U.S. v. Ianniello, s. 1407
| Citation | 808 F.2d 184 |
| Decision Date | 04 December 1986 |
| Docket Number | 1400,D,1408,1401,1409,Nos. 1407,1411,1410,1403,1402,s. 1407 |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
| Parties | , RICO Bus.Disp.Guide 6482 UNITED STATES of America, Appellee, v. Matthew IANNIELLO, Benjamin Cohen, Paul Gelb, Alfred Ianniello, Carl Moskowitz, Morton Walker, Chester Cohen, Bernard Kurtz, and Sol Goldman, Defendants- Appellants. ocket 86-1088, - 1089, -1090, -1091, -1092, -1093, -1102, -1109, -1110. |
Mark F. Pomerantz, New York City (Fischetti & Pomerantz, Jay Goldberg, New York City, of counsel), for defendant-appellant Matthew Ianniello.
Frederick P. Hafetz, New York City (Goldman & Hafetz, of counsel) for defendant-appellant Benjamin Cohen.
John L. Pollok, New York City (Hoffman, Pollok & Gasthalter, of counsel) for defendant-appellant Paul Gelb.
Mark A. Summers, New York City (Hoffman, Pollok & Gasthalter, of counsel) for defendant-appellant Alfred Ianniello.
Deborah A. Schwartz, New York City (Gustave H. Newman, P.C., of counsel) for defendant-appellant Carl Moskowitz.
Paul A. Goldberger, New York City for defendant-appellant Morton Walker.
Eugene Neal Kaplan, New York City (Kaplan, Thomashower & Landau, of counsel) for defendant-appellant Chester Cohen.
Sol Goldman, pro se.
Judd Berstein, New York City, for defendant-appellant Sol Goldman.
Gerald B. Lefcourt, New York City (Gerald B. Lefcourt, P.C., of counsel) for defendant-appellant Bernard Kurtz.
Howard E. Heiss, Asst. U.S. Atty., New York City (Rudolph W. Giuliani, U.S. Atty., James B. Rather, Kenneth Roth, Asst. U.S. Attys., New York City, on the brief), for United States.
Before WINTER and MAHONEY, Circuit Judges, and LASKER, District judge. *
Defendants appeal from judgments entered upon their convictions by a jury in the Southern District of New York, raising a number of issues. We affirm, and discuss only the questions concerning the construction of the indictment, the definition of a pattern of racketeering activity under the Racketeer Influenced and Corrupt Organizations Act, Pub.L.No. 91-452, tit. IX, 84 Stat. 941 () ("RICO"), the elements of mail fraud based upon fraud on the New York State Liquor Authority ("SLA") and state tax authorities, the effect of the twenty-first amendment on the federal government's ability to regulate the mails, and the corroboration necessary to convict on a co-conspirator's statement.
The indictment alleged, inter alia, a broad conspiracy to violate RICO, substantive violations of RICO, mail fraud, bankruptcy fraud and tax evasion.
At trial, the government established 1 that the defendants were part of a group that skimmed profits from bars and restaurants that they owned and operated in New York City. Matthew Ianniello and Benjamin Cohen 2 directed the enterprise's activities, supervising and overseeing its affairs from offices in Manhattan. 3 While they received the greatest profits from its operations, the bars and restaurants ostensibly were owned and managed by others, who acted as "fronts" for Ianniello and Cohen.
As part of the scheme to skim money, the defendants obtained liquor licenses from the SLA for the businesses. Ianniello's and Cohen's financial interests in and receipt of money from the bars and restaurants were concealed from the SLA. This eased the granting of the liquor licenses and made the skimming more difficult to detect.
In addition, the scheme included a plan to defraud the New York State Department of Taxation and Finance (the "Department") by understating gross receipts in sales tax returns. Further, the defendants defrauded the legitimate creditors of the Peppermint Lounge, one of the enterprises involved in this operation, 4 by skimming its receipts while the bar was in bankruptcy proceedings. Finally, various of the recipients of the skimmed cash receipts failed to pay personal income taxes on those receipts.
A lawyer and accountant also participated. Carl Moskowitz ("Moskowitz"), the lawyer, prepared false liquor license applications that were submitted to the SLA for the Mardi Gras, the Haymarket, the Grapevine and the Peppermint Lounge. 5 Sol Goldman ("Goldman"), the accountant, helped conceal the skimming and diversion of income from the Peppermint Lounge, the New Peppermint Lounge and Umberto's Clam House through false books and records, and prepared and filed false state tax returns for the same enterprises. Goldman also assisted in the bankruptcy fraud committed during the bankruptcy proceedings of the Peppermint Lounge.
The most profitable business was P & G Funding Corp., which operated the Mardi Gras. The bar opened in January, 1979, and for the first two years of its operation the owners of record were Paul Gelb and his wife, Pauline Gelb. 6 Subsequently, Pauline Gelb became the sole owner of record. From the time the Mardi Gras opened its doors in 1979, Ianniello, Cohen and Gelb regularly skimmed its cash receipts, dividing the money equally among themselves. By the end of 1982, the defendants had divided over $2 million in unreported income.
The original liquor license application prepared by Moskowitz and filed by the Mardi Gras with the SLA in October 1978 stated that no one other than Paul and Pauline Gelb had a financial interest in the Mardi Gras or would share in the receipts of the bar, hiding Ianniello's and Cohen's stake in the Mardi Gras. This was repeated in the later liquor license renewal applications. These defendants also concealed their skimming at the Mardi Gras from the Department by understating the bar's true gross receipts.
The record owner of Osbro Restaurant, Inc., which did business as "Umberto's Clam House," was Robert Ianniello, 7 and the restaurant was managed by Oscar Ianello. 8 Their two brothers, Matthew Ianniello and Alfred Ianniello, however, controlled the business and skimmed its receipts. Liquor license renewal applications filed with the SLA did not disclose Matthew Ianniello's interest in Umberto's Clam House. The books and records of the restaurant, kept by Goldman, concealed the skimming by showing false receipts and expenses. The sales tax return for the period September through November 1982 also understated the true receipts of the restaurant, as well as the amount of sales tax due.
The "Peppermint Lounge," Mar-Jear Restaurant, Inc., was a bar and nightclub located in Manhattan. While ostensibly owned by Herbert Taylor ("Taylor"), the bar was controlled by Ianniello and Cohen, who skimmed cash from the receipts of the bar. Bernard Kurtz ("Kurtz") was the manager. Kurtz made the major management decisions, particularly regarding money and expenses. In the fall of 1980, Kurtz hired Frank Rocchio ("Rocchio"), his niece's husband, to book bands for the bar. The bar paid for the bands hired by Rocchio.
By the spring of 1982, the Peppermint Lounge had been closed down a number of times by the New York City Fire Department because of overcrowding. As a result, the Peppermint Lounge moved into the physical facilities of a larger bar and nightclub, which at the time was called the "Electric Circus," whose corporate identity was Circus Disco, Ltd. The name of the "Electric Circus" was changed to the "New Peppermint Lounge."
The facilities of the new nightclub, which operated under a similar format and with essentially the same personnel as the old Peppermint Lounge, were purchased from George Vallario, Jr., Nicholas Orlando and their partners by Kurtz, on behalf of Ianniello and Cohen. The sale was concealed from the SLA, and the New Peppermint Lounge opened for business on May 26, 1982. In the fall of 1982, Kurtz stopped making the weekly payments due to the Vallario group on the purchase of the bar. Shortly thereafter, the Vallario group repossessed the bar from Kurtz.
The defendants skimmed the admission charges at both the Peppermint Lounge and the New Peppermint Lounge. For example, in February 1982, Goldman wrote a letter to the Department "concerning the taxable status of admission charges to a disco and bar." The Department's Sales Tax Instructions and Interpretations Unit responded that the sales tax applied to such charges. Shortly after this, the defendants formed Rock-eo Entertainment, Ltd., named after Rocchio, to divert admission receipts from the New Peppermint Lounge. In a contract between Rock-eo Entertainment and Circus Disco, Rock-eo Entertainment agreed to provide the music as an independent contractor for Circus Disco. Under the terms of the agreement, Rock-eo Entertainment had complete control over the promotion of music at the New Peppermint Lounge and was obligated to pay all expenses in that regard. The expenses were to be paid from the door receipts, which Rock-eo Entertainment was obligated to collect. The excess door receipts were to be Rock-eo Entertainment's profit. In reality, however, Rock-eo Entertainment was wholly controlled by the defendants; admission charges collected at the New Peppermint Lounge went to the defendants, not to Rock-eo Entertainment.
The defendants had also skimmed the admission receipts at the old Peppermint Lounge by failing to report any income from performances by bands. When audited, defendants argued that the receipts were for concerts, and thus were not subject to sales tax.
At the same time the defendants were skimming money from the Peppermint Lounge, the bar was in Chapter 11 bankruptcy proceedings. The Bankruptcy Court, at the request of the record owner Taylor, authorized the Peppermint Lounge to retain Goldman as its accountant in connection with the bankruptcy proceedings. One of Goldman's responsibilities was to prepare the monthly financial statements or operating reports to be filed with the Bankruptcy Court. Those reports, like the bar's books and records, understated the bar's receipts, concealing the skimming by the defendants.
While the bar was...
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