U.S. v. Ruiz

• Decision Date: 10 January 1990
• Docket Number: D,No. 464,464
• Citation: U.S. v. Ruiz, 894 F.2d 501 (2nd Cir. 1990)
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Israel RUIZ, Jr., Defendant-Appellant. ocket 89-1255.
• Court: U.S. Court of Appeals — Second Circuit

Page 501

894 F.2d 501

UNITED STATES of America, Plaintiff-Appellee, v. Israel RUIZ, Jr., Defendant-Appellant.

No. 464, Docket 89-1255.

United States Court of Appeals Second Circuit.

Argued Nov. 16, 1989.

Decided Jan. 10, 1990.

Kerri Martin Bartlett, Asst. U.S. Atty., S.D.N.Y., New York City (Benito Romano, U.S. Atty. S.D.N.Y., Edward D. Saslaw, Sp. Asst. U.S. Atty., Maria T. Galeno, Asst. U.S. Atty., New York City, of counsel), for plaintiff-appellee.

Christine E. Yaris, New York City, for defendant-appellant.

Before LUMBARD, FEINBERG, and MESKILL, Circuit Judges.

LUMBARD, Circuit Judge:

Israel Ruiz appeals from the judgment of conviction of the District Court for the Southern District of New York, Peter K. Leisure, Judge. Following a jury trial, Ruiz was convicted of violating 18 U.S.C. Sec. 1014 (1988) by making false statements in loan applications to Chemical Bank, a federally insured institution. Judge Leisure imposed a sentence of eleven months' imprisonment, five of which were suspended; three-years' probation; and 500 hours of community service. Ruiz is at liberty pending appeal. We affirm.

I.

In January 1975, Ruiz began serving as a New York State Senator representing the Thirty-second Senatorial District in the Bronx. Later that year he founded the Alliance for Progress, Inc., a non-profit corporation that sponsored construction and renovation of residential and commercial properties. The Alliance was funded, in part, under a state program allowing elected officials to designate a special interest project to receive state funds.

One of the Alliance's projects involved a commercial development at 880 River Avenue in the Bronx, known as the Yankee Mall. The Alliance, through a subsidiary, the 880 River Avenue Holding Corporation (880 Corporation), purchased the building at that location and sought additional funding from the state's Urban Development Corporation (UDC). UDC entered into a purchase-leaseback arrangement with the Alliance whereby UDC agreed to purchase the property and lease it to the Alliance with a buy-back option at the lease's termination. The Alliance also arranged with Perme Construction Corporation to renovate the property. Perme was headed by Maxiste Brito.

As with other Alliance development projects, Ruiz arranged with the purchaser of the property, in this case the Alliance subsidiary, to provide consulting services for which he would be compensated. Ruiz assured the 880 Corporation that the consulting arrangement did not violate any ethics obligations imposed under New York law by virtue of his position as a state senator. Ruiz received $40,000 for his services on the Yankee Mall project.

Correspondence with the Senate Ethics Committee

Because of the potential ethical problems regarding his consulting activities on the Yankee Mall and other projects, Ruiz regularly corresponded with the chairmen of the Senate Ethics Committee to obtain its conditional approval. Ruiz wrote two such letters, in November 1979 and February 1981, to Senators John Marchi and Christopher Mega, respectively, each of whom subsequently communicated his approval of the consulting arrangements. On June 8, 1983, however, Ruiz wrote to the new chairman, Senator William Steinfeldt, who initially responded to Ruiz that he could "neither approve nor disapprove" of the arrangements. Later, in September 1983, Steinfeldt wrote Ruiz a more detailed letter, stating, in part, that the ethics committee could not "give [Ruiz] a blanket assurance of a lack of conflict within the requirements of the public officers law and the legislative law." Steinfeldt also suggested that the arrangements "may be on the verge of and may be actually within the practice of law."

During an audit of the Yankee Mall project in the spring of 1984, the UDC discovered a $37,500 payment to Ruiz by the Alliance and requested further information. Ruiz supplied, in response, copies of the letters from Senators Marchi and Mega but not the two letters from Senator Steinfeldt. In April 1986, a federal grand jury investigating Ruiz's consulting activities subpoenaed his correspondence with the Ethics Committee. ¹ From the appropriate file, Ruiz's staff retrieved the Marchi and Mega letters but not the Steinfeldt letter. Upon being advised by one staff member that the June 1983 letter to Steinfeldt was missing, Ruiz directed his staff to obtain the letter from the Ethics Committee itself. Later, that committee, in response to a subpoena, delivered to the Government all correspondence relating to Ruiz, including both 1983 letters from Steinfeldt to Ruiz. The Government informed Ruiz's attorney of the discrepancy between the letters Ruiz had supplied and those supplied by the committee. Ruiz then directed his staff again to examine the appropriate file, and the staff this time produced the September 1983 Steinfeldt letter.

Appearing before the grand jury in May 1986, Ruiz was asked about the September 1983 letter and why he had not supplied it when subpoenaed. Ruiz stated repeatedly that, as of the date of the subpoena, he had neither seen nor possessed the letter.

The Two Loan Applications

In October 1984, Ruiz applied to Chemical Bank for a personal loan of $115,000, of which $65,000 was to be invested in construction of a supermarket at Yankee Mall, and the balance in a residential project sponsored by the Alliance. On one of the documents submitted in support of his loan request, Ruiz represented, under the category "Other Assets (Itemize)," a "supermarket at 880 River Ave. investment" worth "$125,000." Despite this and the other supporting documentation, Robert Pearson, the branch manager, requested further information regarding the purpose of the loan and the method of repayment. Ruiz did not provide that information.

In April 1985, Ruiz made a second loan request, this time for $150,000 to complete the supermarket, in the name of a corporation he wholly owned, Able Grocery Corporation. On a financial statement submitted in support of the request, Ruiz listed, again under the category "Other Assets (itemize)," a "Supermarket at 880 River Avenue investment" worth "$139,000." Once again Pearson requested further information, including a proposed business plan for the supermarket, none of which Ruiz supplied.

Both loan applications failed to list a $30,000 debt Ruiz owed to Burton Schoenbach, a friend and former Senate staff employee, for a 1983 loan.

In May 1985--after twice being unsuccessful in applying for Chemical Bank loans--Ruiz finally obtained part of the money he sought through a loan from Maxiste Brito, the head of Perme Construction. Brito earlier had borrowed $75,000 from Chemical Bank, in Perme's name, and loaned $50,000 to Ruiz ostensibly to help Ruiz repair damage to his house from faulty plumbing. The Alliance secured Brito's loan by a $75,000 certificate of deposit to enable Perme to complete construction of the 880 River Avenue project.

The Indictment

On August 23, 1988, the second grand jury returned a three-count indictment against Ruiz. Count One was based on the allegedly false statements contained in the October 1984 loan application. Count Two alleged two material misrepresentations in the April 1985 loan request: his failure to identify the $30,000 debt to Schoenbach and his valuation of the supermarket at $139,000 when his actual interest was only $35,000. Count Three alleged that Ruiz committed perjury before the first grand jury when he stated that at the time of the subpoena he had had neither knowledge nor possession of the Steinfeldt letter. The jury convicted Ruiz on Count Two and acquitted him on Counts One and Three.

II.

A. Abuse of the Grand Jury Process

In November 1988, Ruiz moved for dismissal of the indictment or for a hearing, asserting that he was prosecuted because of political animosity and as a vindictive response to the Government's failure to obtain an indictment from the first grand jury that investigated Ruiz. The court denied the motion. Ruiz argues that Judge Leisure's refusal to require the Government to respond to Ruiz's allegations by affidavit or at a hearing is reversible error.

Although there is no indication that Ruiz requested to appear before the second grand jury, he complains that the prosecutor's failure to call him to testify is indicative of the Government's abuse of the process. Ruiz appeared five times before the first grand jury, but before the second the Government offered transcripts of his earlier testimony instead of calling Ruiz to testify. Ruiz argues that the use of the transcripts prevented the grand jury from assessing his credibility and allowed the prosecutor to mischaracterize the earlier testimony without giving Ruiz a chance to explain it.

Ruiz also claims that the Government was biased against him because he is an Hispanic legislator who has taken many unpopular positions, and because it had unfairly targeted politicians in light of recent prosecutions of alleged corruption among New York City political figures.

Ruiz argues that, at the least, the district court should have required the Government to answer his objections. Were Ruiz better able to substantiate his allegations, there might have been sufficient reason to require the Government to respond. As it was, there was no showing that Ruiz's indictment was caused by improper actions of the Government. Moreover, with respect to Count Two, any error respecting the charge is rendered harmless by Ruiz's conviction beyond a reasonable doubt. See United States v. Mechanik, 475 U.S. 66, 70-71, 106 S.Ct. 938, 941, 89 L.Ed.2d 50 (1986). With respect to the other counts, Ruiz's acquittal renders any error moot. See United States v. Helmsley, 864 F.2d 266, 269 (2d Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 2063, 104 L.Ed.2d 628 (1989). Additionally, as Judge Leisure noted, it is well established that defendants have no constitutional right to appear before a grand jury. United States v....