59 F.3d 1425 (2nd Cir. 1995), 1729, United States v. Nanni

Docket Nº:1729, Docket 95-1007.
Citation:59 F.3d 1425
Party Name:UNITED STATES of America, Appellee, v. Carl NANNI, Defendant-Appellant.
Case Date:July 17, 1995
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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59 F.3d 1425 (2nd Cir. 1995)

UNITED STATES of America, Appellee,


Carl NANNI, Defendant-Appellant.

No. 1729, Docket 95-1007.

United States Court of Appeals, Second Circuit

July 17, 1995

        Argued March 20, 1995.

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        Martin J. Littlefield, Asst. U.S. Atty., Buffalo, NY (Patrick H. NeMoyer, U.S. Atty., W.D.N.Y., Buffalo, NY, on the brief), for appellee.

        Michael J. Regan, Rochester, NY (Regan & Regan, P.C., Rochester, NY, on the brief), for defendant-appellant.

        Before OAKES, KEARSE, and LEVAL, Circuit Judges.

        KEARSE, Circuit Judge:

        Defendant Carl Nanni appeals from judgments entered in the United States District Court for the Western District of New York following a jury trial before Richard J. Arcara, Judge, convicting him on five counts of assisting in the preparation of false tax returns, in violation of 26 U.S.C. Sec. 7206(2), and one count of conspiring to defraud the United States, in violation of 18 U.S.C. Sec. 371. Nanni was sentenced principally to 32 months' imprisonment, to be followed by three years' supervised release. On appeal, he contends that he is entitled to dismissal of the indictment or, alternatively, a new trial and other relief, on the ground that his Fifth Amendment privilege against self-incrimination was violated by the government's use against him of evidence derived from his immunized testimony before a state grand jury. For the reasons that follow, we disagree and affirm the judgment of conviction.


        The present prosecution focused principally on Nanni and his codefendant Saverio T. Latin, who pleaded guilty to various offenses and testified against Nanni at trial. The events in question date back to the early 1980's when New York State ("State") prosecutors were investigating and prosecuting an "adult entertainment" business called "Good Time Charlies" for state-law obscenity offenses. Latin had been president of a company that owned Good Time Charlies; Nanni was his accountant. Most of the events pertinent to the present appeal do not appear to be in substantial dispute.

  1. The 1983-1984 State Grand Jury Proceedings

            On three occasions in 1983-1984, Assistant District Attorney George Burgasser questioned

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    Nanni before a grand jury in Niagara County, New York (the "State grand jury"), investigating possible violations by Good Time Charlies (sometimes referred to as "GTC") of State obscenity laws. Nanni testified that he served as accountant to DiHar, Inc., the former corporate owner of GTC, and to Latin, DiHar's owner. Nanni also stated that he provided accounting services to AJS Merchandising, Inc. ("AJS"), which had purchased GTC from DiHar; Nanni stated that he had notarized the signature of AJS's owner, John Sureaz, on certain corporate papers. In addition, Nanni testified that he was responsible for writing most of the checks for GTC under each of its owners, that he possessed a stamp reproducing the signature of John Sureaz, and that he used the signature stamp at Sureaz's instruction.

            On several issues Nanni gave apparently inconsistent testimony relating to Sureaz. At one point, he described Sureaz as weighing between 160 and 175 pounds, while at another, he described Sureaz as between 135 and 140 pounds. As to how he came into possession of the Sureaz signature stamp, Nanni first testified that Sureaz had brought the stamp without Nanni's office having either requested or ordered it, but later testified that Nanni's office had ordered the stamp. Nanni also testified that Sureaz would often come to the office and not speak with Nanni, the only accountant with whom Sureaz dealt, and would just leave messages with "[a]nybody." (Transcript of Grand Jury Testimony of Carl Nanni, dated January 9, 1984, at 28.)

            During one exchange, Burgasser noted the apparent inconsistency between the supposedly close business relationship between Nanni and Sureaz and the paucity of Nanni's information about Sureaz:

    Q: Have you ever observed the vehicle he drives?

    A: No sir.

    Q: Ever see a plate number on the car?

    A: No sir.

    Q: Have you ever turned around and asked him for any further personal information other than what you've told us before?

    A: Yes, I've asked him, that the end of the year's coming, I have to have all the old records back to complete tax returns, otherwise my hands are tied, I just can't do it.

    Q: Okay. Has Mr. Sureaz ever told you his home address so you can contact him?

    A: He gave me one address.

    Q: Have you ever tried contacting him at that address.

    A: No sir, no sir.

    Q: Has he left you a phone number?

    A: No sir.

    Q: Let me ask you this. You're keeping very important records for this individual, correct?

    A: No sir, I'm only keeping payroll records.

    . . . . .

    Q: Doesn't he also leave the stamp with you to stamp checks?

    A: Yes sir, he does.

    Q: Okay, and doesn't he also leave the checkbook with you?

    A: Yes sir.

    . . . . .

    Q: But he doesn't leave you any information as to how to contact him, if it becomes necessary?

    A: No sir, he says he would contact me....

            (Id. at 22-23.) Later, Burgasser returned to this theme:

    Q: Now, him giving you that rubber stamp, would that be, in your estimation, a great trust in yourself?

    A: Most accountants you have great trust in.

    Q: But yet he doesn't have trust in you to leave a phone number where you can contact him?

            (Id. at 26-27.) Nanni's answer was unresponsive. Eventually, Burgasser asked Nanni directly whether he had "ever verified that this man in fact is a person known as John Sureaz?" to which Nanni responded: "No sir, because normally accountants verifying--if you come in the office, say you're John Doe, we just take it as your word." (Id. at 33-34.)

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    Burgasser came to believe that Latin was still involved in Good Time Charlies despite its purported sale to AJS, and that Sureaz did not exist. Although this belief was initially kindled by Nanni's immunized grand jury testimony, Burgasser as the trial assistant had developed numerous other sources. After causing Sureaz's indictment, the district attorney's office had made extensive efforts to find him so as to arrest him for trial. The futility of those efforts to find Sureaz, together with trial evidence, fortified Burgasser's belief in Sureaz's non-existence.

            Nanni last appeared before the State grand jury on January 9, 1984. Under New York law, he was automatically granted immunity, with very limited exceptions, for his testimony in all of his grand jury appearances. See N.Y.Crim.Proc.Law Sec. 190.40.

  2. The 1987-1992 Federal Tax Investigations

            In 1987, the Internal Revenue Service ("IRS") began an investigation of Latin's income tax returns. This investigation was initially conducted as a civil inquiry by IRS agent Barbara Ricotta. Ricotta first contacted Burgasser about the earlier obscenity prosecution of Good Time Charlies. She learned from Burgasser that Sureaz, though indicted, had not appeared in the proceedings, and that Burgasser believed Latin to be still involved in GTC and Sureaz to be fictitious.

            Although Ricotta received a transcript of the State grand jury proceedings, she did not read it but instead destroyed it so that it could not taint her investigation. Her independent investigation, discussed in greater detail in Parts II.B.1 and 2. below, included meetings with Nanni, Latin's attorney Robert Zucco, GTC employee Brian Laraby, and employees of the bank at which AJS had its account. She also attempted to meet with Sureaz but was unable to locate him. In a report on her investigation, Ricotta concluded that Latin continued to own GTC and that he was part of "a conspiracy involving at least Latin, Nanni, Zucco and Laraby" to skim money from the operations at GTC without reporting it as income. Ricotta recommended that IRS's Criminal Investigation Division ("CID") commence a fraud investigation.

            The ensuing criminal investigation was led by IRS agent Michael DelValle, assisted by agents of the Federal Bureau of Investigation (collectively the "government agents"). DelValle read Ricotta's report. He also learned that the grand jury materials from the obscenity investigation had been made public, and he obtained and read those materials, including Nanni's grand jury testimony. As discussed in greater detail in Part II.B.3. below, DelValle had in mind, and to an extent used, both Ricotta's report and Nanni's grand jury testimony in pursuing his investigation.

            In November 1989, DelValle applied to the CID Chief and other IRS officials (collectively the "CID managers") for permission to conduct an undercover operation. His application emphasized his belief that Sureaz did not exist and that Latin was the true owner of AJS. Permission was granted in January 1990, and undercover government agents, deployed to pose as prospective purchasers of Good Time Charlies, recorded conversations that strongly supported Ricotta's conclusions as to the existence of a money-skimming tax fraud conspiracy.

            In July 1990, the government applied for search warrants for Good Time Charlies and Nanni's accounting firm. The warrant application was supported by DelValle's affidavit, which included an extensive summary of the information gained through the undercover operation and stated DelValle's belief that Sureaz did not exist. In support of that belief, the affidavit stated that searches of records of, inter alia, IRS, the Social Security Administration, and all state departments of motor vehicles had revealed no reference to any person by the name of John Sureaz. The affidavit also made explicit references to Nanni's grand jury testimony as support for DelValle's belief that Sureaz did not exist. The warrants were issued, and the ensuing search of GTC uncovered various...

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