U.S. v. Mollica

• Citation: 849 F.2d 723
• Decision Date: 10 June 1988
• Docket Number: 543 and 1065,Nos. 542,D,s. 542
• Parties: UNITED STATES of America, Appellee, v. Stanley MOLLICA and Marie Cirillo, Defendants-Appellants. UNITED STATES of America, Appellee-Cross-Appellant, v. Marie CIRILLO, Defendant-Appellant, Cross-Appellee. ockets 87-1367, 87-1369 and 87-1370.
• Court: U.S. Court of Appeals — Second Circuit

Page 723

849 F.2d 723

UNITED STATES of America, Appellee, v. Stanley MOLLICA and Marie Cirillo, Defendants-Appellants.

UNITED STATES of America, Appellee-Cross-Appellant, v. Marie CIRILLO, Defendant-Appellant, Cross-Appellee.

Nos. 542, 543 and 1065, Dockets 87-1367, 87-1369 and 87-1370.

United States Court of Appeals,

Second Circuit.

Argued Dec. 15, 1987.

Decided June 10, 1988.

Herald Price Fahringer, New York City (Michael Rosen, Diarmuid White, of counsel), for defendants-appellants.

Alan Hechtkopf, Tax Div., Dept. of Justice, Washington, D.C. (William S. Rose, Jr., Acting Asst. Atty. Gen., Michael L. Paup, Robert E. Lindsay, Tax Div., Dept. of Justice, Washington, D.C., Andrew J. Maloney, U.S. Atty. E.D.N.Y., Brooklyn, N.Y., of counsel), for appellee.

Before MESKILL, KEARSE and MAHONEY, Circuit Judges.

MESKILL, Circuit Judge:

Defendant-appellant Stanley Mollica appeals from a judgment of conviction entered in the United States District Court for the Eastern District of New York, Maletz, J., ¹ dated July 29, 1987. Mollica and This appeal followed. The government also filed a cross-appeal arguing that the district court erred in granting Cirillo a judgment of acquittal on the filing false corporate tax returns charge.

Marie Cirillo were charged with conspiring to commit certain tax offenses and to defraud the United States by impeding, impairing, obstructing and defeating the lawful governmental functions of the Internal Revenue Service (IRS), in violation of 18 U.S.C. Sec. 371 (1982); knowingly and willfully making and subscribing and causing to be made and subscribed corporate income tax returns that they did not believe to be true and correct as to every material matter, in violation of 26 U.S.C. Sec. 7206(1) (1982) and 18 U.S.C. Sec. 2 (1982); and knowingly and willfully attempting to evade and defeat income taxes due from Mollica, in violation of 26 U.S.C. Sec. 7201 (1982) and 18 U.S.C. Sec. 2. Both Mollica and Cirillo were convicted of the conspiracy count. Cirillo was also found guilty of making and subscribing false corporate income tax returns, although the district court granted her a judgment of acquittal on this charge. Mollica and Cirillo were both acquitted by the jury of the remaining charges.

On May 2, 1988, while the appeal was pending, Marie Cirillo died. Because of her death, we vacate her judgment of conviction and remand with instructions to dismiss the indictment as to her. In addition, we do not reach the issues raised in the government's cross-appeal because of the abatement of the prosecution of Cirillo.

As to Mollica, he contends on appeal that his judgment of conviction should be reversed because: (1) the district court amended the conspiracy count of the indictment from that of a conspiracy to impair the IRS in the assessment and collection of income taxes to that of a conspiracy to commit "any" fraudulent act against the United States; and (2) the court impermissibly allowed the government to argue and the jury to consider whether Robert Matthews was a co-conspirator and whether a "money laundering" scheme involving Matthews was part of the alleged conspiracy to defraud the United States although no nexus was established between the money laundering scheme and the charges in the indictment. ² We conclude that there was a significant chance that Mollica was convicted of the conspiracy count because of the evidence presented of the money laundering scheme, although it was not established that this scheme was included in the original indictment, and therefore we vacate the judgment of conviction and remand for a new trial on this count.

I. Cirillo's Appeal

Because of Marie Cirillo's death while the appeal was pending, we must decide the proper way to dispose of her appeal. We were faced with a similar situation in United States v. Floyd, 496 F.2d 982 (2d Cir.), cert. denied, 419 U.S. 1069, 95 S.Ct. 654, 42 L.Ed.2d 664 (1974), in which an appellant died after his appeal had been argued, but before the opinion in the appeal had been filed. Relying on Durham v. United States, 401 U.S. 481, 483, 91 S.Ct. 858, 860, 28 L.Ed.2d 200 (1971) (per curiam), in which the Supreme Court held that death pending direct review of a federal criminal conviction, whether by certiorari or by appeal, abates the prosecution, we vacated the appellant's judgment of conviction and remanded his case to the district court with instructions to dismiss the indictment as to him. 496 F.2d at 984 n. 2. Subsequent to our decision in Floyd, however, the Supreme Court issued its ruling in Dove v. United States, 423 U.S. 325, 96 S.Ct. 579, 46 L.Ed.2d 531 (1976) (per curiam), tersely asserting that: "The Court is advised that the petitioner died at New Other circuits have concluded that Dove applies only to petitions for certiorari, however, not to appeals of right. See, e.g., United States v. Pauline, 625 F.2d 684, 685 (5th Cir.1980); United States v. Bechtel, 547 F.2d 1379, 1380 (9th Cir.1977) (per curiam). Courts therefore have continued to hold that when an appellant dies while his or her criminal appeal is pending, the appellant's conviction should be vacated and the indictment dismissed. See, e.g., United States v. Wilcox, 783 F.2d 44 (6th Cir.1986) (order); Pauline, 625 F.2d at 685; Bechtel, 547 F.2d at 1380.

Bern, N.C., on November 14, 1975. The petition for certiorari is therefore dismissed. To the extent that Durham v. United States, 401 U.S. 481, 91 S.Ct. 858, 28 L.Ed.2d 200 (1971), may be inconsistent with this ruling, Durham is overruled."

Considering the facts of the instant case, we conclude that it is appropriate to vacate Cirillo's judgment of conviction and remand with instructions to dismiss the indictment as to her. We note, however, that in reaching this conclusion, we are limiting our holding to the facts of this case, and are leaving for another day what disposition should be made of cases involving different factual circumstances, such as cases implicating forfeiture provisions.

II. Mollica's Appeal

A. Alleged Illegal Practices

Mollica was the owner and sole shareholder of P.M. Excavating, Inc. (P.M.), a construction and excavation company located on Staten Island, New York. Cirillo was the bookkeeper of P.M., as well as Mollica's close personal friend. The government alleged that Mollica, with the help of Cirillo, engaged in several fraudulent practices to evade income taxes for the tax years of 1981, 1982 and 1983. For example, it was alleged that P.M. checks were made payable to individuals and companies that regularly did business with P.M., and then endorsements on the checks were forged and the checks were cashed. The money was then used for a variety of purposes, and the amounts were improperly deducted as business expenses. In addition, the government charged that other items of personal expense were deducted as business expenses, such as Mollica's daughter's college tuition and Cirillo's mortgage payments on her home. Other alleged illegal practices included diverting earned income into "secret" bank accounts without reporting the income on either Mollica's or P.M.'s tax returns, and not reporting interest income received on loans. Mollica and Cirillo's defense was that they did not act with any criminal intent; they claimed that the bookkeeping and reporting errors were inadvertent or the fault of their accountants.

B. Trial Testimony

At trial, a pivotal issue concerned whether an alleged money laundering scheme involving P.M. and Robert Matthews, the operator of Matthews Industrial Piping, was related to the specific allegations in the indictment. Matthews had been awarded the contract to renovate the Mobil Oil Company bulk storage plant on Staten Island, New York. He subcontracted a part of the excavation work on this project to P.M. P.M. employees and Matthews were allegedly involved in a money laundering scheme that provided Matthews with cash that he used to pay bribes to labor officials and fire inspectors in connection with the work on the Mobil project. Under this scheme, Matthews would make out a check to P.M. for the amount of cash he needed, and Mollica or Cirillo would get the check cashed at a bank where they knew a bank official. Matthews then would receive the cash from Cirillo, less a ten to twelve percent "service charge."

It is difficult to discern the government's position with respect to the relation between the Matthews money laundering scheme and the income tax violations charged in the indictment. Before trial, the defendants requested that the government provide in a bill of particulars the names of any unindicted co-conspirators. Although the government responded that it would provide such a list prior to trial, and it knew of Matthews' involvement in this scheme, it never did provide a list, purportedly Nevertheless, the government later called Matthews as a witness. He testified about the scheme and stated that the amount of cash generated was approximately $147,000. At the conclusion of its case, the government argued that Matthews' testimony established that he was engaged in a conspiracy to defraud the government of the United States by laundering money with Mollica. Defendants' counsel objected, questioning how Matthews' testimony could make him a co-conspirator in a tax case in light of the fact that there was no evidence to suggest that Matthews intended to assist anyone in evading taxes. Defendants' counsel also asserted that if they had been on notice that the money laundering scheme was alleged to be part of a conspiracy to defraud the government or to evade taxes, they would have cross-examined Matthews in a different manner so that they could have elicited his state of mind in entering the scheme, including whether he was at all motivated by the idea of evading taxes. When the court asked how the testimony established that Matthews was a co-conspirator in a tax case, the government cited the ten to twelve percent "service...