U.S. v. Mariani
| Decision Date | 16 February 2000 |
| Docket Number | No. 98-CR-307.,98-CR-307. |
| Citation | 90 F.Supp.2d 574 |
| Parties | UNITED STATES of America v. Renato P. MARIANI, Michael L. Serafini, Leo R. Del Serra, and Alan W. Stephens. |
| Court | U.S. District Court — Middle District of Pennsylvania |
Assistant U.S. Atty, Bruce Brandler, Harrisburg, PA, for Plaintiff.
Robert E. Welsh, Jr., Welsh & Recker, P.C., Philadelphia, PA, Thomas Colas Carroll, Mark E. Cedrone, Carroll & Cedrone, Philadelphia, PA, Gregory T. Magarity, Philadelphia, PA, Harold M. Kane, Scranton, PA, Alan Stephens, Mountaintop, PA, for Defendants.
The basis for this conspiracy to commit mail fraud and mail fraud prosecution is the alleged willful under-reporting to governmental agencies of municipal waste received by Empire Sanitary Landfill, Inc. ("Empire") over a period of about seven years. The indictment charges that defendants Renato P. Mariani (Empire's President), Michael L. Serafini (Empire's Assistant Secretary), Leo R. Del Serra (Empire's Comptroller), and Alan W. Stephens (Empire's Operations Manager) conspired to cause to be sent to the Pennsylvania Department of Environmental Protection ("DEP") and various local governments reports that deliberately omitted waste tonnage accepted at Empire that exceeded maximum daily limits established by the landfill permit issued to Empire by DEP. The indictment points out that various statutory fees payable to governmental units and royalty payments to a partnership known as FMKF Company ("FMKF") were calculated on the basis of the fraudulent reports submitted by Empire. The indictment further alleges that "[i]n order to deter violations of the maximum daily volumes of solid waste set forth in landfill permits, state law requires DEP to impose a mandatory civil penalty of at least $100 per ton for each ton of solid waste received at any landfill in excess of the maximum daily volume limitations set forth in its permit." (Indictment, ¶ 8.) The indictment asserts that the scheme to defraud was devised for the purpose of obtaining "money and property." (Id., ¶ 13.)
Observing that the mail fraud statute is limited to deprivation of money or property, defendants argue that the mail fraud statute does not apply where, as here, the object of the scheme to defraud is to avoid assessment of a civil penalty because the Commonwealth's interest in such a penalty is that of a "regulator," not that of a "property holder." Contending that the $100 per ton penalty constitutes more than 95 percent of the alleged financial loss effected by the purported scheme to defraud, defendants have moved to dismiss the indictment. Defendants have moved alternatively for bills of particular and to compel discovery.
The government has responded to the motion to dismiss by contending that (a) the state's interest in the $100 per ton penalty is that of "property holder" under the mail fraud statute; (b) statutorily required fees and the FMKF royalty constitute cognizable property interests sufficient to support the indictment even if it is determined that the Commonwealth's interest in the $100 per ton penalty is regulatory in nature and not proprietary; and (c) there are non-monetary property interests that the indictment fairly charges as objects of the scheme to defraud. The government also contends that there is no need for a bill of particulars and that it has complied with its discovery obligations under the Federal Rules of Criminal Procedure and this Court's Pretrial Order.
Having carefully considered the matter, I find that the statutory fees and FMKF royalty fall within the mail fraud statute's terms "money and property" because Empire's obligation to pay the fees and royalty accrued upon receipt of the municipal waste. As to the $100 per ton penalty, however, the government has not shown that Empire incurred a binding obligation to pay the penalty when it accepted waste in excess of its daily tonnage limits. Nor has the government shown that Pennsylvania's interest in the civil enforcement mechanism is that of a "property holder." Thus, impairment of the assessment of a civil penalty does not effect a loss cognizable under the mail fraud statute. Finally, I find that the "non-monetary" property interests advanced by the government in opposition to the motion to dismiss — the landfill permit issued by DEP to Empire, the information contained in the reports made by Empire to DEP, and Lackawanna County's interest in scarce landfill space — are not fairly charged in the indictment as objects of the scheme to defraud. Accordingly, those non-monetary property interests may not be advanced by the government as alleged objects of the scheme to defraud.
Because the indictment does identify losses of money and property, i.e., the statutory fees and FMKF royalty, as specific objects of the scheme to defraud, the motion to dismiss the indictment must be denied. See United States v. Asher, 854 F.2d 1483, 1494 (3d Cir.1988), cert. denied, 488 U.S. 1029, 109 S.Ct. 836, 102 L.Ed.2d 969 (1989). Moreover, because defendants have generally not demonstrated a need for supplementation of the indictment, their motions for bills of particular will be denied, with the exception that the government will be required to identify unnamed co-conspirators and others who were involved in the alleged scheme to defraud. Finally, defendants' motion for discovery, which presents, inter alia, the question of whether the government must search DEP files for Brady and other discoverable material, will be denied.
On December 15, 1998, a federal grand jury in this District returned a 25-count indictment against the four defendants. (Dkt. Entry 1.) The first count charges a conspiracy under 18 U.S.C. § 371. (Id. at 6-15.) Counts 2 through 25 charge violations of the federal mail fraud statute codified at 18 U.S.C. § 1341. (Id. at 16-22.)
The factual context for the indictment is the complex of state laws and regulations governing the operation of municipal waste landfills in Pennsylvania. As alleged in the indictment, permits issued by DEP set the maximum amount of waste that may be accepted at a landfill on a daily basis. (Id., ¶ 7.) Section 1112(f) of Pennsylvania's Municipal Waste Planning, Recycling and Waste Reduction Act, 53 P.S. § 4000.1112(f), provides that "[i]n addition to any other remedies provided at law or in equity, [DEP] shall assess a civil penalty of at least $100 per ton for each ton of waste received at any municipal waste landfill in excess of the maximum or average daily volume limitations set forth in its permit." As alleged in the indictment, Pennsylvania law also imposes various fees on landfills based on the amount of solid waste accepted by the landfill. (Indictment, ¶ 10.) These fees include a $2.00 per ton recycling fee that is used to fund Pennsylvania's recycling program; a $1.00 per ton host municipality benefit fee payable to the municipality where the landfill is located; and a $.25 per ton fee payable to a county-established trust fund. (Id.) The indictment further alleges that in addition to the statutory fees set forth in paragraph 10 of the indictment, "Empire was obligated to pay [FMKF] a $1.50 royalty for each ton of solid waste disposed of at the landfill." (Id., ¶ 11.)
According to the indictment, "[i]n order to monitor compliance with DEP regulations regarding waste volumes, waste origin, and waste content, as well as to insure that landfill operators pay the various fees required of them," landfill operators are required to maintain daily records of solid waste deliveries and to submit on a quarterly basis (1) a "municipal waste landfill and resource recovery quarterly operations and fee report," used, inter alia, to calculate the $2.00 per ton recycling fund fee; (2) a "host municipality benefit fee report," used, inter alia, to calculate the $1.00 per ton host municipality fee; and (3) a "municipal waste landfill Act 101 (1988) 1108 site-specific post-closure trust payment worksheet," used to calculate the $.25 per ton fee payable to the county-administered trust fund. (Id., ¶ 12.)
The indictment is based on defendants' alleged scheme to accept waste in excess of the daily limits set forth in the solid waste disposal permit issued by DEP to Empire. Specifically, the indictment alleges that between 1989 and January 22, 1997, defendants "authorized and directed Empire employees to accept thousands of tons of solid waste at the landfill in excess of (1) what was reported to DEP, the host-municipalities, and other entities that received fees based upon the amount of waste received at the landfill, and (2) Empire's permitted maximum daily volume." (Id. ¶ 15.) Defendants concealed their scheme by essentially keeping two sets of books, with billing invoices being based on amounts of waste actually received, while the mandated reports to DEP and local governments indicated lesser amounts of waste. (Id., ¶¶ 16-20.) The indictment charges specific mailings of the purportedly fraudulent reports from July 19, 1995 through January 21, 1997. (Id., ¶¶ 23-39; Counts 2 through 25.)
As alleged in paragraph 20 of the indictment, the statutorily-mandated reports "substantially underreported the amount of waste accepted at the landfill, as well as the recycling fee due DEP, ... the fees due to [the host municipalities]; ... [and] the fees due to the site-specific post-closure trust fund...." Because the reports that Empire submitted to DEP were used to calculate the fees it owed, defendants' alleged mail fraud violations had the effect of depriving the state, municipal, county and private victims of fees and royalties. At oral argument, the government represented that Empire had accepted at least 74,000 tons of waste in excess of what it had reported over the time frame in question. (Tr. of Dec. 10, 1999 Oral Arg., Dkt. Entry 62, at 27.)
The indictment does not specify the precise objects of the alleged scheme to defraud....
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