U.S. v. Mennuti

• Decision Date: 13 May 1982
• Docket Number: D,No. 678,678
• Citation: 679 F.2d 1032
• Parties: 10 Fed. R. Evid. Serv. 644 UNITED STATES of America, Appellee, v. Dominick MENNUTI, Defendant-Appellant. ocket 81-1408.
• Court: U.S. Court of Appeals — Second Circuit

Page 1032

679 F.2d 1032

10 Fed. R. Evid. Serv. 644

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

No. 678, Docket 81-1408.

United States Court of Appeals, Second Circuit.

Argued Feb. 24, 1982.

Decided May 13, 1982.

Irwin Popkin, Hicksville, N. Y., for defendant-appellant.

Arlene R. Lindsay, Asst. U. S. Atty., E.D.N.Y., Brooklyn, N. Y. (Edward R. Korman Before FEINBERG, Chief Judge, and VAN GRAAFEILAND and MESKILL, Circuit Judges.

U. S. Atty., E.D.N.Y., Jane Simkin Smith, Asst. U. S. Atty., Brooklyn, N. Y., of counsel), for the U. S.

MESKILL, Circuit Judge:

The principal issue raised in this appeal is whether, for statute of limitations purposes, a conspiracy can continue even after the commission of the substantive underlying offense has been completed. The district court held that although the relevant five-year statute of limitations barred prosecution of appellant Dominick Mennuti for mail fraud, 18 U.S.C. § 1341 (1976), he could nevertheless be tried for conspiracy to commit mail fraud, 18 U.S.C. § 371 (1976), because overt acts in furtherance of the conspiracy occurred within five years of the filing of the indictment. We agree with the district court that this prosecution was not barred by the statute of limitations and, finding Mennuti's other claims without merit, we affirm his conviction.

BACKGROUND

This case arises from the second attempt to prosecute Mennuti for his involvement in a scheme to destroy private residences in order to obtain insurance proceeds. The first indictment, filed on December 19, 1979, was brought under section 844(i) of Title XI of the Organized Crime Control Act of 1970, 18 U.S.C. § 844(i). The district court dismissed that indictment for lack of jurisdiction, however, because the destroyed property had never been used in commerce or in an activity affecting commerce. United States v. Mennuti, 487 F.Supp. 539 (E.D.N.Y.1980). This Court affirmed. 639 F.2d 107 (2d Cir. 1981).

On February 23, 1981, the government filed a second indictment, charging Mennuti with participating in a conspiracy to commit mail fraud, 18 U.S.C. §§ 371, 1341 (1976). ¹ The underlying offense of mail fraud occurred in December 1975, when CNA Insurance Company (CNA) issued an insurance proceeds check for $10,732 for a residence destroyed in Ridge, New York. The indictment alleged five overt acts in furtherance of the conspiracy, two of which occurred within five years of the filing of the indictment: the endorsement and deposit of the check on March 15, 1976 and Mennuti's own "payoff" in the scheme, the bargain purchase of the property following destruction, in July 1976. ²

Because we had no occasion in our earlier opinion to provide a detailed recitation of the facts underlying this case, we do so here. The government presented evidence that in February 1973, Robert Roy and a partner purchased the Ridge, New York residence for $13,500, paying $2,000 in cash and assuming a mortgage for the balance. ³ The residence was used for rental purposes until January 1975, when the tenant moved without advance notice. The house was vandalized twice while vacant, suffering extensive damage which was not covered by any insurance policy.

During this period, Mennuti operated Mark Real Estate in Shirley, New York. Following the vandalism, Roy enlisted Mennuti's aid to rent or sell the property, but After several days, Roy agreed to the plan. Mennuti decided, however, that instead of selling the land as Roy's agent, he preferred to purchase the property himself and attempt to resell it at a profit. Roy testified that he needed $6,500 to break even and that Mennuti agreed to purchase the land following the destruction of the house for that amount. Roy stated that the paperwork and arrangement of details of the sale were deferred until after the burning. A short time later, Roy paid the initial $1,500. The house was destroyed on September 19. Approximately one month later, Roy paid the remaining $1,500. After the destruction, Roy mailed a "Sworn Statement in Proof of Loss" to CNA for $12,500, the full amount of the insurance coverage. CNA issued ⁴ a check for $10,732 payable to Roy and to the mortgagees on or about December 22, 1975. Roy cashed the check on March 15, 1976 and used the proceeds to pay off the mortgage.

their efforts were unsuccessful. Finally, in September 1975, Mennuti offered to have the house burned to recover the insurance proceeds. Roy testified that Mennuti referred him to a man who had "done this thing for me before." Tr. 68. The cost to Roy for the destruction was set at $3,000-$1,500 then and another $1,500 when the insurance proceeds were received. Mennuti's payoff for arranging the plan was to be the exclusive right to sell the property after destruction.

In January 1976, Roy met with Mennuti to discuss the sale of the property. Mennuti reported that he had located a buyer who could purchase the property in July 1976. The parties then signed a contract granting Mennuti the exclusive right to purchase the property for $6,500, to be paid at the July closing. ⁵ Roy complained that he needed the $6,500 sooner, but Mennuti stated that he could not pay the money until he had sold the property.

The closing occurred as scheduled. The record is unclear as to the details of the transaction. However, it appears that Mennuti first assigned his contract to a real estate broker for $8,100. The broker then sold the contract to the buyer for $8,700. The government presented evidence of Mennuti's profit from the transaction.

The defense attempted to establish that Mennuti had bought the land intending to build a house on it, but later sold the property as a result of unfavorable market conditions. Mennuti chose not to testify after the district court ruled that the government would be permitted to cross-examine him with respect to the destruction of another house, which had been a subject of the first indictment. Following a jury verdict of guilty, the district court sentenced Mennuti to a term of two and one-half years imprisonment and fined him $5,000.

DISCUSSION

In addition to claiming that this prosecution was barred by the statute of limitations, Mennuti argues that the district court erred in ruling that the government could cross-examine him concerning the 1975 destruction of another house and in permitting the government to introduce evidence of his profit from the conspiracy. Mennuti also contends that his sentence is "excessive."

I. Statute of Limitations

Mennuti argues that the five-year statute of limitations in this case began to run on December 22, 1975 when the CNA insurance check was issued. Because the indictment was filed on February 23, 1981, he urges us to reverse his conviction. In Grunewald v. United States, 353 U.S. 391, 397, 77 S.Ct. 963, 970, 1 L.Ed.2d 931 (1957), the Supreme Court stated:

the crucial question in determining whether the statute of limitations has run is the scope of the conspiratorial agreement, for it is that which determines both the duration of the conspiracy, and whether the act relied on as an overt act may properly be regarded as in furtherance of the conspiracy.

(emphasis added). The government was therefore obliged to show that the conspiracy, as contemplated by the agreement, still existed and that "one overt act in furtherance of the conspiracy occurred" no more than five years prior to the filing of the indictment. United States v. Brasco, 516 F.2d 816, 818 (2d Cir.), cert. denied, 423 U.S. 860, 96 S.Ct. 116, 46 L.Ed.2d 88 (1975).

Mennuti asserts that the object of the conspiracy was to acquire control over the CNA check and that when the check was acquired, concededly outside of the limitations period, the conspiracy ended. We think it abundantly clear, however, that the scope of the conspiracy was not limited to receipt of the insurance check. The conspiratorial agreement also included a payoff to each conspirator, which in Mennuti's case was the exclusive right to purchase the property at a bargain price after the house was destroyed. Tr. 71. In fact, Mennuti's sole reason for becoming involved in the scheme was to purchase the property at a low cost and then resell it at a profit. While Mennuti and Roy executed a contract in January 1976 giving Mennuti the right to purchase the property, it was understood at that time that the purchase would occur in July 1976. Only in July, which was within five years of the indictment's filing, did Mennuti receive his payoff.

Mennuti argues that receipt of economic benefits should not be included within the scope of the conspiracy for purposes of the statute of limitations. He suggests that if, instead of reselling the property, he had retained it, hoping to benefit from a favorable market, he could be subject to liability indefinitely. Mennuti's payoff, however, was not the resale of the property, but its purchase at a bargain price. ⁶

We have held in other contexts that a conspiracy continues until the conspirators receive their payoffs. For example, in United States v. Knuckles, 581 F.2d 305, 313 (2d Cir.), cert. denied, 439 U.S. 986, 99 S.Ct. 581, 58 L.Ed.2d 659 (1978), we ruled that hearsay statements by a co-conspirator were admissible into evidence when made "before the spoils (were) divided among the miscreants." Accord, United States v. Floyd, 555 F.2d 45, 48 n.10 (2d Cir.), cert. denied, 434 U.S. 851, 98 S.Ct. 163, 54 L.Ed.2d 120 (1977). We find Mennuti's attempt to distinguish these cases on the ground that they dealt with evidentiary as opposed to statute of limitations issues unpersuasive.

Our conclusion that a conspiracy continues until the conspirators receive their anticipated economic benefits finds support in decisions of other circuits. In United States v. Walker, 653 F.2d 1343 (9th Cir. 1981), cert. denied, --- U.S. ----, 102 S.Ct. 1253, 71 L.Ed.2d 446 (1982), the defendant contended that his prosecution for conspiracy to defraud the United...