U.S. v. Capanegro

• Citation: 576 F.2d 973
• Decision Date: 15 May 1978
• Docket Number: D,No. 729,729
• Parties: 99 L.R.R.M. (BNA) 2232, 83 Lab.Cas. P 10,615 UNITED STATES of America, Appellee, v. Michael CAPANEGRO, Defendant-Appellant. ocket 77-1425.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 973

576 F.2d 973

99 L.R.R.M. (BNA) 2232, 83 Lab.Cas. P 10,615

UNITED STATES of America, Appellee, v. Michael CAPANEGRO, Defendant-Appellant.

No. 729, Docket 77-1425.

United States Court of Appeals, Second Circuit.

Argued Feb. 21, 1978.

Decided May 15, 1978.

Don D. Buchwald, Asst. U. S. Atty., New York City (Robert B. Fiske, Jr., U. S. Atty. for the Southern District of New York, Pamela R. Chepiga, Richard Weinberg, Asst. U. S. Attys., New York City, of counsel), for appellee.

Henry Putzel, III, New York City (Donna M. Zerbo, Law Student Asst., Michael J. Capanegro, pro se, of counsel), for defendant-appellant.

Before FRIENDLY, MULLIGAN and MESKILL, Circuit Judges.

MULLIGAN, Circuit Judge:

This is an appeal by Michael Capanegro from a judgment of conviction entered on October 23, 1977 in the United States District Court for the Southern District of New York, after a 10 day trial before Hon. Thomas P. Griesa, United States District Judge, sitting without a jury. An indictment filed on September 24, 1976 charged Capanegro with 24 counts of embezzling, abstracting and converting monies of Local 1101 (Local or Union) of the Communication Workers of America (C.W.A.) in violation of 29 U.S.C. § 501(c). On July 7, 1977 the court found the defendant guilty on 17 counts and not guilty on seven counts. Judge Griesa filed special findings of fact on July 19, 1977. On October 13, 1977 Capanegro was sentenced to concurrent terms of imprisonment of one year and a day on each count.

In early 1971 appellant represented without fee Ricky Carnivale, who was challenging the incumbent for the presidency of the Local. The campaign was successful and a Carnivale slate of officers was certified in April, 1971. From that point through December, 1972 Michael Capanegro was retained as attorney for the Union at a $25,000 annual retainer. In June, 1971 the members of the Union voted to pay the legal fees of 18 members who had been arrested for actions committed during a 13 day wildcat strike. The membership further voted to pay the legal fees of any member arrested for strike activities in the future. On July 14, 1971 the Local went on strike against the New York Telephone Company; the strike lasted until February 18, 1972. During that period about 45 Union members were arrested for strike-related crimes. Although a few were arrested for the felony of assault, the vast majority were charged with such state misdemeanors or offenses as disorderly conduct or harassment. As each arrest occurred the Local's officers either referred the member to Capanegro or advised the attorney of the incident. Capanegro then submitted legal bills to the Union for his alleged representation. These bills were paid from the Local's Defense Fund which was in part financed by the parent union C.W.A. Between October 21, 1971 and February 29, 1972, in addition to his regular fees under the Retainer Agreement, Capanegro received 45 checks totalling $113,025 from the Local's Defense Fund. Capanegro's bills for alleged legal services were sent directly to Carnivale; no copy was sent to the individual member allegedly represented. Carnivale signed all of the checks; indeed, over $100,000 of the Defense Fund checks were actually written out by Carnivale instead of by the "check writers" of the Defense Fund Committee, the usual practice. After the strike, the extent of Capanegro's billings eventually became known to the parent union as well as the Local. An audit was conducted and Capanegro's bills were brought to the attention of the Department of Labor in 1973. As the result of a criminal investigation, this indictment followed.

I

Each of the 24 counts of the indictment related to Capanegro's billing and subsequent receipt of payment for alleged legal fees incurred while representing individual Union members. In finding Capanegro guilty on 17 counts of embezzling, stealing, willfully abstracting or converting to his own use the funds of the Union in violation of § 501(c), Judge Griesa wrote a carefully detailed 34 page opinion finding facts specially as requested by the defendant pursuant to Fed.R.Crim.P. 23(c). The opinion examined the facts and circumstances underlying each count of the indictment.

Appellant argues that the evidence failed to support the guilty verdicts. Under the familiar rubric the evidence must be viewed in the light most favorable to the Government. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942). In this light, or almost any other form of illumination, the appellant's argument on this point is, at best, unconvincing.

An examination of the findings below reveals that in case after case Capanegro's bills were knowingly false. Each bill purported to provide a description of the services which he had rendered a particular member of the Local. In some cases appellant submitted bills for services to members whom he never saw or consulted. At least twice Capanegro's only service was to speak on the phone and advise the member to file a complaint with the police department. Yet in both cases he billed for appearances at hearings. On other occasions Capanegro made brief court appearances for members whose cases were adjourned in contemplation of dismissal. However, he billed for multiple court appearances including trial representation. He never prepared or filed a single brief or memorandum of law although in several cases he claimed that such services had been performed. Capanegro consistently claimed to have made appearances at police stations, at hearings, and also to have held conferences with witnesses when none of these events had actually transpired. In some cases appellant claimed to have represented members who in fact were represented by other counsel. A review of all the counts upon which Capanegro was found guilty discloses that as to each Judge Griesa found the statement of defendant's services was almost entirely a statement of services which had not been rendered. Nor were the statements good faith estimates of services to be performed. We see no purpose in further discussion of individual counts since the evidence fully established a brazen scheme of looting the Union coffers.

On appeal it is argued that the Government offered no evidence that Capanegro's bills were so outrageously high as to constitute fraud. In support of this we are told that the law is "a profession which lacks any real standards concerning the amount of money it bills its clients." The obvious answer, of course, is that an attorney under any standard cannot bill a client for services neither performed nor ever intended to be performed.

Capanegro did testify in his own behalf, generally maintaining that his bills were a good faith estimate of services rendered. Appellant now claims that Judge Griesa's acquittal of Capanegro on seven counts rendered the verdict of guilty on 17 others inconsistent, thus requiring reversal. The point is totally frivolous. Judge Griesa carefully weighed the Government's evidence with respect to each count and found that in some the Government's case did not persuade him beyond a reasonable doubt. The convictions here were amply supported, indeed, compelled by the evidence. That the trial judge saw fit to acquit appellant on seven counts attests to a careful weighing of the testimony and other evidence on each count rather than to any inconsistency. ¹

II

The principal issue on this appeal ² is whether Capanegro was employed by the Union within the language of § 501(c). That section provides:

Any person who embezzles, steals, or unlawfully and willfully abstracts or converts to his own use, or the use of another, any of the moneys, funds, securities, property, or other assets of a labor organization of which he is an officer, or by which he is employed, directly or indirectly, shall be fined not more than $10,000 or imprisoned for not more than five years, or both.

(Emphasis supplied).

Capanegro was clearly "employed" by the Union. The retainer agreement of June 10, 1971 provided in part 1. The client does hereby employ and retain the attorney (Capanegro) as its attorney for and during a period commencing on the 1st day of April, 1971 and shall continue for as long as Ricky Carnivale, President, shall remain in office.

2. The attorney accepts such employment and retainer and agrees to render and perform all legal services necessary or proper for the protection of the interests and property of the client whenever and to the extent required by such client. . .

Carnivale or other Union officers either referred members to Capanegro for legal assistance or advised him that a member had been involved in some incident related to the strike. Appellant's fees were not paid by Union members referred to him but by his employer, the Union. In the only legal papers submitted by Capanegro to courts in his representation of the strikers, affidavits for adjournment, he described himself as "Chief Counsel to the Communications Workers of America, Local 1101." Appellant's relationship with the Union was not casual or happenstance. His affidavit indicates that he was at the Local's office "daily and working on union business." He spoke at Union gatherings. For the year 1972, 76% of his gross professional income was derived from the Union.

In sum, Capanegro by express agreement and in fact was employed by the Union. We have no difficulty therefore in holding that Capanegro was employed by the Union within the meaning of § 501(c). ³

Appellant's argument to the contrary is that Capanegro was not an "employee" of the Union (i. e., he was not on the Union payroll and no usual employee deductions were taken from his fees by the Union). Rather, he argues, as attorney he was an "independent contractor" and hence not within § 501(c). We agree that Capanegro as retained counsel of the Union was not its "employee" in the common law sense of a servant as distinguished from an independent contractor. But the...