U.S. v. Cherico

• Citation: 769 F.Supp.2d 560
• Decision Date: 25 February 2011
• Docket Number: No. 08 Cr. 786 (CM).,08 Cr. 786 (CM).
• Parties: UNITED STATES of America,v.Louis CHERICO, Defendants.
• Court: U.S. District Court — Southern District of New York

769 F.Supp.2d 560

UNITED STATES of America,

v.Louis CHERICO, Defendants.

No. 08 Cr. 786 (CM).

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

Feb. 25, 2011.

Jonathan Brian New, U.S. Attorney's Office, New York, NY, Nicholas Lloyd McQuaid, U.S. Attorney's Office, White Plains, NY, for Plaintiff.Patrick Thomas Burke, Burke, Miele & Golden, LLP, Suffern, NY, Susan C. Wolfe, Hoffman & Pollok LLP, New York, NY, for Defendant.

DECISION AND ORDER ON DEFENDANT'S MOTIONS TO DISMISS

McMAHON, District Judge:

Louis Cherico was indicted on August 20, 2008. The indictment was sealed by a United States Magistrate Judge on the day it was handed up by the grand jury. It was not unsealed and assigned to a judge until February 16, 2010. By that time, one witness to the transactions at issue had died and another had moved out of the country.

Cherico has filed a motion asking the Court to dismiss Counts Seven through Nine of the Indictment, on the ground that he was not charged within the five years statute of limitations applicable to those counts. He argues that it was not appropriate for the indictment to be sealed, in the first place, and since the date when it was unsealed (February 16, 2010) is beyond the five-year limitations period applicable to those Counts, they cannot be prosecuted.

Cherico also moves for dismissal of the indictment in its entirety, on the ground that the delay resulting from the sealing of the Indictment violated his Sixth Amendment right to a speedy trial.

For the reasons set forth below, defendant's motion is denied.

The Indictment

Counts 1 through 6 of the Indictment charges Cherico with participating in a conspiracy to commit bank fraud from in or about July 2002 through in or about the end of 2002. The purpose of the bank fraud conspiracy was to purchase and re-finance several multi-million dollar residential properties with mortgage and home equity loans obtained through the submission of false and misleading information to banks and other lenders. According to the Indictment, Cherico served as the attorney for various third parties who were co-conspirators in the scheme. In that role, he negotiated and closed fraudulent purchases and sales, allegedly as part of the scheme.

In furtherance of the scheme, Cherico and his co-conspirators, among other things, submitted banks loan applications and contracts of sale that reflected artificially high sales prices for particular properties, obtained loans by falsifying material personal and financial information about the borrowers, and falsely represented to various banks that a borrower had equity in a particular property, when in fact, the borrower had purchased the property with one hundred percent financing. Through these illegal activities, the co-conspirators allegedly bought properties they otherwise would not have been able to purchase: 28 Brae Burn Drive, Purchase, New York (“28 Brae Burn”), 116 Lakeshore Drive, Eastchester, New York (“116 Lakeshore Drive”), 4 Ridgeland Manor, Rye, New York (“4 Ridgeland”), and 3747 Purchase Street, Purchase, New York (“3747 Purchase”). Not only did the participants in the conspiracy obtain the money to purchase these properties under false pretenses; they allegedly earned millions of dollars in fees and commissions as well.

The statute of limitations on these charges is 10 years. See 18 U.S.C. § 3293.

Counts 7, 8 and 9 charge Cherico with conspiring to obstruct justice, obstructing justice, and money laundering. According to the Indictment, Cherico helped Dominick DeVito conceal his profit from the sale of 3747 Purchase Street from the United States Probation Office, which was preparing a report to be used in connection with DeVito's sentencing in a separate federal case. United States v. Pasquale Parello, et al., 01 Cr. 1120(RLC). On August 22, 2003, DeVito submitted an affidavit describing his net worth to the United States Probation Office. In that affidavit, DeVito declared that he earned no income from the sale of 3747 Purchase Street. In fact, nearly $700,000 in profit from the sale of 3747 Purchase Street was deposited into the PREG account, which was controlled by DeVito. (Cherico Indictment at 1–12.)

The statute of limitation on these charges is 5 years. See 18 U.S.C. § 3282. The last activity alleged in furtherance of the purported obstruction of justice conspiracy in Count 7 occurred on August 22, 2003 (Indictment at 11 ¶ 18(d)). Count 8 alleges that Cherico obstructed justice through September 2003 (Indictment at 19), and Count 9 alleges that the purported money laundering scheme ended sometime in December 2003 (Indictment at 20). Thus, the Indictment was timely, with respect to these charges, when “filed” on August 20, 2008.

The Indictment is Sealed

According to the Government, the Indictment was the culmination of an extensive grand jury investigation into a course of fraudulent conduct allegedly perpetrated by Cherico and his co-conspirators. The investigation resulted in a series of indictments.

On November 27, 2006, a grand jury in the Southern District of New York returned an indictment, 06 Cr. 1089(BSJ), charging Louis Cordasco, Jr. and John Liscio with a single count of conspiracy to commit mail fraud, in connection with a scheme where they filed inflated insurance claims for, among other properties, a house in Westchester.

On August 9, 2007, a grand jury returned a superseding two-count indictment, S106 Cr. 1089(BSJ) (the “S1 Cordasco Indictment”), charging Cordasco, Liscio, and Robert DiDonato with conspiracy to commit mail fraud and mail fraud in connection with the same insurance fraud scheme. The S1 Cordasco Indictment specified several properties in Westchester that were utilized in the scheme, including 28 Brae Burn Drive.

On October 2, 2007, a grand jury returned a second superseding indictment, S2 06 Cr. 1089(BSJ) (the “S2 Cordasco Indictment”). The S2 Cordasco Indictment added Dominick DeVito as a defendant, and charged DeVito with participating in the insurance fraud scheme charged in the S1 Cordasco Indictment.

On November 29, 2007, a grand jury returned a three-count, third superseding indictment, (the “S3 Cordasco Indictment”), which for the first time, charged Cordasco, Liscio, DiDonato, DeVito, and a fifth defendant, Daniel Forbes, with a conspiracy to commit bank fraud in connection with a scheme to purchase and re-finance multi-million dollar residential properties using mortgage and home equity loans obtained through the submission of false and misleading information to banks and other lenders. The S3 Cordasco Indictment also charged Cordasco, Liscio, DiDonato, and DeVito with the conspiracy to commit mail fraud in connection with the insurance fraud scheme that was charged in the previous Cordasco Indictments.

On April 29, 2008, a grand jury returned a fourth superseding indictment, S4 06 Cr. 1089(BSJ), which added additional properties to the bank fraud conspiracy. Daniel Forbes was not charged in the fourth superseding indictment; he died in January 2009.

Finally, on or about August 20, 2008, a grand jury returned the Cherico Indictment. According to the Government, two critical developments led the Government to seek an indictment charging Cherico with having participated in the mortgage fraud scheme described in the Cordasco Indictments.

First, in or about 2008, Forbes—who had proffered less than truthfully on several occasions—finally began to provide complete and truthful information about his role in the mortgage fraud. During his proffer sessions, Forbes told the Government that Cherico had played a prominent role in the mortgage fraud scheme. Based on Forbes' statements, the Government anticipated that Forbes would enter into a cooperation agreement with the Government and would testify for the Government against Cherico at trial.

Second, between December 2007 and July 2008, a potential cooperating witness (CW) recorded several telephone conversations and in-person meetings with Cherico. During those conversations, Cherico made admissions about his participation in DeVito's mortgage fraud scheme.

The same day the Cherico Indictment was returned, the Government submitted a four-page sealed ex parte letter to United States Magistrate Judge Michael H. Dolinger (“Sealing Letter”). In the Sealing Letter, the Government asked that the Cherico Indictment be sealed, thereby tolling the statute of limitations. According to the Sealing Letter:

• Several of Cherico's current and former clients are known members of the Genovese Organized Crime Family, including Dominick DeVito.

• During an investigation into DeVito, the Government had begun to meet with, and debrief, the CW, who was close friends with Cherico. The CW had consensually recorded approximately six conversations with Cherico, in which Cherico made admissions about his participation in DeVito's mortgage fraud scheme.

• The CW was being used in a separate investigation, the target of which was a close associate of a high-ranking member of the Genovese Organized Crime Family. The investigation was focused on various racketeering acts committed by that person and other members of the Genovese Organized Crime Family, including the murder of a Genovese capo in Springfield, MA (the “Springfield murder”). The CW was proactively cooperating with the Government by making consensual recordings related to the Springfield murder and other racketeering acts, including gambling and loan-sharking.

• The Government expected to continue to utilize the CW for the purpose of gathering additional evidence of the Springfield murder and other crimes.

• If the Cherico Indictment were unsealed, the Government would be obligated to give the defense the consensual recordings of Cherico made by the CW. Turning over the recordings would reveal the CW's cooperation with the Government, which would shut down the Government's proactive investigation of the Springfield murder and related offenses and would place the CW's...