US v. Weinberg, 86 CR 226 (S-1).

• Decision Date: 20 March 1987
• Docket Number: No. 86 CR 226 (S-1).,86 CR 226 (S-1).
• Citation: 656 F. Supp. 1020
• Parties: UNITED STATES of America, v. Samuel WEINBERG, Defendant.
• Court: U.S. District Court — Eastern District of New York

656 F. Supp. 1020

UNITED STATES of America, v. Samuel WEINBERG, Defendant.

No. 86 CR 226 (S-1).

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

March 20, 1987.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Andrew J. Maloney, U.S. Atty. for E.D. N.Y. (Jonny J. Frank, Asst. U.S. Atty., of counsel), for plaintiff.

Jerome Karp, Brooklyn, N.Y. (Robert Bennet Adler, of counsel), for defendant.

MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

Defendant is named in a sixteen-count superseding indictment. Count One charges that defendant violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c), by conducting the affairs of an enterprise — his real estate business — through a pattern of racketeering. Seven predicate acts of racketeering are alleged.

The first four predicate acts arise from defendant's ownership of a building at 123-25 82nd Avenue, Kew Gardens, Queens, New York. The First Act of Racketeering charges defendant with employing various forms of harassment and deception in a scheme to force and fraudulently induce elderly and low-rent tenants to vacate their apartments. The Second Act of Racketeering charges a fraudulent scheme to overcharge tenants by violating New York's rent control and stabilization laws and misrepresenting to tenants the requirements of those regulations. The Third Act of Racketeering charges defendant with defrauding the purchaser of the building by falsely stating that the rents had been legally set and by misrepresenting the condition of the building. As part of this scheme, defendant allegedly paid $10,000 to the building superintendent in exchange for the latter's providing misleading information to agents of the purchaser. The Fourth Act of Racketeering charges defendant with fraudulently recovering the $10,000 bribe by suing the superintendent in the New York City Civil Court, Kings County.

The next two predicate acts involve a building at 1422 Fulton Street, Brooklyn, New York. It is alleged that defendant fraudulently received money from insurance companies by hiring an individual to commit arson at the building. The Fifth Act of Racketeering charges that in August 1975, the building was damaged by a fire set at defendant's request. The Sixth Act of Racketeering charges that the February 1979 fire that destroyed the building was also set at defendant's instigation.

The Seventh Act of Racketeering involves a two-family home at 378 Hawthorne Street, Brooklyn, New York. It is alleged that defendant arranged to have the house vandalized and then filed a fraudulent insurance claim for the damage.

Counts Two through Six charge mail fraud, 18 U.S.C. § 1341, in connection with the sale of the 82nd Avenue building. The allegedly defrauded purchaser sent mortgage payments to defendant and his wife through the mails.

Counts Seven through Eleven charge mail fraud in connection with the Civil Court suit to recover the $10,000 paid to the superintendent of the 82nd Avenue building. The mails were used when the superintendent sent payments to defendant's attorney in satisfaction of the judgment.

Counts Twelve through Fifteen charge mail fraud in connection with the destruction by fire of the Fulton Street building. The mails were used to transmit payments, claims and photocopies of documents.

Count Sixteen charges mail fraud in connection with an allegedly false insurance claim for personal injuries. Defendant struck his head on a car door and subsequently filed a lawsuit seeking $500,000 in damages. It is alleged that during the course of the litigation, he falsely stated that he had been totally incapacitated for four months. The indictment charges that "numerous items" were sent through the mails for the purpose of executing the fraudulent scheme.

Defendant has filed several motions. He seeks dismissal of all counts, disclosure of grand jury minutes, severance of Count Sixteen, a bill of particulars, and additional disclosure.

I. The RICO Count

A. Enterprise

Defendant contends that the RICO count must be dismissed because it fails to charge properly the existence and operation of an enterprise. He argues that Count One alleges only individual conduct and fails to make the required distinction between the individual defendant and the enterprise.

18 U.S.C. § 1961(4) defines an "enterprise" to "include any individual, partnership, corporation, association or other legal entity, and any union or group of individuals associated in fact although not a legal entity." The enterprise must have an ongoing formal or informal organization, and its various associates must function as a continuing unit. United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 2528, 69 L.Ed.2d 246 (1981).

The enterprise alleged in this case is "Samuel Weinberg's Real Estate Business, also Known as All Cash Realty, and also known as Queens Blvd. Realty." The indictment describes this entity's business as the owning, controlling, managing and holding of mortgages on real property. Defendant argues that the government has charged as an enterprise an individual activity that is devoid of corporate identity or distinct form.

He points out that the person who is alleged to have conducted the affairs of the enterprise through a pattern of racketeering, see 18 U.S.C. § 1962(c), cannot himself be the enterprise. See United States v. DiCaro, 772 F.2d 1314, 1319-20 (7th Cir. 1985), cert. denied, ___ U.S. ___, 106 S.Ct. 1458, 89 L.Ed.2d 716 (1986); see also Bennett v. United States Trust Co., 770 F.2d 308, 315 (2d Cir.1985) (corporate entity may not be simultaneously the "enterprise" and the "person"), cert. denied, ___ U.S. ___, 106 S.Ct. 800, 88 L.Ed.2d 776 (1986). The instant indictment makes no such allegation. It charges defendant's real estate business — not defendant himself — as the enterprise. The entity is alleged to have employed several persons and included partners and corporations. Whether the government proves the existence of this enterprise is a question for the jury at trial.¹ The allegations in the indictment are sufficient at this stage. See McCullough v. Suter, 757 F.2d 142, 143-44 (7th Cir. 1985) (defendant proprietor of sole proprietorship may be liable as person conducting affairs of enterprise through pattern of racketeering if sole proprietorship is business with identity distinct and separate from that of defendant; result would be different "if the sole proprietorship were strictly a one-man show").

B. Pattern

Defendant next challenges the sufficiency of the pleading of the pattern of racketeering activity in Count One. He contends, citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S.Ct. 3275, 3285 n. 14, 87 L.Ed.2d 346 (1985), that the predicate acts charged here are merely sporadic activities and lack the combination of continuity and relationship necessary to constitute a pattern. He points to the different factual contexts of the alleged racketeering acts and argues that their varying natures preclude their being regarded as part of a pattern.

As the Second Circuit recently pointed out in United States v. Ianniello, 808 F.2d 184, 190 (2d Cir.1986) (quoting United States v. Weisman, 624 F.2d 1118, 1122 (2d Cir.), cert. denied, 449 U.S. 871, 101 S.Ct. 209, 66 L.Ed.2d 91 (1980)), however, "the link between the acts is supplied by the fact that `the predicate acts constituting a "pattern of racketeering activity" must all be done in the conduct of the affairs of the enterprise.'" In other words, the "continuity plus relationship" test does not require some independent connection or similarity among the predicate crimes apart from their status as activities related to the common purpose of the continuing enterprise. See id. at 191.

Defendant is of course free to argue to the jury that the alleged pattern of racketeering activity in fact consists of sporadic crimes lacking the required nexus. "No doubt the government must prove at trial that the racketeering acts were done in the conduct of the affairs of the enterprise. Count One so alleges, and no more is required." United States v. Dellacroce, 625 F.Supp. 1387, 1390 (E.D.N.Y.1986).

II. The Mail Fraud Counts

A. Counts Two through Six

Defendant apparently has two objection to Counts Two through Six, which charge mail fraud in connection with the July 1980 sale of the building on 82nd Avenue in Kew Gardens. The mails were allegedly used in furtherance of the scheme when the defrauded purchaser mailed mortgage payments to defendant in 1981, 1982 and 1983. Defendant first argues that the charges are time-barred. Second, he argues that the mailings alleged do not bring the activity within the purview of the mail fraud statute because they are insufficiently related to the fraudulent scheme.

1. Time Bar

18 U.S.C. § 3282 requires that an indictment be filed within five years after the commission of the offense. Defendant contends that the instant indictment, which was filed in 1986, is untimely because the alleged crime was complete upon the sale of the building in 1980. The object of the allegedly fraudulent scheme was not, however, simply the transfer of title to the building. Rather, as the indictment states, the goal was "to obtain money." Thus, as the Supreme Court has recently pointed out, a "jury could properly find that the scheme, at the earliest, was not completed until receipt of the last payment ..." United States v. Lane, 474 U.S. 438, 106 S.Ct. 725, 733-34, 88 L.Ed.2d 814 (1986). Because the offense was not complete until the proceeds of the fraudulent sale were collected, see Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954) (collection of proceeds is essential part of scheme), there is no time bar.

2. "Incidental" Mailings

Defendant next argues that Counts Two through Six must be dismissed because the mailings charged are not an integral part of the alleged fraudulent scheme. He describes them as routine, incidental mailings...