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United States v. Berger

decided: October 14, 1970.

UNITED STATES OF AMERICA, APPELLEE,
v.
SAMUEL BERGER ET AL., APPELLANTS



Friendly, Smith and Hays, Circuit Judges.

Author: Hays

HAYS, C. J.:

I.

Samuel Berger, Yvette Feinstein and Travis Levy appeal from judgments of conviction entered after a jury trial in the United States District Court for the Southern District of New York. The indictment under which they were convicted was in three counts, each charging conspiracy to pay illegal kickbacks to labor union welfare and pension fund officials in violation of 18 U.S.C. § 371 (1964) and 18 U.S.C. § 1954 (1964).

Count One was dismissed at the close of the government's case. Levy was found guilty as charged under Counts Two and Three; Berger and Feinstein were found guilty as charged under Count Three. Levy received concurrent sentences of two years' imprisonment and a fine of $10,000 on each count. Berger received a sentence of five years' imprisonment and a fine of $10,000. Feinstein received a suspended sentence and was placed on probation for two years. We affirm the convictions of Berger on Count Three and of Levy on Count Two, and reverse the convictions of Feinstein and Levy on Count Three.*fn1

II.

Briefly described, the evidence introduced at trial detailed the efforts of Shiah Arsham,*fn2 who in late 1963 took over the management of Cashmere Corporation of America of Cleveland, Ohio, a manufacturer of sweaters and yarn, to obtain desperately needed financing for the corporation. Shortly after he became president of Cashmere, Arsham sought the assistance of Travis Levy, a Manhattan attorney. In early 1964 Levy and Arsham made a number of attempts to obtain mortgage financing from various sources without success.

Finally Levy approached Stephen Birnbaum,*fn3 a New York City mortgage broker, to discuss the possibility of obtaining a $1,500,000 mortgage loan for Cashmere from a labor union pension fund. In late May, Birnbaum proposed to his associate Herbert Itkin*fn4 that they develop the deal together. Various financial arrangements were made between the parties and Itkin enlisted the aid of James Plumeri,*fn5 who agreed to propose the Cashmere loan to the Furriers Union. Because of Cashmere's inability to obtain a promised appraisal of its assets, this deal fell through. By this time it had become necessary for Cashmere to obtain interim financing, while efforts continued to obtain a long term mortgage commitment.

The effort to obtain interim financing provided the basis for Count Two of the indictment. The government proved, primarily through the testimony of Itkin, that Itkin, on behalf of Levy and with his knowledge, made several illegal payoffs to Frank Zulferino,*fn6 the president of Local 10 of the International Brotherhood of Production, Maintenance and Operating Employees in return for a letter for financial commitment purporting to obligate Local 10's welfare fund to provide Cashmere with a $1,200,000 mortgage loan. It was understood that the commitment would never be used, its agreed-upon purpose being to convince banks to lend Cashmere short-term money. After several revisions of the letter and much in-fighting among the participants, Levy and Arsham in October 1964 received a commitment letter which they considered satisfactory. However thecommitment did not prove helpful and they were still unable to obtain bank loans.

At the same time as the attempts to obtain interim financing on the basis of the Local 10 commitment were taking place, negotiations on the transaction which forms the basis of Count Three of the indictment were proceeding. The government proved, primarily through the testimony of Robert Graff,*fn7 a Chicago mortgage broker, that Graff, in collaboration with Berger, paid Floyd Webb,*fn8 a trustee of the Central States, Southeast, and Southwest Area Pension Fund of the International Brotherhood of Teamsters $20,000 in return for the Teamsters' giving Cashmere a mortgage of $1,500,000.

Count Two

III.

Levy concedes that if the jury believed Itkin they could have found Levy a knowing participant in the Local 10 kickback. However he argues that (1) it was improper to allow Itkin to testify as a co-conspirator; (2) Itkin's explanation of why he lied to the F.B.I. was improper and prejudicial; and (3) certain portions of the trial court's charge were erroneous.

Levy contends that since Itkin was not named as a co-conspirator in the indictment his testimony as to conversations he had with other alleged co-conspirators was hearsay and not admissible against Levy. This claim lacks merit since "it is enough if evidence, other than that whose admissibility is under challenge, disclosed . . . [a conspiracy]." United States v. Annunziato, ...


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