U.S. v. Somerstein
| Citation | 20 F.Supp.2d 454 |
| Decision Date | 20 August 1998 |
| Docket Number | No. CR 96-657(ADS).,CR 96-657(ADS). |
| Parties | UNITED STATES of America v. Stuart SOMERSTEIN and Marianna Somerstein, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
SPATT, District Court.
The defendants, Stuart Somerstein ("Stuart") and Marianna Somerstein ("Marianna," collectively the "Somersteins" or the "defendants"), the officers and principals of Somerstein Caterers of Lawrence, Inc. ("Somerstein Caterers" or "SCLI") were convicted after a jury trial as to count one, conspiracy to commit mail fraud and to make false statements; count two, mail fraud; and count three, making false statements in relation to documents required by ERISA. In addition, Stuart Somerstein was convicted of the theft of $155,000 from a private pension plan. The original indictment also charged Sylvia Bromley ("Bromley"), SCLI's former bookkeeper, and John Iacovetti ("Iacovetti"), SCLI's former manager, with related crimes. Bromley died prior to the commencement of trial and the indictment against her was dismissed. The jury acquitted Iacovetti on all counts.
The Probation Department's Report indicates that Stuart Somerstein has a Criminal History Category of I, and an Offense Level of 20, resulting in a sentencing range of 33 to 44 months incarceration. Marianna Somerstein, with a Criminal History Category of I, and an Offense Level of 13, faced a term of incarceration from 12 to 18 months. This opinion addresses three of the sentencing issues confronting the Court: (1) the Government's motion for a 2-level adjustment in the sentences of Marianna and Stuart, pursuant to U.S.S.G. § 3B1.1(c), for their role in the offense, specifically, acting as organizers and leaders who directed the activities of another criminally responsible participant, namely Bromley; (2) Marianna's motion for a downward departure pursuant to United States v. Milikowsky, 65 F.3d 4, 6-9 (2d Cir.1995), on the ground that her imprisonment would impose an "extraordinary hardship" on her employees; and (3) Marianna's motion for a downward departure based on a combination of factors, including her charitable efforts, excellent work record, and experience as a survivor of the Holocaust.
I. BACKGROUND: THE OFFENSE
Somerstein Caterers is one of the premier caterers of Long Island. In addition to serving as the in-house caterer for Temple Israel in Lawrence, New York, the corporation operates the well-known Water's Edge Restaurant in Queens, New York. As part of this business, SCLI employs waiters, waitresses, bartenders, cooks, dishwashers, limousine drivers and security and maintenance personnel. Stuart Somerstein is the president of Somerstein Caterers. Marianna Somerstein, Stuart's wife, is vice president. As stated above, Bromley, who is now deceased, was SCLI's bookkeeper. Iacovetti served as the general manager until 1993.
Somerstein Caterers employs both union and nonunion employees. These employees are also called "wait staff." During the trial, the term "wait staff" was defined as waiters, bartenders, captains and head waiters. Tr. 2184. The union employees are represented by the Hotel Employees and Restaurant Employees International Union, AFL-CIO ("HEREIU"), a labor organization whose members work in the culinary and hotel industries. Local 100 ("Local 100" or the "Union") is the regional HEREIU chapter which includes as members restaurant and catering hall employees in the New York metropolitan area, including Long Island. At all relevant times, Somerstein Caterers was a signatory to collective bargaining agreements with Local 100.
On June 1, 1987, the "1987 collective bargaining agreement" between SCLI and Local 100 went into effect. Articles IX, XII and XIII of the 1987 collective bargaining agreement required the following benefit contributions be made to various employee benefit funds ("Benefit Funds" or "Funds"):
Fund Amount of contributions
Vacation Fund $5.00 per employee per party
Welfare Fund $5.00 per employee per party
Pension Fund $2.00 per employee per party
On June 30, 1990, the parties renegotiated their collective bargaining agreement. Under this "1990 collective bargaining agreement," the required contributions were identical to those stated in the 1987 agreement, the exception being that the contribution to the Pension Fund was increased from $2.00 to $5.00 per employee per party.
Consistent with the terms of the 1987 and 1990 collective bargaining agreements, Somerstein Caterers filed monthly documents called "remittance reports" with the Benefit Funds. The reports set forth the number of jobs worked by each employee, the names and social security numbers of the employees and the contributions made on their behalf. In order to keep track of contributions, the Funds maintain member history reports, which include the number of jobs worked and contributions made by an employer over a specific period of time. The information contained in these remittance reports is certified by the Benefit Funds in Internal Revenue Form 5500, which is filed annually with the federal government. According to the prosecution, the collective bargaining agreements required that the remittance reports contain the necessary and accurate information, and the contributions to provide benefits for both union and nonunion employees.
On November 1, 1980, prior to the execution of these collective bargaining agreements, Somerstein Caterers established the "Somerstein Caterers of Lawrence, Inc. Pension Plan" (the "Private Pension Plan"). The Private Pension Plan was developed for the benefit of employees not covered by the HEREIU Benefit Funds.
According to the Government, based on information obtained from audits of Somerstein Caterers, and documents seized during a search, between 1987 and May 1994 the Somerstein conspired to defraud the Local 100 Benefit Funds by failing to pay the required contributions. As part of this scheme the defendants allegedly made false statements and false representations in the remittance reports filed with the Benefits Funds. The prosecution contends that the defendants would intentionally fail to make the required contributions, either by not listing certain employees on the reports or by not reporting all of the parties they catered. In addition, the Government maintains that Stuart Somerstein, acting in his capacity as a trustee, caused the Private Pension Plan to make two loans in the total amount of $155,000 to Somerstein Caterers. According to the prosecution, these transfers constitute an embezzlement and a "prohibited transaction" within the meaning of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq.
The indictment was filed on July 23, 1996, charging all the defendants with conspiracy, mail fraud, and filing false statements with the Benefit Funds. In addition, Stuart Somerstein was charged with embezzlement of funds from the Private Pension Plan. The trial commenced on April 8, 1997 and continued for three and one-half weeks. On April 29, 1997, at the close of the Government's case, the Court granted the defendants' motion for judgment of acquittal pursuant to Fed.R.Crim.P. 29, in part, dismissing those portions of the indictment alleging criminally fraudulent conduct in connection with Somerstein Caterers' failure to make benefit contributions for nonunion employees. On May 3, 1997, the jury returned a verdict convicting Stuart and Marianna Somerstein of conspiracy, mail fraud and filing false documents. Stuart Somerstein also was convicted of embezzling funds from the Private Pension Plan.
II. THE GOVERNMENT'S MOTION PURSUANT TO U.S.S.G. § 3B1.1(C) FOR A TWO LEVEL ADJUSTMENT IN THE SENTENCES OF MARIANNA AND STUART SOMERSTEIN FOR THEIR ROLE IN THE OFFENSE AS ORGANIZERS OR LEADERS DIRECTING THE CRIMINAL ACTIVITY OF SYLVIA BROMLEY
The Government urges the Court to adopt the Probation Department's recommendation of 2-level enhancement of the defendants' sentences pursuant to U.S.S.G. § 3B1.1(c) for directing the criminal activity of Bromley, SCLI's former bookkeeper. The Court notes that there was little evidence presented at trial pertaining to Bromley, although the original indictment charged her with related crimes, most likely because she died prior to the trial and the indictment against her was dismissed.
U.S.S.G. § 3B1.1(c) may be applied if it is shown by a preponderance of the evidence that a defendant was an "organizer, leader, manager, or supervisor" of another "criminally responsible participant" in the criminal scheme. See U.S.S.G. § 3B1.1; United States v. Beverly, 5 F.3d 633, 642 (2d Cir.1993). If § 3B1.1(c) applies, the offense level increases by two. Id. "The district court's inquiry is not limited to defendant's role in the count of conviction; rather, the court may take all `relevant conduct' into account." United States v. Brinkworth, 68 F.3d 633 (2d Cir.1995).
The Court extensively reviewed the trial transcript prior to its decisions denying the motions of both defendants for a judgment of acquittal. The sole references to Bromley in the Court's post-trial Memorandum of Decision and Order are the following:
The testimony and exhibits admitted at trial, as considered in the light most favorable to the Government, demonstrate the following facts. Stuart Somerstein is the President of Somerstein Caterers and Marianna Somerstein is the vice president. Both are active participants in all...
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