United States v. O'Sullivan
| Docket Number | 20-CR-272 (PKC) |
| Decision Date | 27 October 2023 |
| Parties | UNITED STATES OF AMERICA, v. DONAL O'SULLIVAN, HELEN O'SULLIVAN, and PADRAIG NAUGHTON, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
On October 22, 2021, after a fourteen-day trial, a jury found Defendants Donal O'Sullivan, Helen O'Sullivan, and Padraig Naughton (collectively, “Defendants”) guilty of: (1) mail and wire fraud conspiracy (Count One) (2) three counts of wire fraud (Counts Two, Three, and Four) (3) three counts of mail fraud (Counts Five, Six, and Seven) (4) conspiracy to embezzle from employee benefits funds (Count Eight); (5) embezzlement from employee benefits funds (Count Nine); (6) conspiracy to file false remittance reports (Count Ten); and (7) the submission of false remittance reports (Count Eleven). The jury found that the conspiracies charged in Counts Eight and Ten constituted a single agreement to commit two offenses. (Verdict Form, Dkt. 262.) The Court sentenced Donal O'Sullivan to a six-month term of imprisonment with two years of supervised release Naughton to a six-month term of imprisonment with two years of supervised release, and Helen O'Sullivan to two years' probation. (See 6/30/2023 Minute Entry; 7/13/2023 Minute Entry.)
Before the Court are:
(1) Donal O'Sullivan's and Naughton's motions for bail pending appeal pursuant to 18 U.S.C. § 3143(b)(1) (Def. Donal O'Sullivan's Mot. for Bail Pending Appeal, Dkt. 409 (hereinafter, “Dkt. 409”); Def. Naughton's Mot. for Bail Pending Appeal, Dkt. 429 (hereinafter, “Dkt. 429”)); (2) Helen O'Sullivan's motion for a stay of her sentence-specifically her term of probation-pursuant to Federal Rule of Criminal Procedure (“Fed. R. Crim. P.”) 38(d) (); and
(3) Defendants' motion for a stay of the Court's Restitution Order pursuant to Fed. R. Crim. P. 38(e)(1) (Def. Donal O'Sullivan's Mot. for Stay of Restitution, Dkt. 432 (hereinafter, “Dkt. 432”), Dkt. 414, Dkt. 429).
For the reasons that follow, Donal O'Sullivan and Naughton's motions for bail pending appeal are denied, Helen O'Sullivan's motion for a stay of her sentence is denied, and Defendants' motion for a stay of restitution is denied.
The Court assumes the parties' familiarity with the underlying facts of this case and repeats only the information necessary to resolve the instant motions.[1] Defendants' convictions after trial stemmed from their participation in a multi-year fraud scheme to evade making required payroll contributions to certain benefits funds for employees of Navillus Tile, Inc. d/b/a Navillus Contracting (“Navillus”)-one of the largest construction companies in New York City-for work that was covered by collective bargaining agreements (“CBAs”). (Ind., Dkt. 1, ¶¶ 1-2, 6-7.) At all times relevant to this matter, Defendants were high-ranking employees at Navillus. (Dkt. 302, at 1.) At trial, the Government established that, between 2011 to 2017, Defendants fraudulently funneled payroll funds for 97 of Navillus's employees through a consulting firm, D.E.M. Consulting LLC d/b/a/ as Allied (“Allied”), which was not a party to the CBAs, as part of a scheme to avoid paying benefits contributions and submitting remittance reports to the benefits funds with respect to those employees' “covered work,” i.e., work for which benefits were owed under the CBAs. (See Dkt. 302, at 1-2, 37, 42, 45-46.)
In order to grant bail pending appeal under Section 3143, the Court must find that: (1) the defendant “is not likely to flee or pose a danger to the safety of any other person or the community if released,” by clear and convincing evidence; and (2) the appeal is not for the purpose of delay and “raises a substantial question of law or fact likely to result in-(i) reversal, (ii) an order for a new trial, (iii) a sentence that does not include a term of imprisonment, or (iv) a reduced sentence to a term of imprisonment less than the total of the time already served plus the expected duration of the appeal process.” 18 U.S.C. § 3143(b)(1). A “substantial question” is a “close question or one that very well could be decided the other way.” United States v. Randell, 761 F.2d 122, 125 (2d Cir. 1985) (internal quotations omitted). There is a “presumption in favor of detention,” United States v. Abuhamra, 389 F.3d 309, 319 (2d Cir. 2004), and the defendant bears the burden to “rebut this presumption with clear and convincing evidence.” Id.; see also United States v. Miller, 753 F.2d 19, 22 (3d Cir. 1985) (“[O]nce a person has been convicted and sentenced to jail, there is absolutely no reason for the law to favor release pending appeal or even permit it [absent] exceptional circumstances.”).
The only disputed issue with respect to Donal O'Sullivan's and Naughton's motions for bail pending appeal[2] is whether they “raise[] a substantial question of law or fact likely to result in-(i) reversal, (ii) an order for a new trial, (iii) a sentence that does not include a term of imprisonment, or (iv) a reduced sentence to a term of imprisonment less than the total of the time already served plus the expected duration of the appeal process.” 18 U.S.C. § 3143(b)(1). These Defendants present several issues that they maintain meet this standard. However, the Court finds that none of these issues are substantial, and each one “has previously [been] denied based on well-settled precedent.” United States v. Aiyer, 500 F.Supp.3d 21, 23 (S.D.N.Y. 2020) ().
Donal O'Sullivan and Naughton both argue that their appeals raise two substantial questions that justify bail pending appeal: (1) whether there was sufficient evidence that he “knew and intended that the Allied workers were engaged in any covered work”; and (2) whether the Court erred by admitting evidence in summary form of Navillus's relationship to the “alter-ego companies.” (Dkt. 409, at 2; see also Gov't Opp'n, Dkt. 433 (hereinafter, “Dkt. 433”), at 2.)[3]Naughton also argues that his appeal raises the substantial question of “whether the onerous Covid restrictions so permeated the trial that Mr. Naughton was denied a fair trial.” (Dkt. 429, at 2.)
Having carefully assessed the sufficiency of the evidence as to the knowledge and intent of Donal O'Sullivan and Naughton in its April 6, 2022 Memorandum & Order denying their posttrial motions for acquittal or a new trial, the Court finds that this issue does not present a substantial question on appeal. In deciding Defendants' post-trial motions, the Court found that the evidence was sufficient to support “the inference that each Defendant had the necessary criminal intent to be convicted of each of the 11 counts charged” and that “the evidence establishing guilt [was] far from meager or non-existent.” (Dkt. 302, at 47.)[4]
Indeed, the Court found ample evidence supporting the conclusion that Donal O'Sullivan “directed and was involved in setting up Navillus's relationship with Allied, for the specific purpose of carrying out the fraudulent scheme.” (Id. at 32.) For example, the Government's cooperating witness, Kieran Lambe, testified that Donal O'Sullivan was a “hands-on” boss and told him that there may be something the two of them could “work out” to have Lambe continue to work for Navillus-through Allied-for immigration and financial reasons. (Id. at 31 (citing Trial Tr. 1335:4-12), 32 (citing Trial Tr. 1341:3-22; 1346:22-1347:25).) Donal O'Sullivan also referred to the Allied scheme as “the weekly arrangement” in emails to Lambe. (Id. at 32 (citing Trial Tr. 1436:10-21).) Additionally, a Navillus employee, Luis Gonzalez, testified that he notified Donal O'Sullivan that he was being paid via checks written out to Donal O'Sullivan's brother-in-law John Michael Sugrue through Allied despite the fact that he (Gonzalez) worked for Navillus. (Id. at 31, 33-34; see also Trial Tr. 2293:10-2294:15.)
The Court also determined that there was sufficient evidence to establish that Naughton knew and intended that Allied was being used as a means to avoid contributions to benefits funds. Among other things, the evidence established that Naughton directed Lambe to change the name of D.E.M. Consulting to Allied, directed Lambe to leave the descriptions of services that Allied was purportedly providing to Navillus as blank, and failed to disclose to Navillus's auditors that Navillus was using Allied to process some of its employees' payroll. (Dkt. 302, at 38-39.) In sum, because Naughton was directly and closely involved with Allied the entire time the scheme operated, it is not a “close question” that Naughton knew that the employees being paid through Allied were doing covered work for Navillus and that Naughton sought to conceal this fact.
Donal O'Sullivan argues that “although [the] Court ruled against him” in response to his post-trial motion on the issues he raises as substantial questions for appeal, his arguments are “‘fairly debatable,' and go to the heart of his conviction.”[5] (Def. Donal O'Sullivan Reply, Dkt. 435 (hereinafter, “Dkt. 435”), at 1.) The Court disagrees that these questions are fairly debatable, and instead finds that both Donal O'Sullivan and Naughton's challenges on the issue of the sufficiency of the evidence as to their intent are unlikely to result in a reversal or a new trial given the ample evidence introduced against Defendants at trial. See, e.g., United States v. Munshani, No. 22-CR-215 (JSR), 2023 WL 5390201, at *2 (S.D.N.Y. Aug. 21,...
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