U.S. v. Pelullo, Civ. A. No. 94-276(DRD).
| Decision Date | 17 April 1997 |
| Docket Number | Civ. A. No. 94-276(DRD). |
| Citation | 961 F.Supp. 736 |
| Parties | UNITED STATES of America, Plaintiff, v. Leonard PELULLO, Defendant. |
| Court | U.S. District Court — District of New Jersey |
Faith S. Hochberg, United States Attorney by Mark W. Rufolo and Leslie Faye Schwartz, Assistant U.S. Attorneys, for plaintiff.
Herbert Beigel, Aaron C. Horowitz, Beigel, Lasky, Rifkind, Fertig Gelber & White, New York City, for Defendant, Leonard Pelullo.
TABLE OF CONTENTS
I Background ................................................................ 740
II Summary of the Evidence ................................................... 744
A. Compton Press, Inc. ................................................... 744
B. the Granada-DWG Transfers ............................................. 745
C. The Away to travel South Transfer ..................................... 747
D. The UNUM Annuity Contract ............................................. 749
III Discussion ................................................................ 750
A. Sufficiency of the Evidence ........................................... 750
B. Money Laundering Counts ............................................... 751
C. Brady, Giglio, Jencks Material ........................................ 753
1. Interview of Witnesses ............................................ 753
2. Heine Materials ................................................... 754
3. UNUM Contract Witnesses ........................................... 756
4. Gerardi, Marqueen and Derrick Loans ............................... 756
5. Other Brady, Giglio, Jencks Contentions ........................... 757
D. Miscellaneous Contentions ............................................. 759
1. Hearsay Evidence .................................................. 759
2. Attorney/Client Privilege ......................................... 759
3. Rule 404(b) Evidence .............................................. 759
4. Jury Charges ...................................................... 759
5. Statute of Limitations ............................................ 760
6. Prosecutorial Misconduct .......................................... 760
7. Refusal to Grant Continuance ...................................... 760
8. Forfeiture ........................................................ 761
IV Conclusion ................................................................ 761
In November 1996 a jury found defendant, Leonard Pelullo, guilty on one count charging him with conspiracy to embezzle $4.176 million from two employee pension benefit plans and to engage in money laundering, on 11 counts of embezzlement from these employee pension benefit plans, and on 42 counts of money laundering. Defendant has moved for a judgment of acquittal or a new trial on the following grounds:
1. The Government violated its obligations under Brady, Giglio, and Jencks, by, among other things, not producing (and/or destroying) notes, reports and 302s of interviews with witnesses, and not producing all of the relevant files of the defendant seized in the search of his warehouse.
2. The Government knowingly presented perjured and/or false testimony, and failed to correct that false testimony.
3. The Government improperly presented hearsay testimony in the guise of co-conspirator statements which were never connected to the conspiracy.
4. The specific transactions charged as money laundering neither promoted the embezzlement, nor were designed to conceal or disclose in violation of 18 U.S.C. § 1956(a)(1).
5. The indictment was brought after the statute of limitations had expired.
6. The court failed to grant the defense's request for a continuance, and thus did not provide the defense with adequate time to prepare which resulted in ineffective assistance of counsel.
7. The government violated the defendant's attorney-client privilege.
8. The government improperly inserted the civil standard under ERISA through the testimony, closing arguments and jury instructions, as the basis for finding the defendant guilty of a crime.
9. The Government made improper statements during this closing and rebuttal arguments, including references to Mr. Pelullo's decision not to testify, vouching for witnesses, and improperly characterizing the evidence.
10. The amount of the forfeiture is in error.
11. There was insufficient evidence to prove a violation of 18 U.S.C. § 664 (embezzlement).
12. There was insufficient evidence to prove a violation of 18 U.S.C. § 371 (conspiracy).
On December 9, 1994 a grand jury sitting in Newark, New Jersey, returned a 54 count indictment against defendants Leonard Pelullo and Raul Corona.
Count 1 charged a two-part conspiracy. First, defendants and others were accused of conspiracy to embezzle approximately $4,176,000 belonging to the Compton Press Employees' Profit Sharing Retirement Plan (the "Retirement Plan") and belonging to the Compton Press Employees' Thrift Plan (the "Thrift Plan") contrary to 18 U.S.C. § 664. (The two Plans will be referred to collectively as the "Employees Benefit Plans"). Second, defendants and others were accused of conspiring to commit money laundering offenses, namely, to conduct financial transactions that involved the proceeds of unlawful activity (the thefts from the Employees Benefit Plans) with the intent to promote the unlawful activity and knowing that the financial transactions were designed to conceal the nature and ownership of the proceeds of the unlawful activity contrary to 18 U.S.C. § 1956(a)(1).
Counts 2 through 12 each charged that the defendants embezzled an amount of money or assets of one or the other or both of the two Employees Benefit Plans. Counts 13-54 each charged that the defendants engaged in a specific transaction which constituted an act of money laundering.
Prior to trial the charges against Corona were dismissed for the reason that the government used information immunized during proceedings in the Middle District of Florida to obtain the indictment against him in the District of New Jersey. United States v. Pelullo, 917 F.Supp. 1065 (D.N.J.1995).
Pertinent to the pending motions are two other pretrial proceedings in the cases and the information developed during those proceedings. The first of these proceedings was Pelullo's motion to dismiss the indictment for the reason that the government seized and made use of documents protected by the attorney-client privilege. The second of these proceedings was an extended Fed. R.Evid. 104 in limine evidentiary hearing to establish the authenticity of the vast array of documents upon which the government intended to rely to establish its case. Information developed in connection with the privilege motion and in connection with the in limine hearing bear upon the merits of Pelullo's pending motion.
The privilege motion required an inquiry into some of the many governmental investigations of Pelullo, some of the civil proceedings in which Pelullo was involved, and the existence and disposition of documents assembled in or created by those investigations and proceedings.
In 1991 a Florida state grand jury was investigating Pelullo. At the same time a federal grand jury was sitting in the Middle District of Florida. It was investigating allegations of bankruptcy fraud and related offenses by Pelullo and others involving the Ryder/PIE concerns. During the course of that investigation a warrant was issued authorizing the search of a 2,400 square foot warehouse located at 6985 N.W. 82nd Avenue, Miami, Florida. The warehouse contained the records of 25 Pelullo companies, including Compton Press, Inc. and other companies which figure in the embezzlements charged in the present case. The FBI seized from the warehouse 904 boxes of documents, 114 file cabinets containing documents and 10 file cabinet drawers of corporate and financial records.
While the United States Attorney in the Middle District of Florida was investigating the Ryder/PIE embezzlements, the New Jersey United States Attorney's Office was investigating the Compton Press matter. Special Agent Rosario Ruffino of the United States Department of Labor, Office of Racketeering traveled to Florida in the fall of 1991, conferred with the FBI agent in charge of the Florida federal investigations, and brought back to Newark six boxes of original documents seized during the search of the Miami warehouse.
In his Florida grand jury testimony, Corona described the manner in which Pelullo conducted his many businesses. He created companies, affiliated companies and subsidiaries by the dozens. He transferred employees back and forth among them. He funnelled money through and between these companies. As Corona described it:
The other thing is that the way he controlled his companies was like if they're all his — they're all his companies and all the money funnels down into one pool, and wherever he needs it, he sends it, irregardless to what, whose money. Which other company it belongs to or what their responsibilities are tomorrow. It's he needs it today here, this resolves the problem for today, and we'll worry about tomorrow tomorrow. We made it through today. And every day is just making it through that one day.
He did think about the relationship of the other companies in how he passed the money through to wherever he needed it. He would funnel it through the company that was the parent of the company he was sending it to from the company that was under But it never — other than that, it never held him back on where he would put the money, as to — it was a matter of strictly where he needed it, where his priorities were the day — the day that you were in front of him.
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