US v. Cannistraro
| Citation | 800 F. Supp. 30 |
| Decision Date | 22 July 1992 |
| Docket Number | Crim. A. No. 89-218. |
| Parties | UNITED STATES of America, Plaintiff, v. Richard S. CANNISTRARO and Richard O. Bertoli, Defendants. |
| Court | U.S. District Court — District of New Jersey |
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John M. Fietkiewicz, David M. Rosenfield, Asst. U.S. Attys., Newark, N.J., for U.S.
Richard O. Bertoli, pro se.
Franklin M. Sachs, Podvey, Sachs, Meanor, Catenacci, Hildner & Cocoziello, Newark, N.J., for defendant Richard O. Bertoli.
Richard S. Cannistraro, pro se.
Patricia D. Codey, Federal Public Defender's Office, Newark, N.J., Michael B. Pollack, New York City, for defendant Richard S. Cannistraro.
This is a criminal action which originated on 16 June 1989 when an indictment (the "Indictment") was returned. Defendants Richard O. Bertoli ("Bertoli"), Leo M. Eisenberg ("Eisenberg") and Richard S. Cannistraro ("Cannistraro") were named in the Indictment.1 On 29 September 1989 a six count superseding indictment (the "Superseding Indictment")2 was returned against Bertoli, Cannistraro and Eisenberg.3 On 21 January 1992 the Government returned an eight count second superseding indictment (the "Second Superseding Indictment") against Bertoli and Cannistraro (collectively, the "Defendants"). Count One of the Second Superseding Indictment charges the Defendants with racketeering activities involving Monarch Funding Corporation ("Monarch") in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. ? 1961 et seq. Count Two charges the Defendants with conspiracy to commit racketeering in violation of RICO. Count Three charges the Defendants with conspiracy to obstruct justice in violation of 18 U.S.C. ? 371. Counts Four through Seven charge Bertoli with obstruction of justice in violation of 18 U.S.C. ? 1503. Count Eight charges the Defendants with conspiracy to commit securities fraud in violation of 18 U.S.C. ? 371.4 Eisenberg is not a defendant in the Second Superseding Indictment although he is listed as a co-conspirator.5
Currently before the court are the pretrial motions of the Defendants6 (1) to dismiss the Second Superseding Indictment for prosecutorial misconduct, or in the alternative, for discovery of grand jury materials (the "Misconduct Motion"), (2) to dismiss the Second Superseding Indictment for pre-indictment delay, for selective prosecution and for vindictive prosecution (the "Pre-Indictment Delay Motion"), (3) to preclude the introduction of the Cayman Islands Depositions (the "Cayman Islands Motion") at trial, (4) to dismiss Counts One and Two of the Second Superseding Indictment on the ground that the RICO Counts are barred by the statute of limitations (the "Statute of Limitations Motion"), (5) to dismiss Counts One, Two and Eight of the Second Superseding Indictment for failure to state an action for securities fraud (the "Securities Fraud Motion"), (6) to dismiss Count Seven (the "Obstruction of Justice Motion"), (7) to compel discovery pursuant to Fed.R.Crim.P. 16 (the "Motion to Compel Discovery") and (8) for the court to consider the pretrial motions filed in connection with the Superseding Indictment as filed following the Second Superseding Indictment (the "Motion re First Pretrial Motions") (collectively, the "Second Pretrial Motions").7
For the reasons set forth below: the Misconduct Motion is denied; the Pre-Indictment Delay Motion is denied; the Statute of Limitations Motion is denied; the Securities Fraud Motion is denied and the Obstruction of Justice Motion is denied. The Motion to Compel Discovery is denied; however, Bertoli is given leave to continue to inspect documents in possession of the Government. The Cayman Islands Motion is also denied; however, Bertoli is given leave to cross-examine witnesses with respect to the Second Superseding Indictment and to recross individuals not previously recrossed and Cannistraro is given leave to cross-examine individuals deposed in the Cayman Islands.
As to Count One, the Second Superseding Indictment states Monarch, the enterprise, was a securities brokerage firm in New York City, New York which was engaged in the business of underwriting, purchasing and selling securities primarily traded in the over-the-counter markets. Second Superseding Indictment, Count One ("Count One"), ? 2. Count One states Bertoli was the former president of a brokerage firm, not named in the Second Superseding Indictment, and controlled and had a beneficial interest in several nominee brokerage accounts8 maintained at Monarch. Id., ? 3. These nominee brokerage accounts included accounts in the names of family members and various Cayman Islands individuals and entities. Id.
Count One states Cannistraro was a securities research analyst with Wood Gundy, Inc. ("Wood Gundy"), a brokerage firm located in New York City, New York. Id., ? 4. It states Cannistraro controlled and had a beneficial interest in nominee brokerage accounts maintained at Monarch. Id. These nominee brokerage accounts included accounts in the names of relatives and Cayman Islands individuals and entities. Id. Count One states that Eisenberg was the owner and president of Monarch. Id., ? 5. It states Eisenberg controlled and had a beneficial interest in nominee brokerage accounts maintained at Monarch, which included accounts in the names of various Cayman Islands individuals and entities. Id. Count One describes the pattern of racketeering engaged in by the Defendants and others, including Eisenberg, as consisting of predicate acts of mail fraud, wire fraud, interstate transportation of money taken by fraud, securities fraud and obstruction of justice. Id., ? 9.
Count One charges that from about January 1982 to the present, in the District of New Jersey and elsewhere, the Defendants and Eisenberg participated in the affairs of Monarch through a pattern of racketeering activity, the object of which was to "use Monarch as a vehicle to engage in fraudulent securities trading practices and thereby obtain money and other things of value for the Defendants...." Id., ?? 7-8. It identifies the victims of the racketeering activity as the purchasers and sellers of securities recommended and traded by the Defendants and Eisenberg. Id., ? 8. It alleges the means and methods of conducting the conspiracy included "attempts to conceal and cover-up their fraudulent activities." Id., ? 9.
Count One charges the Defendants with engaging in racketeering activity through the execution of seven separate fraudulent trading or concealment schemes involving the following securities: Astrosystems, Inc. ("Astrosystems"); Nature's Bounty, Inc. ("Nature's Bounty"); Liquidation Control, Inc. ("LCI"); Toxic Waste Containment, Inc. ("Toxic Waste") and High Technology Capital Corp. ("High...
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