U.S. v. Blau

• Decision Date: 21 April 1997
• Docket Number: No. 95 Cr. 556(DAB).,95 Cr. 556(DAB).
• Citation: 961 F.Supp. 626
• Parties: UNITED STATES of America, v. Arthur M. BLAU, Defendant.
• Court: U.S. District Court — Southern District of New York

961 F.Supp. 626

UNITED STATES of America, v. Arthur M. BLAU, Defendant.

No. 95 Cr. 556(DAB).

United States District Court, S.D. New York.

April 21, 1997.

COPYRIGHT MATERIAL OMITTED

Mary Jo White, United States Attorney for the Southern District of New York, New York City (Michael A. Rogoff, Celeste L. Koeleveld, Hector Gonzalez, Assistant United States Attorneys, of counsel), for U.S.

Anderson Kill & Olick, P.C., New York City (John H. Doyle, III, of counsel), for Defendant.

MEMORANDUM and ORDER

BATTS, District Judge.

On June 26, 1995, Arthur Blau, the Defendant, was charged in a three-count Indictment with violations of 18 U.S.C. § 1954.¹ On July 12, 1996, Defendant was convicted on Count Three, acquitted on Count Two and a mistrial was declared as to Count One. Defendant moves for a judgment of acquittal or, in the alternative, for a new trial.

I. BACKGROUND

Beginning in or about February 1992, the United States Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation ("FBI"), the Department of Labor ("DOL") and the Internal Revenue Service ("IRS") commenced an investigation into certain real estate transactions involving the Mason Tenders District Council of Greater New York's ("Mason") trust funds. (Snyder Aff. ¶ 1.) The investigation resulted in the issuance of numerous grand jury subpoenas, including a 34-count Indictment, issued on September 10, 1992, charging Ron Miceli, Frank Lupo and Charles Trentacosta with racketeering, conversion of pension fund assets, mail fraud and money laundering. (Snyder Aff. ¶ 3; Doyle Aff. ¶ 13; Blau Ex. A.) The charges centered on the use of Mason pension funds to purchase real estate in Manhattan and Brooklyn at grossly inflated prices from associates of the Genovese Crime Family. (Snyder Aff. ¶ 3.) The bloated prices paid by the pension fund for the real estate were supported by false appraisals prepared by individuals associated with one of the organized crime associates. (Id.) Assistant United States Attorney Orin Snyder was assigned to the case. (Snyder Aff.; Gov't Mem. Law at 9.)

Part of the investigation of Mason included an immunized interview of the Defendant. (Snyder Aff. ¶ 4.) Defendant was a partner in Blau, Soloway, Goldstein & Co., an accounting firm which provided services to Mason. (Doyle Aff. ¶ 7; Maffeo Aff. ¶ 2.) On March 16, 1992, Defendant was served with a grand jury subpoena. (Doyle Aff. ¶ 6; Maffeo Aff. ¶ 2 & Ex. A.) He hired the firm of Bernstein & Maffeo to represent him. (Doyle Aff. ¶ 8; Maffeo Aff. ¶ 2.) They contacted AUSA Snyder seeking information regarding the subpoena and, once learning of the subpoena's background, informed AUSA Snyder that the Defendant would invoke his Fifth Amendment privilege if called before the grand jury. (Doyle Aff. ¶ 8; Maffeo Aff. ¶ 3 & Ex. B.) The Defendant also declined a request that he be questioned about the investigation. (Doyle Aff. ¶ 8.)

On April 3, 1992, a subpoena duces tecum was served on the Defendant. (Doyle Aff. ¶ 9; Maffeo Aff. ¶ 4 & Ex. C.) Upon discussion with AUSA Snyder, it was agreed the subpoena would be addressed to Blau, Soloway, Goldstein & Co. (Maffeo Aff. ¶ 4 & Ex. D.) On June 4, 1992, AUSA Snyder once again expressed an interest in meeting with the Defendant, which request was once again denied. (Maffeo Aff. ¶ 5.) On August 28, 1992, a further subpoena was served on the Defendant requiring handwriting samples and fingerprints. (Doyle Aff. ¶ 11; Maffeo Aff. ¶ 6 & Ex. E.)

On September 9, 1992, by letter from AUSA Snyder, Defendant was informed that he was now a target of the investigation. (Doyle Aff. ¶ 12; Maffeo Aff. ¶ 7 & Ex. F; Bernstein Aff. ¶ 3.) On September 25, 1992, an attorney proffer was made to AUSA Snyder, as to what the Defendant would testify to, if granted immunity. (Doyle Aff. ¶ 14; Maffeo Aff. ¶ 10; Bernstein Aff. ¶ 5.) On October 6, 1992, the Government sought a court order of immunity for the Defendant which was granted by Judge Kevin Thomas Duffy. (Doyle Aff. ¶ 15; Bernstein Aff. ¶ 7.) Pursuant to the Order, Defendant attended one debriefing session, conducted by AUSA Snyder, on October 28, 1992. (Doyle Aff. ¶ 16; Bernstein Aff. ¶ 8; Snyder Aff. ¶ 4; Gov't Mem. Law at 9.)

During the debriefing session, Defendant provided information regarding "his knowledge and recollections concerning the real estate transactions, as well as the role of Frank Lupo and Roger Levin in the perpetration of the fraud." (Doyle Aff. ¶¶ 16-17; Bernstein Aff. ¶¶ 9-10.) It appears the Defendant made no incriminating statements or admissions about his involvement in the real estate transactions, or any other criminal activity. (11/13/95 Affidavit of Robert S. Franklin ¶¶ 12-15; Bernstein Aff. ¶¶ 9-10; Snyder Aff. ¶ 4; Gov't Mem. Law at 10.)

Subsequent to the proffer, Defendant supplied, pursuant to subpoena, his personal diaries and telephone logs (collectively "diaries") under the assumption that they would be covered by the grant of immunity.² (Doyle Aff. ¶¶ 19-21; Maffeo Aff. ¶ 14 & Ex. G-H: Bernstein Aff. ¶ 13; Snyder Aff. ¶ 6; Gov't Mem. Law at 10.)

On January 7, 1993, Lupo pled guilty to participating in racketeering activities. (Doyle Aff. ¶ 23 & Ex. C; Snyder Aff. ¶ 6; Gov't Mem. Law at 11.) On January 13, 1996, the grand jury returned a superseding Indictment against Miceli and James Massera, who then pled guilty in April 1993. (Doyle Aff. ¶ 22 & Ex. C; Snyder Aff. ¶ 6; Gov't Mem. Law at 11.) The principal difference in the superseding Indictment was the addition of Massera. (Doyle Aff. ¶ 22 & Ex. C; Snyder Aff. ¶ 6; Gov't Mem. Law at 11.)

The criminal investigation thereafter remained dormant until the fall of 1993. (Gov't Mem. Law at 11.) Lupo was sentenced in July 1993, to a 41 month term of incarceration. (Gov't Mem. Law at 11; Doyle Aff. ¶ 24 & Ex. C.) He then contacted an FBI agent two weeks later to explore cooperation. (Doyle Aff. ¶ 25; Gov't Mem. Law at 11-12.) Lupo entered a cooperation agreement on August 9, 1994. (Doyle Aff. ¶ 27 & Ex. D.) On September 2, 1994, Levin entered into a cooperation agreement. (Doyle Aff. ¶ 29 & Ex. E.) On June 26, 1995, a three-count Indictment against the Defendant was handed down. (Doyle Aff. Ex. A.)

At the time Lupo began providing information, AUSA Snyder was no longer involved in the Mason investigation. The Government represents that Snyder did not participate in the Lupo debriefings, nor did he communicate the information Blau had provided to anyone involved in the Lupo debriefings. The Government further represents that AUSAs Koeleveld and Gonzalez were not aware of the October 1992 proffer until the filing of this motion, nor did they use Defendant's diaries.

On July 11, 1995, Defendant retained Robert S. Franklin, pursuant to a written retainer agreement, to defend him at trial, which he did. (9/11/96 Franklin Aff. ¶¶ 2-3.)

Prior to representing the Defendant, Franklin had represented Thomas Nastasi, Jr., in connection with investigations involving the Carpenters. (9/11/96 Franklin Aff. ¶ 4.) Nastasi was terminally ill, and Franklin represented him until his death in October 1995. (Id.) Count Three of the Indictment alleged that Defendant made illegal payments to Nastasi through Levin.

In the retainer agreement Defendant was informed of this possible conflict. "A specific condition of this representation is that you will not become a cooperating witness for the government. If that condition is breached, you understand and agree that my representation of you will cease and you will be required to retain other counsel." (9/11/96 Franklin Aff. Ex. A.) Franklin also spoke to the Defendant about a possible conflict. (9/11/96 Franklin Aff. ¶ 7.)

Prior to trial, Defendant filed a motion requesting dismissal of the Indictment, arguing that the diaries he provided on November 17, 1992, "undoubtedly allowed the investigators to focus their inquiry or characterize Mr. Blau in a particular way which has impacted on the government's decisions regarding the investigation and prosecution of Mr. Blau." (11/13/95 Franklin Aff. ¶ 18.) Furthermore, Defendant argued that the United States Attorney's Office, Civil Division, by obtaining an order unsealing the grand jury investigation and using it to institute a civil action shows that "there has been obvious concerted action between and among both divisions of the U.S. Attorney's office, the FBI, IRS as well as the Department of Labor." (11/13/95 Franklin Aff. ¶ 27.) From this the Court assumed Defendant was arguing that it was inevitable that the information provided in the diaries was used to bring the Indictment. On January 17, 1996, in a Memorandum and Order, the Court denied the motion at that time, finding that the Defendant had failed to show that the information he provided during the proffer session related in any way to the prosecution. The Court left open the opportunity for Defendant to move, again after trial. (1/17/96 Memorandum and Order at 10 & 11.)

For the reasons stated below, the Defendant's Motions are denied.

II. DISCUSSION

A. Defendant's Motion for Judgment of Acquittal Based on Use of Immunized Testimony is Denied

It is well-established that the Government can compel a witness to give testimony or other self-incriminating information, by granting the witness immunity that is at least as broad as that provided by the Fifth Amendment privilege. Kastigar v. United States, 406 U.S. 441, 449, 92 S.Ct. 1653, 1658-59, 32 L.Ed.2d 212 (1972); United States v. Nanni, 59 F.3d 1425, 1431 (2d Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 576, 133 L.Ed.2d 499 (1995). The grant of immunity pursuant to 18 U.S.C. § 6002, as was given in this case, meets this requirement, Nanni, 59 F.3d at 1431, and prohibits the government from using the information gathered from the witness, directly of indirectly, in a future prosecution. 18 U.S.C. § 6002; Nanni, 59 F.3d at 1431.

The first step in determining whether the immunized information has...