U.S. v. Parness
| Decision Date | 13 January 1975 |
| Docket Number | No. 984,D,984 |
| Parties | UNITED STATES of America, Appellee, v. Milton PARNESS and Barbara Parness, Appellants. ocket 74-1027. |
| Court | U.S. Court of Appeals — Second Circuit |
Roy M. Cohn, New York City (Eugene Gressman, Washington, D.C., and Michael Rosen, New York City, on the brief), for appellants.
Bart M. Schwartz, Asst. U.S. Atty., New York City (Paul J. Curran, U.S. Atty., and S. Andrew Schaffer, Asst. U.S. Atty., New York City, on the brief), for appellee.
Before FRIENDLY and TIMBERS, Circuit Judges. *
Appellants Milton and Barbara Parness 1 appeal from judgments of conviction entered upon jury verdicts returned on October 3, 1973 after a thirteen day trial in the Southern District of New York before Dudley B. Bonsal, District Judge, finding them guilty on two counts of causing interstate transportation of stolen property (Counts Four and Six) and on one count of causing a person to travel in interstate commerce in furtherance of a scheme to defraud (Count Five), in violation of 18 U.S.C. 2314 (1970); and, in addition, finding Milton Parness guilty of acquiring an enterprise affecting interstate or foreign commerce through a pattern of racketeering activity (Count One), in violation of a provision of Title IX of the Organized Crime Control Act of 1970, 18 U.S.C. 1962(b) (1970). 2
Of the numerous claims of error raised on appeal, we find the following to be the principal ones: (1) both appellants challenge the sufficiency of the evidence; (2) Parness claims that there was a material variance between the theory of the crime charged in Count One and the theory upon which that count was submitted to the jury; (3) Parness claims that the acquisition of a foreign corporation by means of criminal acts committed in the United States does not state an offense within the meaning of 1962(b); and (4) Parness claims that the statute is unconstitutionally vague on its face and as applied. Questions (3) and (4) appear to be ones of first impression. Other subordinate claims of error are also raised.
We affirm.
In view of the issues raised on appeal, including the challenge to the sufficiency of the evidence, the following summary of the events from the end of 1967 to the middle of 1971 which culminated in the indictment is believed necessary to an understanding of our rulings on those issues.
In 1967, Allan Goberman, a successful Pennsylvania businessman, learned of an opportunity to invest in the St. Maarten Isle Hotel Corporation, N.V. (Hotel Corp.) which owned an insolvent and partially completed hotel-casino complex on the island of St. Maarten in the Netherlands Antilles. He organized the Goberman Construction Company, N.V. and arranged for the necessary financing through American sources and later from the Antillean government with which to complete the construction of the hotel-casino in January 1970. When the complex was opened in early 1970, Goberman owned 90.5% Of Hotel Corp.'s stock. He also held a $3.5 million demand note from Hotel Corp. which represented money he had loaned Hotel Corp. for construction of the complex.
The hotel was moderately successful during its first few months of operation. As the winter holiday season came to an end in early 1970, however, it became apparent that the hotel's continued financial success depended upon additional income from gambling junkets to the casino. These junkets, originating primarily in the United States, were organized by junket operators (junketeers) who arranged for a group of prospective gamblers to be folwn to St. Maarten and gamblers to be flown to St. Maarten and the hotel, all free of charge.
Each junket participant prior to his departure from the United States was required to deposit gambling 'front money' with the junketeer. If his losses at the casino exceeded his initial stake, he was permitted to gamble on credit. These credit advances were evidenced by signed IOU's, commonly known as markers. When a player was unable to recoup his losses and thereby redeem his markers prior to his return to the United States, it was the responsibility of the junketeer to collect such debts and to remit the proceeds, less a commission, to Hotel Corp. The junketeer also was responsible for forwarding the front money to Hotel Corp.
In mid-1970, Goberman first met Parness, a junketeer who had been arranging successful junkets to the casino for some time through his corporation, Olympic Sports Club, Inc. In the fall of 1970, Goberman offered Parness the exclusive right to manage and direct junkets to the hotel-casino. Parness accepted. Thereafter all such junkets were arranged through Parness and Olympic. Beginning in late 1970 and continuing until his eventual acquisition of Goberman's interest in Hotel Corp., Parness assumed sole responsibility for collecting all of the hotel's outstanding marker receivables. During the same period, Olympic's sole function was arranging gambling junkets to the hotel. Almost its only income was from gamblers' front money and marker collections.
Despite the income from the gambling junkets, Hotel Corp. began to experience serious financial difficulties within a few months of the opening of the hotelcasino. In order to continue operations until permanent financing could be arranged, Goberman on October 6, 1970 obtained from Leonard Holzer of New York City a short term $150,000 loan (the Holzer loan). Goberman signed a promissory note in this amount, secured by a pledge of his entire 226,500 share interest in Hotel Corp. Goberman advanced virtually the entire $150,000 to Hotel Corp. Parness knew of the Holzer loan and of the hotel's financial straits.
In late 1970, Holzer began to threaten Goberman with foreclosure on the stock pledge unless the loan was immediately repaid. In order to obtain the necessary funds with which to repay the loan, Goberman repeatedly asked Parness for approximately $400,000 in overdue marker receivables which Parness claimed he had not yet been able to collect. Because these funds were not forthcoming from Parness or Hotel Corp., Goberman was unable to repay the loan. Holzer called the loan and on January 25, 1971 began foreclosure proceedings on Goberman's stock interest in Hotel Corp.
Shortly before Goberman's Hotel Corp. stock was to be sold at auction on February 4, 1971, Parness told Goberman that, although the outstanding markers were still uncollectible, he had arranged to borrow $150,000 and would advance that sum to Goberman to enable him to repay the Holzer loan. Parness told Goberman that the lenders had demanded that Goberman again pledge his entire interest in Hotel Corp. At Parness' direction, Goberman signed a loan agreement with two Parness nominees, Barbara Landew (Parness) and one Stanley Amsterdam, pursuant to which he was to receive $160,000 3 (the Goberman loan). Neither Barbara nor Amsterdam had supplied any of the funds loaned to Goberman. Amsterdam signed the agreement only as a favor to Parness.
On February 4, Barbara went to a bank in West Orange, New Jersey, and, with $99,000 in cash and a $56,000 check drawn on Olympic's account, purchased two cashier's checks. 4 These were to be used by Goberman to repay the Holzer loan. Later the same day, Parness arranged for Goberman, his attorney and Holzer's attorney to meet in Manhattan. From there they went to the New Jersey bank and picked up the cashier's checks which Barbara had left there. On February 9, again using Olympic funds, Barbara purchased another $5,000 cashier's check at the same bank and forwarded it to Holzer's counsel in New York as legal fees. 5
During February and March of 1971, Goberman continued his efforts to obtain from Parness the $400,000 in unremitted marker receivables. Because this money was still not forthcoming and allegedly because Goberman was denied access to other funds which Parness had remitted to Hotel Corp., he was unable to repay Barbara and Amsterdam. They, at Parness' direction, prepared to exercise their rights under Goberman's latest pledge of his Hotel Corp. stock. On April 3, Parness' counsel drafted, and Goberman, Barbara and Amsterdam executed, a number of documents bearing various dates and purportedly prepared over a period of time in the ordinary course of business, the end result of which was that Goberman was formally divested of his 226,500 shares of Hotel Corp. stock.
Shortly thereafter, Parness acquired Aliter Holdings, N.V., a shell Antillean corporation. He did so through his cousin, Edward Levrey. On June 10, Barbara and Amsterdam transferred 'their' interest in Hotel Corp. to Aliter. in a letter purportedly written by Levrey, Aliter acknowledged receipt of the stock. The letter also sought to establish that Aliter had provided the funds for the Goberman loan and that Barbara and Amsterdam had acted as its agents throughout. Aliter in fact had supplied no funds to Barbara or Amsterdam and had not even been an active corporation at the time the Goberman loan was made.
During the summer of 1971, Parness, again using Levrey as a front, acquired Terrasol Holdings, N.V., another shell Antillean corporation. Terrasol then exchanged its common stock for Aliter's holdings in Hotel Corp. In November, Parness attempted to make a public offering of Terrasol common stock in Canada. The prospectus, prepared at Parness' direction, falsely described Terrasol as a Levrey family corporation and falsely represented that Levrey had purchased the 226,500 shares of Hotel Corp. stock from Goberman for $150,000 in cash. Levrey in fact had invested no funds in either Aliter or Terrasol and had had no financial dealings with Goberman.
In challenging the sufficiency of the evidence, appellants claim that the government failed to establish that the cashier's checks, which they eaused to be transported in interstate commerce,...
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