U.S. v. Cody

• Decision Date: 28 November 1983
• Docket Number: D,Nos. 1211,1609,s. 1211
• Citation: 722 F.2d 1052
• Parties: 114 L.R.R.M. (BNA) 3517, 83-2 USTC P 9733, 99 Lab.Cas. P 10,603, 14 Fed. R. Evid. Serv. 968 UNITED STATES of America, Appellee, v. John CODY, Defendant-Appellant. ockets 82-1428, 83-1100.
• Court: U.S. Court of Appeals — Second Circuit

Page 1052

722 F.2d 1052

114 L.R.R.M. (BNA) 3517, 83-2 USTC P 9733,

99 Lab.Cas. P 10,603, 14 Fed. R. Evid. Serv. 968

UNITED STATES of America, Appellee, v. John CODY, Defendant-Appellant.

Nos. 1211, 1609, Dockets 82-1428, 83-1100.

United States Court of Appeals, Second Circuit.

Argued June 17, 1983.

Decided Nov. 28, 1983.

Lawrence H. Sharf, Brooklyn, N.Y., Sp. Atty. for the United States Attorneys Office, E.D.N.Y. (Raymond J. Dearie, U.S. Atty., E.D.N.Y., Edward A. McDonald, Attorney-in-Charge, U.S. Dept. of Justice, Organized Crime Strike Force, E.D.N.Y. and Michael A. Guadagno, Sp. Atty., Brooklyn, N.Y., of Counsel), for appellee.

Paul Windels, Jr., New York City (Charles L. Stewart, Craig P. Murphy, Georgina M. Guernica, Kim Davenport, of Windels, Marx, Davies & Ives, New York City, of counsel), for defendant-appellant.

Before OAKES and CARDAMONE, Circuit Judges, and BARTELS, District Judge. ^*

CARDAMONE, Circuit Judge:

The leader of a local Teamsters union appeals his conviction on charges based upon unlawful schemes he devised while serving as president of his local and trustee of its pension fund. The proof shows that he engaged in these schemes to enrich himself by means of extortion and kickbacks and through acceptance of valuable services from corporations that employed rank and file members of his local. A union representative is a fiduciary who may not feather his own nest at the same time he is supposed to be serving the union membership. As the facts of this case demonstrate, efforts directed toward such economic self-aggrandizement constitute not only a breach of trust, but serious criminal misconduct as well.

I--BACKGROUND

This appeal stems from the judgment of conviction entered against John Cody in the United States District Court for the Eastern District of New York, following a jury trial held before Judge Jacob Mishler. Cody was convicted of violating the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Sec. 1962(c) (Count I of the indictment), receiving illegal benefits from employers in violation of 29 U.S.C. Sec. 186(b)(1) (Counts II, IV, V and VI), income tax evasion in violation of 26 U.S.C. Sec. 7201 (Count VII) and filing a false tax return in violation of 26 U.S.C. Sec. 7206(1) (Count VIII). He was found not guilty on Count III, another illegal benefit count. Appellant was sentenced to concurrent prison terms of five years on the RICO and tax evasion counts, three years on the false filing count and one year each on the illegal benefit counts. In addition, he was fined $25,000 on the RICO count, $10,000 on the tax evasion count and on each illegal benefits count, and $5,000 on the false filing count. Cody also appeals from a post-judgment order denying his motion for a new trial. After reviewing appellant's numerous contentions, we reverse as to Count II--one of the illegal benefit counts--and otherwise affirm the judgment of the conviction and the order denying him a new trial.

II--FACTS

Local 282 of the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America represents truck drivers who deliver building materials to construction sites throughout the New York metropolitan area and Long Island. The Local 282 Pension Trust Fund ("Pension Fund") is one of four employee benefit plans to which employers that have collective bargaining agreements with Local 282 contribute. During the entire time frame of events alleged in the indictment, Cody held significant salaried positions with both Local 282 and the Pension Fund, including President of the Local, trustee of the Pension Fund and Fund Manager.

The first offense under Count I involved three incidents that occurred during the construction of Cody's home in Southampton, New York from 1968 through 1970. One of the builders, Cody's old friend Herbert T. Schneider, owned a construction company that employed members of Local 282. The value of Schneider's services amounted to $6,653; however, prior to the grand jury investigation in November, 1981, Cody had paid only $1,900 of this amount. After Schneider reported to Cody that the grand jury inquiry related to this outstanding bill, Cody promptly paid him in full. One of the Schneider's subcontractors, Gallagher Service Corp., also performed substantial work on the house. Cody eventually tendered a check in part payment for these services but, at the same time, demanded that Gallagher kickback most of it. When Gallagher refused, Cody threatened him. Later, when Gallagher's employees voted to join Local 282, Gallagher went out of business. The final incident involving the Southampton home concerned an expensive driveway that cost the contractor, H.S. Roberts, Inc., $7,500 to install. Cody had asked one of the principals of Roberts for a "break" on the price and was told that although the company was too small to install the driveway without billing for it, it could probably do the job at cost. With this concession, Cody paid less than half of the contractor's costs, or $3,230.

In addition to these three incidents, the racketeering count encompassed two major kickback schemes arising from Cody's Pension Fund activities. The first occurred during 1969 and 1970 when the Fund's trustees arranged to purchase with Fund assets the Northampton Country Club. The Fund agreed to buy the golf club and adjoining acreage through Henry Norman, a part-time real estate agent and friend of the appellant. When Cody and another trustee learned that Norman's agency was to receive a $175,000 commission, they demanded a $60,000 kickback. At Cody's direction Norman paid $15,000 to Cody and $3,200 to the other trustee. The balance of the $60,000 kickback was invested in real estate. Four years later, under similar circumstances, Cody demanded and received another kickback from John Strong when the Fund purchased three parcels of undeveloped land referred to as "Pine Barrens." From Strong's commission of $700,000, Cody extorted $100,000.

All of these Count I charges, serving as predicate offenses for the RICO charge, occurred more than five years prior to the January 1982 indictment. To avoid statute of limitations problems the government also listed as predicate crimes Counts II through VI, each of which transpired within the five-year period. The jury convicted Cody on four of these counts--II, IV, V and VI--as well as on Count I. Counts IV, V and VI charged him with receiving free chauffeuring service from "no show" employees who were members of Local 282. The first chauffeur was Charles Daglia. He worked concurrently for Cody and, as teamster foreman, for the Carlin and Atlas Construction Company. Although Carlin and Atlas paid Daglia over $600 per week, he had no duties at the jobsite, so he was able to chauffeur Cody without any distractions. Later, Cody was chauffeured for substantial periods of time by Louis Ambrosio and Bruce Kay, both members of the Local who, like Daglia, drew their salaries from construction contractors while spending their working hours serving Cody.

Count II of the indictment charged that Cody received the rent-free use of a luxury apartment in North Shore Towers, near the boundary between Nassau and Queens. In 1971 Sigmund Somer Construction Company (Somer or Somer Construction) began building North Shore Towers. It did not have a contract with Local 282, nor did it employ any of the Local's members, although several subcontractors working on the project did. At trial, the government's only allegation of a nexus between Somer Construction and Local 282 was that Somer had plans to erect an office building in Manhattan that would be subject to a "high-rise construction" agreement between employers and Local 282. Due to the death of Sigmund Somer, these plans never came to fruition. In any event, the government proceeded to prove that Cody's mistress, Marilyn Taggert, had the rent-free use of the apartment from 1975 to 1977 and that Cody and Taggert each received free parking spaces in the Towers garage. The rental value of the apartment and garage spaces came to about $1,200 a month.

Perhaps the most damaging evidence with respect to the use of the rent-free apartment was Ms. Taggert's grand jury testimony which, over the strenuous objections of defense counsel, was read in her absence. The trial had originally been set to begin on June 7, 1982. Taggert successfully avoided service of a trial subpoena by fleeing to Europe. As a result, a continuance was granted until September in order to locate her, but these efforts were unavailing. It was in light of her untimely disappearance that Judge Mishler permitted the government to read her testimony into the record.

III--RICO COUNTS

To establish Cody's guilt under the RICO count of the indictment the government had to prove that he committed at least two predicate offenses, 18 U.S.C. Sec. 1961(5), one of which occurred within the five-year statute of limitations, 18 U.S.C. Sec. 3282. See United States v. Walsh, 700 F.2d 846, 851 (2d Cir.1983). While the work on Cody's Southampton house and the kickbacks of real estate commissions from Strong and Norman charged seven predicate RICO offenses indicating a pattern of racketeering activities, these events occurred beyond the five-year period of limitations. Thus, even though the jury found Cody guilty on six of the seven charges, his RICO conviction may be sustained only if one of the four offenses charged separately in Counts II, IV, V and VI--all of which occurred within five years of the indictment--is upheld.

Before undertaking to analyze the substance of these charges, it is helpful to put them in perspective by briefly reviewing the statutory development. Among the concerns addressed by the Labor Management Relations (Taft-Hartley) Act of 1947, Pub.L. No. 101, 61 Stat. 136, was the surfacing evidence of corruption, which Sec. 302 of the Act, 29 U.S.C. Sec. 186, was designed to meet. 1 C. Morris, The Developing Labor...