United States v. Aloi
| Decision Date | 21 December 1977 |
| Docket Number | No. 77 CR 77.,77 CR 77. |
| Citation | 449 F. Supp. 698 |
| Parties | UNITED STATES of America v. Nicholas ALOI, Michael Dattero, Joseph DeCicco, Louis DiFazio, Murray Edelstein, Edward Fischman, Seymour Frank, Charles Glazer, Arthur Gudeon, Theodore Hali, Selwynn Schenkman, Allen Shuman and John Valente, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
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David G. Trager, U. S. Atty., Eastern District of New York, Brooklyn, N. Y., for the United States of America by Edward R. Korman, Chief Asst. U. S. Atty., Richard S. Berne, Stanley Marcus, Asst. U. S. Attys., Samuel H. Dawson, Deputy Chief Asst. U. S. Atty., Brooklyn, N. Y.
Barry Ivan Slotnick, New York City, for defendant Joseph DeCicco.
Theodore T. Jones, Brooklyn, N. Y., for defendant Louis DiFazio.
Joseph J. Marcheso, New York City, for defendant Seymour Frank.
William J. Cunningham, Buffalo, N. Y., for defendant Edward Fischman.
Joseph W. Ryan, Jr., Mineola, N. Y., for defendant Charles Glazer.
Saxe, Bacon & Bolan, P. C., New York City, for defendant Theodore Hali, Roy M. Cohn, Michael Rosen, Ronald F. Poepplein, New York City, of counsel.
Segal & Hundley, New York City, for defendant John Valente, Marvin G. Segal, New York City, of counsel.
The within matters are before this Court by way of various defendant motions to dismiss the underlying indictment. This indictment rests upon facts which can be briefly summarized as follows.
In 1975, in the wake of a major fiscal crisis, the State of New York sought ways to improve the financial stability of the State. One such measure utilized was a review of the New York State Medicaid Program1 which was enacted and is partially funded pursuant to the Federal Medical Assistance Program.2 During this review by the New York State Legislature, a proposal was made which advocated elimination of various optional medicaid services from the state program. Among such services contemplated to be excised from medicaid funding were podiatric services.3 At the time this proposal was under legislative consideration, a joint state and federal investigation uncovered a scheme whereby certain persons allegedly sought to illegally influence officials of New York's Executive and Legislative branches not to eliminate podiatric services from New York's Medicaid Program. This scheme ostensibly included an attempt to bribe a New York public official in order to influence his decision to secure the future federal and state funding of podiatric services.4 The defendants herein are alleged to have participated in this scheme.5
On February 9, 1977 a two count indictment was handed up which charged the defendants6 with numerous violations of federal law.7 Under Count One of the indictment, all thirteen defendants are charged with conspiracy to defraud the United States in violation of section 371 of Title 18 of the United States Code.8 More specifically, Count One alleges that the defendants conspired to defraud the federal government in connection with the performance of its lawful governmental functions by obstructing and hindering the Department of Health, Education and Welfare (hereinafter HEW) from properly administering and distributing federal funds pursuant to the Medical Assistance Program and, furthermore, by depriving the government of the faithful and honest participation of the State of New York in the Medicaid program. As part of the conspiracy, it is alleged that the defendants agreed to defraud the United States of its right to have federal funds distributed fairly and impartially and of its right to have New York Executive and Legislative officials render an impartial and honest decision regarding the proposal to eliminate podiatric services from the state's Medicaid program. As a further part of this conspiracy, Count One claims that the defendants agreed to raise $100,000 to be used to bribe a public official of New York in order to influence his decision with respect to the legislative proposal then under consideration.9
Count Two of the indictment charges four of the defendants10 with violations of Sections 211 and 195212 of Title 18 of the United States Code in that they allegedly employed facilities in interstate commerce to commit the crime of bribery in violation of Section 200.00 of the New York State Penal Law.
The defendants, individually and in conjunction, have raised various objections to the instant indictment. As to Count One, the defendants contend that the offense charged fails to state a cognizable offense under the laws of the United States, that it fails to allege the essential elements of a conspiracy to defraud the United States, and is impermissibly vague in that it omitted to name the public official who allegedly was to be bribed.
The defendants who are charged under Count Two of the indictment further attack the indictment as being legally insufficient on the ground that Count Two does not adequately allege the essential elements of a violation of section 1952 of Title 18 of the United States Code. These defendants further contend that Count Two contains insufficient allegations of interstate activity to establish a violation of section 1952.
Finally, all of the defendants seek a dismissal of the indictment on the ground that it violates the Federal Wiretap Statute, 18 U.S.C. § 2510 et seq. (1970). Relying on the Second Circuit's decision in United States v. Marion, 535 F.2d 697 (2d Cir. 1976), the defendants argue that certain wiretap and eavesdropping evidence obtained during the joint investigation was submitted to the federal grand jury in violation of section 2517(5) of Title 18 of the United States Code. The defendants thus conclude that the indictment must be dismissed.
In the alternative to dismissal of the entire indictment or a particular count contained therein, four of the defendants move for suppression of all wiretap conversations in which they were involved on various grounds including failure to name said defendant in the wiretap order, failure to promptly amend said orders to include unrelated crimes, failure to promptly seal the intercepted conversations, and failure to properly minimize. Furthermore, defendant DeCicco moves for inspection of the Grand Jury minutes. Finally, several of the defendants have also moved for severance.
Count One of the indictment charges the defendants with conspiracy to defraud the United States in violation of section 371 of Title 18. As previously noted, the defendants have interjected a variety of contentions which they argue necessitate a dismissal of this count.
The defendants' primary contention is that Count One fails to set forth a cognizable offense against the United States. This contention is predicated on a variety of arguments. First, the defendants contend that the decision whether to eliminate podiatric services from the New York State Medicaid Program was wholly within the jurisdiction of the Executive and Legislative branches of New York. The defendants then point out that no federal agency or public official was directly involved in this decision, and, thus, no federal offense could have been committed. The defendants also maintain that the functions and administration of HEW are separate and independent from any action taken by state officials. Furthermore, the defendants argue that no federal interest was involved which could be defrauded since no legal relationship or responsibility existed between the state officials and HEW with respect to the proposed legislation. Finally, the defendants claim that no official act of a public servant was to be illegally influenced and that no federal funds were either diverted or dependent on the outcome of the proposed legislation. After careful consideration of all of these arguments advanced by the defendants, the Court finds them to be without merit.
To begin with, it appears that the defendants have misconstrued the meaning of the conspiracy to defraud clause of section 371 of Title 18. Furthermore, it appears that the defendants have failed to perceive the pervasive involvement of the federal government in New York State's Medicaid Program. Consequently, the defendants have failed to recognize the vital interest that the federal government has in maintaining the integrity of a state program.
Turning first to the issue of whether the acts alleged in Count One of the indictment fall within the terms of the conspiracy to defraud clause of section 371 of Title 18, it is necessary to initially examine the seminal decision of Hammerschmidt v. United States, 265 U.S. 182, 44 S.Ct. 511, 68 L.Ed. 968 (1924), which analyzed the nature and meaning of this clause. In this case, the Supreme Court stated:
conspiracy to defraud the United States means primarily to cheat the government out of property or money, but it also means to interfere with or obstruct one of its lawful governmental functions by deceit, craft or trickery, or at least by means that are dishonest. It is not necessary that the government shall be subjected to property or pecuniary loss by the fraud, but only that its official action and purpose shall be defeated by misrepresentation, chicane, or the overreaching of those charged with carrying out the governmental intention.
Id. at 188, 44 S.Ct. at 512 (emphasis supplied). Here, there can be no question that the alleged conspiracy encompassed a "means that is dishonest" and that the result impairs, obstructs, and defeats the lawful functions of HEW, and thus the United States. See United States v. Johnson, 383 U.S. 169, 172, 86 S.Ct. 749, 15 L.Ed.2d 681 (1966); Haas v. Henkel, 216 U.S. 462, 479, 30 S.Ct. 249, 54 L.Ed. 569 (1910).
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