U.S. v. Schwartz

• Decision Date: 25 April 1986
• Docket Number: Nos. 84-2792,s. 84-2792
• Citation: 787 F.2d 257
• Parties: , 20 Fed. R. Evid. Serv. 442 UNITED STATES of America, Plaintiff-Appellee, v. Dennis SCHWARTZ, Diane Henning, Harry Testa, Thomas Tucker, Joseph Ciolino, Michael Caliendo, and James D'Antonio, Defendants-Appellants. to 84-2798.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 257

787 F.2d 257

54 USLW 2546, 20 Fed. R. Evid. Serv. 442

UNITED STATES of America, Plaintiff-Appellee, v. Dennis SCHWARTZ, Diane Henning, Harry Testa, Thomas Tucker Joseph Ciolino, Michael Caliendo, and James D'Antonio, Defendants-Appellants.

Nos. 84-2792 to 84-2798.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 15, 1986.

Decided March 28, 1986.

As Amended April 2 and April 25, 1986.

Ruben Castillo, Asst. U.S. Atty., Chicago, Ill., for plaintiff-appellee.

Marc Kadish, Maren Dougherty, Chicago, Ill., Dalton Grier, West Chicago, Ill., Joseph A. Lamendella, Lamendella & Filosa, Chicago, Ill., Terry Sullivan, Rolling Meadows, Ill., for defendants-appellants.

Before WOOD, EASTERBROOK and RIPPLE, Circuit Judges.

EASTERBROOK, Circuit Judge.

One of the booming industries in Illinois is the disposal of usable, but depreciated, cars in order to make false claims for insurance proceeds. Peter Basile ground up one car after another in a "cruncher" in order to buy new and better cars. United States v. Basile, 771 F.2d 307 (7th Cir.1985). Benito Silva hired a team of mechanics to take his motor home apart so that he could both sell the parts and obtain compensation for a "theft." United States v. Silva, 781 F.2d 106 (7th Cir.1986). This case revolves around Belden Auto, a repair shop in Stone Park, Illinois. Dennis Schwartz, the owner of Belden Auto, and assorted hangers on would stage auto accidents. Some involved real damage, but the majority of the "accidents" were fictitious. Belden would attest to the cost of the necessary repairs. Police officers filled out accident reports, which supported Belden's claims and induced insurance companies to pay up.

Within eight months in 1981 Schwartz and his henchmen reported at least 13 fake accidents and bamboozled insurance companies out of at least $190,000. The cast of characters included Harry Testa, the Chief of Police of Stone Park. Two of the "accidents" involved Testa, and Testa may have been instrumental in producing police reports that satisfied the insurers' curiosity.

Some people pleaded guilty to various roles in the scheme; one defendant went to trial and did not appeal; still other people testified for the prosecution at trial. We have the cases of seven appellants. Schwartz was convicted of 31 counts of mail fraud, 18 U.S.C. Sec. 1341, and one count of racketeering, 18 U.S.C. Sec. 1962(c). See United States v. Lane, --- U.S. ----, ---- - ----, 106 S.Ct. 725, 733-34, 88 L.Ed.2d 814 (1986). He received a total of seven years' imprisonment to be followed by five years' probation. Testa was convicted of four counts of mail fraud, fined $1,000, and was sentenced to six months' imprisonment plus three years' probation. Diane Henning, who lived with Schwartz and kept Belden's books, was convicted of a single count of mail fraud and sentenced to three years' probation. Thomas Tucker, a lieutenant of the Stone Park police who submitted a false claim for himself and helped fabricate claims for others, was convicted of four counts of mail fraud, and was sentenced to six months' imprisonment, three years' probation, and fined $1,000. James D'Antonio, an acquaintance of Schwartz, was convicted of three counts of mail fraud for submitting a claim for a bogus accident. He received six months' work release, three years' probation, and a fine of $1,000. Two police officers became involved in the scheme by filling out reports on nonexistent accidents. Joseph Ciolino, a sergeant with the Stone Park force, was convicted of five counts of mail fraud and received three years' probation. Michael Caliendo, an officer of the Melrose Park, Illinois, police, was convicted of three counts of mail fraud and received 90 days' work release to be followed by 33 months' probation.

I

The "events" of May 13, 1981, demonstrate the nature of this scheme. Belden Auto submitted insurance claims for two accidents that supposedly occurred on May 13. The first was a collision between a 1974 Ford Mustang owned by Denise Koester and a car supposedly owned by a "Carico Plumbing." Koester obtained a check for $1,226.41 from Allstate Insurance after submitting a report that her car had been in a collision and had been towed to Belden Auto by John Kirschbaum. Kirschbaum was convicted of mail fraud for falsely certifying that he towed this and other cars; he did not appeal. Koester, who testified for the prosecution at trial, said that there had been no accident. She got the idea for the bogus claim from Joseph Bulwa, Schwartz's brother, who pleaded guilty to mail fraud. On May 13 Bulwa gave Koester an accident report signed by Ciolino and told Koester to call her insurance company. Koester never talked to Ciolino about the accident. "Carico Plumbing," the other party to this "accident," also submitted an insurance claim and obtained a check for $5,681.92 made out to Carico Plumbing and Belden Auto. The check was negotiated by "John Mizener," apparently a pseudonym of Schwartz and Kirschbaum, and the proceeds landed in Belden's account.

The second "accident" of May 13 involved a 1977 Buick Regal owned by Tucker and a 1981 Cadillac Eldorado Biarritz. According to the accident report (like all documents, a report submitted by mail), Schwartz was driving the Cadillac when Tucker ran into the car from the rear, severely damaging the Cadillac and destroying the Buick. The claim was accompanied by a photo of a severely damaged Cadillac Eldorado Biarritz, and the report showed that the Cadillac's odometer had a reading of 506 miles. Tucker owned a Buick Regal, having registered title to one on May 12. Belden or Schwartz owned a Cadillac Eldorado, having acquired it from Andrew Ott, who owned a repair shop across the street from Belden. Ott, who pleaded guilty to mail fraud, transferred ownership to the Cadillac in January 1981 after it had already been damaged severely, with an odometer reading of 506 miles. The Cadillac was the "other car" in four accidents--a real one on January 15, 1981, bogus ones on May 13, June 1, and June 30.

After the supposed rear-end accident on May 13, Kirschbaum again "towed" the cars to Belden Auto, where the Cadillac had been sitting ever since January. Both Schwartz and Tucker made claims on their insurance policies. State Farm asked for a police report to back up the claims, and Tucker submitted a report signed by Ciolino. Schwartz then spoke with State Farm's representative by phone and repeated the claim that he had been driving the Cadillac when Tucker's car struck it from the rear. State Farm's representative spoke with Tucker's wife, who confirmed the story of the accident. Later the representative spoke with Tucker, who asked for cash rather than a replacement car. State Farm sent Tucker checks for $2,924.46 and $1,550.54, which he acknowledged. It sent three checks aggregating $9,314.65 to "Dennis and Diane Schwartz" for the Cadillac. Schwartz and Henning endorsed these checks, which Henning cashed. Belden Auto gave Tucker a check for $2,000.

Both police reports for the May 13 "accidents" were signed by Ciolino. Ciolino was the shift commander on duty at the police station that evening. The first accident supposedly occurred at 6:48 p.m., and Ciolino's report recites that he was notified at 6:50. The "accident" supposedly occurred right in front of the police station. The report includes a diagram of the "crash", and the diagram is accompanied by the following: "Veh. # 2 [Koester] stated she was S/B [south bound] 1600 Mannheim Rd. when a F/W [white female] darted S/B off of curb and swerved into Veh. # 1 pushing it into curb." This would lead a reader to conclude that Ciolino had visited the scene of the crash (or rather that the scene of the crash had visited the police station) and spoken with Koester. A patrol officer of the Stone Park police testified that the preparation of accident reports usually entails discussions with the drivers involved and that a diagram would be prepared when the officer reached the scene of the accident before the vehicles had been moved. Of course Ciolino had not seen any crash or spoken with Koester. Ciolino's report of the "crash" between the Buick and the Cadillac was timed at 8:42 p.m. and again includes both a diagram and descriptions that would lead a reader to conclude that Ciolino had spoken with the parties involved at the scene.

The actors in the events of May 13 gave different excuses. Henning testified and denied knowledge that any of the events was bogus or that any of the money she obtained had derived from fraud. Tucker presented testimony of friends who said that he got drunk now and again. His daughter testified that she received a 1977 Buick Regal on May 5, 1981, that someone broke its windshield, that she gave the car to her father and never saw it again. Tucker told his wife that it had been in an accident. Ciolino did not testify. Schwartz did not put on a defense, but it was stipulated that he paid more than $16,000 in restitution to several insurers on account of these claims and others. Kirschbaum testified that the records of Belden were disorganized, so that he did not know what he had towed and when. He conceded signing "Bill Mizener's" name to some checks at Schwartz's request but denied knowing that anything was amiss.

Six appellants (all except Schwartz) insist that the evidence is insufficient. Four of these six are whistling in the dark. Tucker mailed reports and accepted checks (including a $2,000 check from Belden) for a "rear end accident" between his car and a Cadillac that never left Belden Auto. Testa submitted two false claims for accidents; in each Testa collected insurance proceeds for autos he did not own, on account of accidents that never occurred. Thomas Peppers, who submitted a bogus claim for one of these "accidents," testified at trial that the whole thing was fabricated at a meeting he had with Testa and Schwartz. D'Antonio, too, submitted a false...