U.S. v. Lopreato, 1129

• Decision Date: 08 May 1996
• Docket Number: D,No. 1129,1129
• Citation: 83 F.3d 571
• Parties: UNITED STATES of America, Appellee, v. Dominick LOPREATO, Defendant-Appellant. ocket 95-1485.
• Court: U.S. Court of Appeals — Second Circuit

Page 571

83 F.3d 571

UNITED STATES of America, Appellee, v. Dominick LOPREATO, Defendant-Appellant.

No. 1129, Docket 95-1485.

United States Court of Appeals Second Circuit.

Argued Feb. 28, 1996.

Decided May 8, 1996.

Richard R. Brown, Hartford, CT (Brown, Paindiris & Zarella, Hartford, CT, of counsel), for Appellant.

Thomas J. Murphy, Assistant United States Attorney, District of Connecticut, New Haven, CT (Edwin J. Gale, Acting United States Attorney, Peter A. Clark, Assistant United States Attorney, District of Connecticut, New Haven, CT, of counsel), for Appellee.

Before: VAN GRAAFEILAND, MESKILL and WINTER, Circuit Judges.

MESKILL, Circuit Judge:

This is an appeal from the sentencing portion of a judgment of conviction following a jury trial by the United States District Court for the District of Connecticut, Daly, J. The district court sentenced appellant Dominick Lopreato to 51 months incarceration and fined him $250,000 for two counts of violating 18 U.S.C. § 1954, three counts of violating 26 U.S.C. § 7206(1), one count of violating 18 U.S.C. § 371 and two counts of violating 18 U.S.C. § 1621(1). Lopreato contends that the district court incorrectly (1) calculated his sentence by considering the money he received a bribe rather than a gratuity, (2) calculated his sentence based on the full amount of money invested and lost by the pension fund of which Lopreato was a trustee, and (3) failed to give him notice of its intent to impose an alternative fine as required by Fed.R.Crim.P. 32.

BACKGROUND

Dominick Lopreato served as Co-Chairman and Trustee of the Connecticut Laborers' Pension Fund (CLPF), an employee pension benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(2) (ERISA). As such, he was subject to the strictures of 18 U.S.C. § 1954, which prohibits "an administrator, officer, trustee, custodian, counsel, agent, or employee of any employee welfare benefit plan or employee pension benefit plan" from receiving, or agreeing to receive any "fee, kickback, commission, gift, loan, money, or thing of value because of or with intent to be influenced with respect to, any of the actions, decisions, or other duties relating to any question or matter concerning such plan." 18 U.S.C. § 1954(1).

On two occasions, the Board of Trustees of the CLPF, including Lopreato, voted unanimously to invest a total of more than $5 million in securities offered by the Colonial Realty Company (Colonial). The CLPF never received a return on the investments and the principal was lost. Colonial is now in bankruptcy proceedings. The reason for this state of affairs is that the Colonial principals, Jonathan Googel and Benjamin Sisti, bled the company dry and looted it. It was not alleged that appellant knew of the fraudulent acts of Colonial and its principals.

Jonathan Googel pled guilty to two counts of wire fraud, in violation of 18 U.S.C. § 1343, one count of bank fraud, in violation of 18 U.S.C. § 1344, and one count of endeavoring to impede the due administration of the internal revenue laws, in violation of 26 U.S.C. § 7212(a). Judge Daly sentenced Googel to an eight year term of incarceration. Benjamin Sisti pled guilty to two counts of bankruptcy fraud, in violation of 18 U.S.C. § 152, one count of wire fraud, in violation of 18 U.S.C. § 1343, and one count of structuring transactions to avoid reporting requirements, in violation of 31 U.S.C. § 5324 and 31 U.S.C. § 5322. Judge Daly sentenced Sisti to a nine year term of incarceration.

The thrust of the government's case against Lopreato was that Colonial partner William Candelori contacted Lopreato and proposed that the CLPF invest in the Colonial Metro Zero Coupon Mortgage Trust (Metro Zero), a debt security which Colonial was then offering. In response, Lopreato informed Jonathan Googel, through their mutual friend, Ronald Welch, that the CLPF would invest in Metro Zero, but that Lopreato would have to be paid, in cash delivered by Welch. An agreement was reached that Colonial would pay Lopreato five percent of each such CLPF investment.

Thereafter, in May of 1988, Colonial made a sales presentation to the CLPF trustees, including Lopreato, and the CLPF trustees subsequently voted to invest $2 million in Metro Zero. After the CLPF's investment was made, Welch brought Lopreato $50,000 in cash, which was 5 percent, minus money given to Welch and other necessary participants.

Lopreato then informed Googel and Welch that he would arrange more CLPF investments, but that any money necessary to pay others could no longer be taken from his 5 percent. Googel agreed. In September 1989, the CLPF trustees, including Lopreato, voted again to invest in a Colonial offering--this time $3,094,734 in the Colonial Gold Zero Coupon Limited Partnership (Gold Zero). Subsequently, Welch brought $150,000 (5 percent of $3 million) in cash to Lopreato. ¹

The jury found that Lopreato violated 18 U.S.C. § 1954(1). Lopreato does not challenge his conviction, only his sentence. He challenges the finding of the district court at sentencing that he received a bribe rather than a gratuity. While the difference between a bribe and a gratuity does not affect the propriety of Lopreato's conviction under section 1954(1), a bribe commands a higher base offense level under the Sentencing Guidelines.

Lopreato also challenges the size of the increase in his offense level under United States Sentencing Guidelines (Guidelines) § 2E5.1(b)(2). That section instructs the sentencing court to increase the defendant's offense level incrementally, tying it to the "improper benefit" of the bribe to the payer. Lopreato contends that the court incorrectly used the total amount of money invested by the CLPF in the two Colonial investments, an amount in excess of $5 million. Lopreato claims the court instead should have increased his sentence level based on the amount of money he received from Colonial.

Finally, Lopreato challenges the district court's assessment of a $250,000 alternative fine without providing notice that it intended to do so, in contravention of Fed.R.Crim.P. 32 as interpreted by the Supreme Court in Burns v. United States, 501 U.S. 129, 111 S.Ct. 2182, 115 L.Ed.2d 123 (1991).

DISCUSSION

A. Standard of Review

We review de novo the district court's interpretation of the Guidelines, and review the district court's factual findings for clear error. United States v. Reese, 33 F.3d 166, 174 (2d Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 756, 130 L.Ed.2d 655 (1995).

B. Was the Unlawful Payment a Bribe or Gratuity?

Lopreato challenges the district court's determination in setting a base offense level that he received a "bribe" rather than a "gratuity" as set out in the 1988 Guidelines. Guidelines § 2E5.1(a). The Guidelines, in setting offense levels for those convicted under 18 U.S.C. § 1954, provide for a base offense level of six for receipt of a gratuity, but a base offense level of ten for receipt of a bribe. Id. The difference between receiving a bribe and receiving a gratuity is explained by Application Notes 1 & 2 and is reflected in the language of section 1954 itself.

Application Note 1 states that a bribe is "the offer or acceptance of an unlawful payment with the specific understanding that it will corruptly affect an official action of the recipient." Guidelines § 2E5.1, app. note 1. A gratuity, according to Application Note 2, is "the offer or acceptance of an unlawful payment other than a bribe." Guidelines § 2E5.1, app. note 2.

The evidence at trial showed that Lopreato informed Colonial (through its representatives) that the CLPF would invest in Colonial's securities if Lopreato was paid. The evidence showed that thereafter Lopreato arranged for Colonial to pitch its securities to the CLPF trustees, and that subsequently, Lopreato and the other trustees voted in favor of investing. Immediately following each of the two CLPF investments, Welch delivered cash payments to Lopreato, as promised by Colonial's representatives and as demanded by Lopreato. This evidence fully supports Judge Daly's finding that these payments were bribes within the meaning of Guideline § 2E5.1(a)(1).

Appellant's primary argument challenging the court's finding that the payments to appellant were bribes is that the payments were made after appellant's acts of arranging each meeting for Colonial with the CLPF trustees and after appellant voted to approve each investment. This "time of payment" argument is irrelevant under the language of section 1954 and flies in the face of a common sense interpretation of Application Note 2.

First, section 1954 criminalizes the receipt of money by an ERISA trustee "because of or with intent to be influenced." 18 U.S.C. § 1954. The "because of/with intent to be influenced" dichotomy corresponds with the bribe/gratuity dichotomy. United States v. Roberto, 801 F.Supp. 946, 953 (D.Conn.1992) (referring to the "with intent to be influenced" language as the "quid pro quo " portion). Furthermore, the Background to Guidelines § 2E5.1 clearly indicates that the higher base level for receipt of a bribe applies "where the payment is the primary motivation for an action to be taken, as opposed to [a gratuity], where the prohibited payment is given because of a person's actions, duties, or decisions without a prior understanding that the recipient's performance will be directly influenced by the gift." Guidelines § 2E5.1, Background (emphases added); see also United States v. Mariano, 983 F.2d 1150, 1159 (1st Cir.1993) (stating that "[t]he essential difference between a bribe and an illegal gratuity is the intention of the bribe-giver to effect a quid pro quo "); United States v. Muldoon, 931 F.2d 282, 287 (4th Cir.1991) (stating that the intent of the payer to influence the actions of the recipient is what distinguishes bribes from gratuities). The Guidelines clearly dictate that a promise to pay money, made...