United States v. Ianniello

• Decision Date: 30 September 1986
• Docket Number: No. 86 Civ. 1552-CSH.,86 Civ. 1552-CSH.
• Citation: 646 F. Supp. 1289
• Parties: UNITED STATES of America, Plaintiff, v. Matthew IANNIELLO, a/k/a "Matty the Horse," Benjamin Cohen, a/k/a "Benny Cohen," Paul Gelb, Alfred Ianniello, Osbro Restaurant, Inc., d/b/a "Umberto's Clam House," Robert Ianniello, P & G Funding Corp., d/b/a the "Mardi Gras," Pauline Gelb, John Zaffarano, John Doe, and John Doe, Inc., d/b/a "John Doe Restaurant," Defendants.
• Court: U.S. District Court — Southern District of New York

646 F. Supp. 1289

UNITED STATES of America, Plaintiff, v. Matthew IANNIELLO, a/k/a "Matty the Horse," Benjamin Cohen, a/k/a "Benny Cohen," Paul Gelb, Alfred Ianniello, Osbro Restaurant, Inc., d/b/a "Umberto's Clam House," Robert Ianniello, P & G Funding Corp., d/b/a the "Mardi Gras," Pauline Gelb, John Zaffarano, John Doe, and John Doe, Inc., d/b/a "John Doe Restaurant," Defendants.

No. 86 Civ. 1552-CSH.

United States District Court, S.D. New York.

September 30, 1986.

Rudolph W. Giuliani, U.S. Atty., S.D. N.Y., New York City, for plaintiff; Robert L. Ullmann, Sp. Asst. U.S. Atty., Randy M. Mastro, Asst. U.S. Atty., of counsel.

Gerald L. Shargel, New York City, for defendants Robert Ianniello and Osbro Restaurant Corp.

Hoffman, Pollok & Gasthalter, New York City for defendant Alfred Ianniello; Judd Burstein, of counsel.

Jay Goldberg, P.C., New York City, for defendant Matthew Ianniello; Michael Berger, of counsel.

ON MOTION TO DISMISS

HAIGHT, District Judge:

Defendants move, pursuant to Rule 12(b)(6), F.R.Civ.P., to dismiss the Amended Complaint in the captioned action. The factual background of this civil RICO case, brought under 18 U.S.C. § 1964, is stated in this Court's Memorandum Opinion and Order of April 16, 1986, familiarity with which is assumed. The motion is denied.

Except as to Robert Ianniello,¹ defendants do not contend the Government has failed to state a claim upon which relief can be granted. Rather, defendants argue that some aspects of the relief sought by the Government are unavailable.

Assuming arguendo that some or all of defendants' contentions are meritorious, they do not justify dismissal of the Amended Complaint. Rule 56(c), F.R. Civ.P., provides that "every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings." Therefore, "a meritorious claim will not be rejected for want of a prayer for appropriate relief." Holt Civic Club v. City of Tuscaloosa, 439 U.S. 60, 66, 99 S.Ct. 383, 387, 58 L.Ed.2d 292 (1978). As long as the plaintiff "might conceivably have some remedy" for the claim asserted, a Rule 12(b)(6) challenge must fail. Build of Buffalo, Inc. v. Sedita, 441 F.2d 284, 288 (2d Cir.1971).

Here, I need not speculate whether plaintiff "might conceivably" have some remedy if it prevails on the merits. Defendants do not contend that none of the prayed-for relief is available if the Government prevails on the merits; indeed, they concede this Court has the "power ... to grant extensive equitable relief." (Def. Reply Mem. at 3-4). Accordingly, their arguments are not properly presented in a Rule 12(b)(6) motion. The appropriate scope of relief may be argued and determined if the Government prevails on the merits.²

Defendants argue as to Robert Ianniello that his acquittal by the Court in the related criminal case, S85 Cr. 116 (EW) (the "Bar case"), collaterally estops the Government from pursuing the instant civil action. In the Bar case, Judge Weinfeld, applying the principles of United States v. Geaney, 417 F.2d 1116 (2d Cir.1969), cert. denied, 397 U.S. 1028, 90 S.Ct. 1276, 25 L.Ed.2d 539 (1970), held the Government had failed to prove Robert Ianniello's participation in the charged RICO conspiracy by a fair preponderance of the independent, nonhearsay evidence. He therefore struck the hearsay evidence received against Robert. Having done so, Judge Weinfeld found the remaining evidence against Robert insufficient to sustain a conviction and granted his motion for acquittal pursuant to Rule 29(a), F.R. Cr.P.

The doctrine of collateral estoppel, or issue preclusion, bars relitigation of an issue of fact or law necessary to prior judgment if the party against whom the doctrine is invoked had a "`full and fair' opportunity to litigate its claims" in the first action. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 332-33, 99 S.Ct. 645, 652, 58 L.Ed.2d 552 (1979); see also Sprecher v. Graber, 716 F.2d 968, 972 (2d Cir.1983). Generally, the differing standards of proof in criminal and civil proceedings preclude giving collateral estoppel effect to an acquittal in a subsequent civil action. See e.g. United States v. One Assortment of 89 Firearms, 465 U.S. 354, 361-62, 104 S.Ct. 1099, 1104-05, 79 L.Ed.2d 361 (1984). Defendants argue, however, that Judge Weinfeld, in his Geaney ruling, effectively held that the Government had not proved its case against Robert Ianniello even by a fair preponderance of the evidence, precluding relitigation of that issue.

Without reaching the merits of this argument, however, I reject Robert's effort to take cover in the collateral estoppel doctrine. There are reasons other than differing burdens of proof which may make it inappropriate to afford preclusive effect to an acquittal in a subsequent civil suit. Once such circumstance is the availability of evidence admissible in the civil case that was inadmissible in the criminal context. Standefer v. United States, 447 U.S. 10, 22-24, 100 S.Ct. 1999, 2007-08, 64 L.Ed.2d 689 (1980). In such a case, the Government is deprived of "the kind of `full and fair opportunity to litigate' that is a prerequisite of estoppel." Id. at 22, 100 S.Ct. at 2007. "The whole premise of collateral estoppel is that once an issue has been resolved in a prior proceeding, there is no further factfinding function to be performed." Parklane Hosiery Co., supra, 439 U.S. at 336, 99 S.Ct. at 654. That premise does not arise where the Government has at its disposal potentially result-altering facts admissible in the civil case that were inadmissible in the prior criminal proceeding.

In this civil case, the Government will be able to call a key witness not available to it in the criminal case: Robert Ianniello. Moreover, if Robert, consistent with his practice to date,³ invokes his Fifth Amendment privilege to remain silent and is upheld in doing so, the Government may ask the finder of fact to draw an adverse inference from the assertion of that privilege. Baxter v. Palmigiano, 425 U.S. 308, 319, 96 S.Ct. 1551, 1558, 47 L.Ed.2d 810 (1976). Whether or not he invokes the privilege, the Government will have at its disposal significant evidence unavailable to it in the criminal case.⁴

The motion is denied.⁵

It is SO ORDERED.

MEMORANDUM OPINION AND ORDER

The Government renews its application for the appointment of a receiver pendente lite of Umberto's Clam House, owned by defendant Osbro Restaurant, Inc. The action is brought under the "Civil Remedies" section of the Racketeer Influenced and Corrupt Organizations Act of 1970 ("RICO"), 18 U.S.C. § 1964. The factual background of the case is set forth in the Court's Memorandum Opinion and Order of April 16, 1986, which denied the requested relief on the record then existing. Familiarity with that Opinion is assumed.

The Court's prior opinion held, in essence, that the Government had not made a sufficiently strong factual showing of certain individuals' continued skimming from Umberto's to justify appointment of a receiver. I suggested that the Government's case might be bolstered by expert opinion evidence from a witness qualified in restaurant procedures and accounting. Slip op. at 13. Since the entry of that Opinion, the Government retained such an expert, who conducted certain inquiries and submitted an affidavit. Defendants retained experts who also prepared affidavits. The experts have been subjected to cross-examination in depositions.

The Government sought to bolster the record further by pre-trial discovery. That effort was blocked by a blanket invocation of the Fifth Amendment. Defendant Robert Ianniello, the president of Osbro, pleaded the Fifth Amendment in bar to all questions put to him at his deposition. Defendants Matthew and Alfred Ianniello, in a pragmatic time-saving device, have stipulated with the Government that they would also invoke the Fifth Amendment if sought to be deposed. In written interrogatories propounded to Osbro, the Government asked inter alia for the names and addresses of "all officers, directors, employees and suppliers of Osbro"; and for the identification and description of the custodian, location and general description of all documents, including pertinent employment and business records of Osbro's relevant to the subject matter of the action. In addition to making objections and assertions with which I need not presently deal, Osbro also responded:

"There is no person who can answer the remainder of these interrogatories on behalf of defendant without invoking his Fifth Amendment right to decline to answer on the ground that any answer might tend to incriminate him."

I have considered the recently developed expert testimony and defendants' invocation of the Fifth Amendment within the context of the entire record. I now conclude that the Government is entitled to the appointment of a receiver.

I.

Count 37 of the superseding criminal indictment tried before Judge Weinfeld charged that from on or about September 1, 1982 up to and including the filing of the indictment on February 15, 1985, Matthew Ianniello, Alfred Ianniello, and other individuals entered into a fraudulent scheme, part of that scheme being "that the said defendants and their co-schemers regularly skimmed, diverted, extracted, and converted to their own use a substantial portion of the daily gross receipts of Osbro." Indictment at ¶ 98. The jury convicted Matthew and Alfred Ianniello on this count. Under the RICO statute, they are now estopped from denying those allegations of the criminal charge. § 1964(d).

The central issue on the present motion is whether the Government has made a sufficient showing of post-indictment, continuing skimming on the part of these defendants to justify appointing a receiver to take charge of Umberto's affairs. The receiver's essential function would be to put an end to any continued skimming or improper diversion of Umberto's...