US v. Rivieccio

• Decision Date: 05 September 1989
• Docket Number: No. 88 CR 283 (S-2) (ERK).,88 CR 283 (S-2) (ERK).
• Citation: 723 F. Supp. 867
• Parties: UNITED STATES of America, Plaintiff, v. Bartholomew RIVIECCIO, Defendant.
• Court: U.S. District Court — Eastern District of New York

723 F. Supp. 867

UNITED STATES of America, Plaintiff, v. Bartholomew RIVIECCIO, Defendant.

No. 88 CR 283 (S-2) (ERK).

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

September 5, 1989.

Andrew J. Levander, Scott A. Korenbaum, New York City, for defendant.

Andrew J. Maloney, U.S. Atty. by Nicholas DeFeis, Asst. U.S. Atty., Brooklyn, N.Y., for plaintiff.

MEMORANDUM & ORDER

KORMAN, District Judge.

On May 5, 1988, a grand jury sitting in the Eastern District of New York returned a four count indictment against the defendant Bartholomew Rivieccio. A superseding indictment was returned on July 21, 1988, and a second superseding indictment, containing twenty-nine counts, was returned on November 3, 1988. All three indictments were returned by a grand jury impanelled on February 1, 1988.

The indictments charged Rivieccio with fraudulently obtaining over ten million dollars in loans from the Hyfin Credit Union and an additional seventeen million dollars in loans from the Chemical Bank. The initial four count indictment involved only charges arising out of the Chemical Bank loan. The first superseding indictment added additional counts relating to the Hyfin Credit Union loans and the last superceding indictment made language changes in some of the counts relating to the Hyfin Credit Union loans.

The defendant did not testify before the grand jury that returned the original and two superseding indictments. The defendant did appear before another grand jury for the purpose of producing corporate documents of which he was the custodian. This testimony was given after he had invoked the privilege against self-incrimination and after he had been ordered to testify. The order compelling his testimony was entered pursuant to 18 U.S.C. § 6002 (1985) which provides that "no testimony or other information compelled under the order (or any information directly or indirectly derived from such testimony or other information) may be used against the witness in any criminal case...."¹

On October 25, 1988, a week before jury selection was scheduled to commence, the defendant belatedly filed a number of pretrial motions. One of these sought an order "dismissing the indictment on the grounds that the government has violated Mr. Rivieccio's rights or privilege against self-incrimination guaranteed to him by the Fifth Amendment ... because Mr. Rivieccio was compelled to testify before a Grand Jury herein, and the information obtained thereby has been illegally used against him. United States v. Hinton, 543 F.2d 1002 (2nd Cir.1976), Kastigar v. United States, 406 U.S. 441 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972)." Letter of John A. Jasilli, October 25, 1988, at 2.

Because the primary focus of the pre-trial hearing mandated by Kastigar v. United States, 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972) is on the source of the evidence the government proposes to use at trial, id. at 461, 92 S.Ct. at 1665, rather than on the evidence before the grand jury, it seemed appropriate to delay the hearing on the defendant's eleventh hour motion so that the issue whether his Fifth Amendment rights were infringed could be determined with the aid of a fully developed trial record. See United States v. Williams, 644 F.2d 950, 952-53 (2d Cir.1981).

The defendant now stands convicted of the multi-million dollar fraud of which he was accused. A post-trial hearing was held to determine whether any evidence used against the petitioner at trial was derived in any way from his compelled testimony. At such a hearing, "one raising a claim under this statute need only show that he testified under a grant of immunity in order to shift to the government the heavy burden of proving that all of the evidence it proposes to use was derived from legitimate independent sources." Kastigar, 406 U.S. at 461-62, 92 S.Ct. at 1665; United States v. Blue, 384 U.S. 251, 255, 86 S.Ct. 1416, 1419, 16 L.Ed.2d 510 (1966). At the hearing here, it was conceded that all the evidence introduced at trial, with the exception of the testimony of one witness, Ralph Strafaci, was derived from "legitimate independent sources."

The defendant argued that the United States Attorney learned about Ralph Strafaci from the testimony given by the defendant and that, even if the United States Attorney knew of Ralph Strafaci prior to the defendant's grand jury appearance, it was the defendant's testimony that caused the prosecutor to "focus" on Strafaci. The evidence, however, clearly demonstrates that Mr. Strafaci's identity, his role as the defendant's accountant, and his usefulness as a witness, were known to the United States Attorney prior to the defendant's appearance before the grand jury.

During the Kastigar hearing, Anthony Valenti, a criminal investigator on the staff of the United States Attorney, testified that on April 9, 1986, prior to the defendant's appearance before the grand jury, he had encountered Strafaci at the Bart Construction and Development Company when he executed a search warrant for those premises: "Mr. Strafaci was doing some work at the desk and I asked him who he was, he identified himself and he said that he was the accountant for the corporations." Tr. 7, March 17, 1989.

Mr. Valenti's testimony is corroborated by the transcript of a proceeding before Judge Glasser on January 9, 1987, some six months before the defendant testified before the grand jury. The issue there was a dispute over subpoenas issued for the books and records of seventeen real estate corporations through which the defendant transacted business and through which loans from Hyfin were funnelled. In the course of the proceeding, the Assistant United States Attorney told Judge Glasser:

Add to that a statement by an attorney by the name of Ben Fonti, and the best spelling I have is F-O-N-T-I, which was made approximately a month ago in a telephone conversation with Assistant United States Attorney Michael Gold. Mr. Fonti is an attorney for Mr. Strafacci, who is the accountant for Bart Rivieccio. During the course of the conversation, Mr. Fonti advised A.U.S.A. Gold that all of Rivieccio's corporate documents were turned over at Rivieccio's directions by Strafaci, the accountant to the law firm of Kostelanetz and Ritholz.

* * * * * *

Whatever documents were important enough to be maintained in the files of Mr. Rivieccio's accountant, were turned over to the attorneys for Mr. Rivieccio at his directions.

Tr. 10, 11, 12, January 9, 1987.

The evidence plainly establishes that the United States Attorney knew the identity of Ralph Strafaci and the significance of his role before the defendant told the grand jury that Ralph Strafaci "did accounting and did the tax work for all the different corporations." Exh. 3500-4, at 11. While it is true that Strafaci was not called to testify before the grand jury until April, 1988, some nine months after the defendant testified, there was simply nothing in the defendant's testimony before the grand jury (which only repeated what Strafaci had earlier himself told Valenti and what Strafaci's attorney had earlier told the same Assistant United States Attorney who questioned the defendant) that would have caused the United States Attorney to "focus" on Strafaci.

The defendant's only other claim with respect to the impermissible use of his testimony at trial relates to the admission Mr. Valenti candidly made during the post-trial hearing that, after the defendant testified before the grand jury, Mr. Valenti asked the Assistant United States Attorney how the defendant "reacted to questioning, what he was like so that later on down the road certain decisions, strategic decisions might be important." Specifically, Valenti, was interested in how "did he react to questions. How many times did he go out to talk to his lawyer, stuff like that, that's all." Tr. 18-19, April 13, 1989.

In United States v. Mariani, 851 F.2d 595, 600 (2d Cir.1988), cert. denied, ___ U.S. ___, 109 S.Ct. 1654, 104 L.Ed.2d 168 (1989), the Court of Appeals declined to follow reasoning that would "foreclose the prosecution of an immunized witness where his immunized testimony might have tangentially influenced the prosecutor's thought processes in preparing the indictment and preparing for trial." This holding is dispositive here. The defendant did not take the stand and any possible advantage derived from hearing about the kind of witness he would make was not put to any use. See United States v. Gallo, 863 F.2d 185, 190 (2d Cir.1988), cert. denied, ___ U.S. ___, 109 S.Ct. 1539, 103 L.Ed.2d 843 (1989).

Because the United States Attorney has demonstrated an independent source for all the evidence introduced at trial, the defendant's motion is directed primarily to evidence before the grand jury. The essence of his claim is that, even if his conviction is based on evidence that has an independent source and even if a new indictment could be obtained on the basis of the untainted trial record, the conviction must nevertheless be set aside and the present indictment must be dismissed because some of the evidence before the grand jury was tainted.

Discussion

The threshold issue is whether a defendant, who has been convicted after a trial at which all of the evidence was untainted, should be permitted to obtain post-trial dismissal of the indictment on the ground that some of the evidence before the grand jury was tainted. There are two separate lines of authority that suggest that the defendant is foreclosed from "picking over the evidence" before the grand jury for this purpose. United States v. Remington, 208 F.2d 567, 574 (2d Cir.1953), cert. denied, 347 U.S. 913, 74 S.Ct. 476, 98 L.Ed. 1069 (1954) (L. Hand, J., dissenting).

The defendant's motion to dismiss collides first with what Chief Justice Burger has described as "a line of cases in this Court holding that an indictment returned by a properly constituted grand jury is not subject to challenge on the ground that it was based on...