 484 U.S. 957, 108 S.Ct. 355, 98 L.Ed.2d 380 (1987). In light of this standard, a rational juror could have found the following from the evidence presented at trial.

D'Amato, an attorney, started a law partnership with Jeffrey Forchelli in 1976. By 1988, the two were practicing as partners of D'Amato, Forchelli, Libert, Schwartz, Mineo & Carlino ("D'Amato Forchelli"), a firm of Unisys, a Fortune 100 company, maintained a Surveillance and Fire Control Systems Division ("S & FCS") in Great Neck, New York. This division manufactured radar missile control systems that were sold to the United States government. Charles Gardner served as a Unisys vice president in charge of marketing for S & FCS from the early 1980's until March 1988. Throughout the pertinent period, Gardner bribed Navy officials, made illegal campaign contributions to Congressmen, and personally profited through kickbacks. The government has stipulated, however, that none of these illegal activities involved D'Amato or Senator D'Amato, and there was no evidence that D'Amato was aware of any of Gardner's illegal activities.

roughly twenty lawyers based in Mineola, New York. D'Amato's brother, Alfonse D'Amato, was a United States Senator from the State of New York throughout the period of relevant events. Senator D'Amato was a member of the Senate Appropriations Committee, the Senate committee charged with oversight of defense procurement programs.

Gardner first met D'Amato in spring 1984. At the time, Gardner was seeking to obtain support for the purchase of Unisys products in the Senate Appropriations Committee. Over the course of two meetings, Gardner expressed his interest in gaining Senator D'Amato's support and told Armand D'Amato that he was being hired to further that purpose. Gardner told D'Amato that he would be paid by means of a purchase order, and that these purchase orders would generally call for the production of some form of reports on Congressional proceedings. D'Amato apparently agreed to represent Unisys, although the work was to be done by Peter Iovino, who was joining D'Amato Forchelli to open a Washington, D.C. office.

In 1985, Gardner, dissatisfied with Iovino, sent Herbert Chodosh, a Unisys marketing manager, to ask D'Amato to work for Unisys personally. D'Amato agreed, and the parties discussed another purchase order arrangement, this time through Coastal Energy Enterprises ("Coastal"), a Unisys subsidiary. In a subsequent meeting with D'Amato, Gardner made clear that Unisys was hiring D'Amato to "support[ ] our programs in the Senate Appropriations Committee through [ ] Senator D'Amato's office." Gardner told D'Amato that he would receive $5,000 per month for his services and would be paid through Coastal's issuance of a purchase order calling for the production of reports on Congressional proceedings. Gardner further indicated to D'Amato that Unisys "would offer to help to do the report."

Pursuant to this agreement, in April 1986 Coastal sent D'Amato a purchase order to cover the period from June 1, 1986 to May 31, 1987. The purchase order called for D'Amato Forchelli to "[p]rovide technical services to advise Coastal on matters as specified in the attached Statement of Work." The statement of work contained directives such as "[a]nalyze matters within the purview of Coastal Energy Enterprises in such areas as Federal budgeting, legislative action, likelihood of program funding" and "[p]rovide reports to Coastal relative to performance of competitive companies' offerings of products."

Pursuant to the purchase order, D'Amato Forchelli sent monthly bills on its letterhead to Coastal seeking payment "For Professional Services Rendered: Re: Coastal Energy Enterprises, Inc. Monthly Retainer." By December 1986, Coastal had raised D'Amato Forchelli's retainer to $6,500 a month, and in May 1987 the agreement was extended for another year. In or around July 1986 and December 1987, Unisys employees asked D'Amato to transmit to Senator D'Amato's office draft letters to the Secretary of the Navy composed by Unisys employees. D'Amato apparently complied on both occasions, and letters bearing Senator D'Amato's signature were in fact sent to the Secretary of the Navy.

In fall 1987, Unisys began an internal investigation of alleged unethical behavior by Unisys employees. The investigation was headed by Lawrence Cresce, the Unisys ombudsman, who in turn reported to Henry Ruth, counsel to Unisys's corporate ethics committee. Cresce received information that Gardner was involved in unethical lobbying activities and began an investigation. Cresce's investigation discovered that Gardner had entered into numerous technical service agreements on behalf of Unisys that In November 1987, Cresce questioned Gardner about his activities. Gardner acknowledged that the reports mentioned in the purchase orders "just weren't worth the money," and that the "reports were window dressing, and simply paper so that the consultants can get paid." Gardner further maintained that the consultants he hired were performing valuable work for Unisys. Gardner, however, did not tell Cresce that he had bribed Navy officials. Gardner also falsely denied receiving kickbacks.

called for the production of reports. Upon examining the reports, Cresce became suspicious that many of the reports had been plagiarized from public sources.

In early 1988, Gardner met with senior management and explained the benefits to Unisys of the technical service agreements. Cresce also informed senior Unisys officials, including the Chairman of the Board and the General Counsel, of Gardner's procedure for paying political consultants. Subsequent to his November 1987 meeting with Gardner, Cresce received information that Gardner had used D'Amato Forchelli as a "contact point" with Senator D'Amato's office. Cresce eventually prepared a report dated May 1988 that concluded that Gardner had, among other activities, used D'Amato Forchelli to gain access to Senator D'Amato.

Meanwhile, Gardner had closed Coastal in 1987. Coastal's last payment to D'Amato Forchelli came in November 1987, bringing the total of payments to D'Amato Forchelli by Coastal to $88,000. Gardner decided, however, to continue to retain D'Amato's services through Unisys. Unisys internal procedures dictated that purchase orders to law firms had to be released and controlled by Unisys's law department. Gardner and Dennis Mitchell, a Unisys marketing manager, conceived the idea of circumventing this requirement by issuing the purchase order in the name of Jeffrey Forchelli, the second name on the firm's letterhead. At a subsequent meeting attended by Norm Steiger, head of the Unisys legal department at its Great Neck facility, it was mutually agreed that purchase orders would be issued in...

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