U.S. v. Blau

• Citation: 159 F.3d 68
• Parties: UNITED STATES of America, Appellee, v. Arthur M. BLAU, Defendant-Appellant. Docket 97-1431.
• Decision Date: 16 October 1998
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 68

159 F.3d 68

UNITED STATES of America, Appellee, v. Arthur M. BLAU, Defendant-Appellant.

Docket 97-1431.

United States Court of Appeals Second Circuit.

Argued April 24, 1998.

Decided Oct. 16, 1998.

J. Bruce Maffeo, Seiff & Kretz, New York, NY, for Defendant-Appellant.

Celeste L. Koeleveld, Assistant United States Attorney, New York, NY (Mary Jo White, United States Attorney for the Southern District of New York, Hector Gonzalez, Craig A. Stewart, Assistant United States Attorneys, New York, NY on brief), for Appellee.

Before: WALKER and CALABRESI, Circuit Judges, and RESTANI, Judge ^*.

WALKER, Circuit Judge:

Defendant-appellant Arthur M. Blau appeals from the judgment of the United States District Court for the Southern District of New York (Deborah A. Batts, District Judge), convicting him, after a jury trial, of offering kickbacks to influence the operations of an employee benefit plan, in violation of 18 U.S.C. § 1954. Blau was sentenced, in principal part, to thirty-six months' imprisonment, to be followed by one year of supervised release. On appeal, Blau contends that (1) the district court erred in denying his post-trial motion for a Kastigar hearing into whether the government improperly employed a proffer, given by Blau under a grant of immunity pursuant to 18 U.S.C. § 6002, to indict Blau and obtain his conviction, and (2) his trial attorney, Robert S. Franklin, rendered ineffective assistance due to a conflict of interest arising out of Franklin's representation of the recipient of Blau's bribes. We affirm.

BACKGROUND

On June 26, 1995, a federal grand jury returned a three-count indictment charging Blau, a certified public accountant, in each count with violating 18 U.S.C. § 1954, which makes it a crime to bribe one who has authority over an employee benefit plan and who receives money with intent to be influenced in connection with the plan. Count One related to bribing Frank Lupo, a trustee of the Mason Tenders District Council of Greater New York ("Mason Tenders") from 1989 to 1991. Count Two related to bribing Frank Lupo's brother, James Lupo, who succeeded Frank from 1992 to 1993 as a trustee of the Mason Tenders Funds. Count Three The jury found Blau guilty on Count Three, not guilty on Count Two, and was unable to reach a verdict on Count One, as to which the district court declared a mistrial. The district court denied Blau's post-trial motions for a judgment of acquittal and, in the alternative, for a new trial, see United States v. Blau, 961 F.Supp. 626, 633 (S.D.N.Y.1997) ("Blau II"), and sentenced Blau on Count Three, in principal part, to thirty-six months' imprisonment, to be followed by one year of supervised release.

related to bribing Thomas J. Nastasi, a trustee of the New York District Council of the United Brotherhood of Carpenters and Joiners of America ("Carpenters") from 1992 through 1993. Blau made the bribes to secure contracts for Blau's accounting services with the plans run by the Mason Tenders and the Carpenters.

The proof at trial as to Count Three established that Blau paid kickbacks to Nastasi from March 1992 until April 1993 to obtain accounting work at the Carpenters Funds. Blau obtained the cash for the kickbacks from his former accounting firm partners--Herman Soloway, Edward Goldstein and Ray Froimowitz--and made the payments to an attorney for the Carpenters Funds, Roger Levin, who then delivered the cash to Nastasi. The government relied at trial upon the testimony of Levin, Soloway, Goldstein and Froimowitz.

The jury also heard testimony relating to Counts One and Two from Frank Lupo and Roger Levin. As to Count One, Lupo testified that he received kickbacks from Blau starting in 1989, when Lupo became President of the Mason Tenders, and Levin, who also represented the Mason Tenders, testified that in 1993 Blau admitted paying kickbacks to Frank Lupo and had shown Levin a ledger reflecting the payments. As to Count Two, the only proof was Levin's testimony that, on several occasions in 1993, he had been instructed by a Mason Tenders Funds supervisor to pick up envelopes from Blau.

In his defense, Blau denied making payments to Nastasi, whom Blau knew to be an influential trustee of the Carpenters Funds. Blau similarly denied making payments to either Frank or James Lupo, or to anyone affiliated with the Mason Tenders Funds.

After the jury's verdict, appellant unsuccessfully moved for a judgment of acquittal, see Fed.R.Crim.P. 29, and, in the alternative, for a new trial, see Fed.R.Crim.P. 33, on the grounds that (1) his indictment and conviction resulted from information derived by the government from a proffer given by Blau in October 1992 under a grant of immunity pursuant to 18 U.S.C. § 6002 and from his immunized production of documents in November 1992, and (2) Blau's right to counsel was violated by an alleged conflict arising from his trial attorney's simultaneous representation of both Blau and Nastasi.

DISCUSSION

I. Kastigar Claim

Blau contends that the district court erred in denying his post-trial motion for a hearing, pursuant to Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972), into whether the government, in obtaining the indictment and conviction in this case, improperly used or relied on a proffer that Blau gave under a grant of immunity several years earlier. Specifically, Blau claims that a Kastigar hearing was warranted since his immunized proffer "apparently" caused Frank Lupo to plead guilty and cooperate against Blau, which in turn led Roger Levin to plead guilty and cooperate against Blau as well. Blau's Kastigar claim requires further explication of the relevant facts.

In February 1992, the United States Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation ("FBI"), the United States Department of Labor, and the Internal Revenue Service began an investigation into various real estate transactions involving the Mason Tenders Funds. The grand jury issued subpoenas and witnesses were interviewed by the prosecutors. In March 1992, Blau, as the outside accountant for the Mason Tenders pension funds, was subpoenaed to appear before a grand jury. Blau informed the government that, if called to testify, he would invoke his privilege against self-incrimination.

Blau subsequently received and complied with a subpoena duces tecum directing that he produce numerous business records from the files of his accounting firm.

On September 10, 1992, the grand jury indicted Ron Miceli, Frank Lupo and Charles Trentacosta and charged them with racketeering, conversion of pension fund assets, mail fraud and money laundering. The charges arose from the use of the Mason Tenders pension funds to buy real estate in Manhattan and Brooklyn at inflated prices from associates of the Genovese Organized Crime Family. The inflated prices were supported by phony appraisals prepared by individuals with ties to organized crime.

In late October 1992, Blau, accompanied by counsel, attended a proffer session pertaining to the Mason Tenders real estate transactions, under a grant of immunity pursuant to 18 U.S.C. § 6002. At that session, Blau provided his recollections of the real estate transactions at issue, focusing on the roles of Frank Lupo and Roger Levin in the perpetration of the fraud. Prior to his indictment, Frank Lupo was the President of the Mason Tenders and a trustee of the Mason Tenders Funds. Blau made no incriminating statements or admissions during the proffer about his involvement in the real estate transactions or in any other criminal activity. Blau was never asked about, nor did he provide, any information concerning any alleged kickbacks he may have made to representatives of the Mason Tenders Funds, or to any other entity.

On November 17, 1992, Blau produced certain personal and telephone diaries that were requested by a grand jury subpoena duces tecum. An accompanying letter from counsel stated that the documents were being produced under compulsion of the prior immunity order.

Frank Lupo's attorney, John L. Pollok, submitted an affidavit in the district court to the effect that Pollok was aware of Blau's immunized proffer and his production of documents in connection with the proffer, and that Pollok told Lupo about the proffer and document production.

On January 7, 1993 Frank Lupo pled guilty to one count of racketeering arising out of the Mason Tenders real estate transactions. Lupo was sentenced on July 16, 1993 to imprisonment for forty-one months, three years' supervised release and a fine of $15,000.

About two weeks after he began his sentence on September 14, 1993, Lupo contacted FBI Special Agent Paul Meyer to explore the possibility of cooperating with the government. At appellant's trial, Lupo testified that when Meyer arrested him, Meyer told Lupo that he could help him if Lupo ever decided to cooperate. On cross-examination, Lupo acknowledged that his "absolute[ ]" purpose in seeking out Special Agent Meyer was "to try to get out of prison." Between October 1993 and May 1994, Lupo met frequently with Special Agent Meyer and other government representatives which resulted in a cooperation agreement in August 1994.

Lupo testified that he was a "very close" friend of Blau, that their families had a social relationship, and that these circumstances led Lupo to hold back incriminating information as to Blau for months after he began cooperating. Lupo testified: "I was trying to protect [Blau] and cover up anything with him. I didn't want anything to come out to get him involved in any way." Lupo also admitted to lying initially to federal officials to avoid incriminating Blau.

Levin testified at trial that, after learning in May 1994 that he might be the target of a civil RICO case, he contacted the government in July with an eye toward cooperation. He entered into a formal cooperation agreement in September. There is no evidence in the...