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United States v. Pfingst

decided: December 17, 1973.


Appeal from an order of the United States District Court for the Eastern District of New York, Jack B. Weinstein, Judge, denying a motion for a new trial on the grounds of newly discovered evidence. Affirmed.

Kaufman, Chief Judge, Smith and Oakes, Circuit Judges.

Author: Kaufman

KAUFMAN, Chief Judge:

On April 27, 1972, after a trial lasting more than one month before Judge Weinstein and a jury in the Eastern District of New York, Joseph Pfingst, a New York State Supreme Court Justice, was found guilty on three counts of a ten count indictment for knowingly and willfully participating in three fraudulent transfers in contemplation of bankruptcy in violation of 18 U.S.C. § 152. On the subsequent appeal to this Court, Pfingst alleged numerous errors in the proceeding below. His claims ranged from allegations of erroneous rulings by the trial judge to assertions of prosecutorial misconduct, including the failure to reveal a "deal" with the principal government witness, Ramon D'Onofrio, and the deliberate stimulation of publicity by the government both before and during the trial which allegedly created an atmosphere that precluded a fair trial. After a careful review of the record, we found all of these contentions to be meritless and unanimously affirmed the conviction. United States v. Pfingst, 477 F.2d 177 (2d Cir.), cert. denied, 412 U.S. 941, 37 L. Ed. 2d 400, 93 S. Ct. 2779 (1973).

On July 3, 1973, Pfingst moved for a new trial pursuant to Fed.R.Crim.P. 33 on allegedly new information which had come to the attention of Pfingst's counsel, Joseph Marcheso, indicating that the government had suppressed evidence of a mutually beneficial arrangement with D'Onofrio. Pfingst also contended, in support of his motion, that the government had knowingly permitted D'Onofrio to commit perjury at the bankruptcy fraud trial when he denied the existence of certain purported elements of this alleged agreement. After a six-day hearing, which included testimony by Joseph Ryan, the Assistant United States Attorney who prosecuted the bankruptcy fraud trial, Robert Morse, the United States Attorney for the Eastern District (now deceased), Judge Edward Neaher, former United States Attorney for the Eastern District, Anthony Lombardino, former Chief of the Criminal Division for the Eastern District, David Brodsky, Assistant United States Attorney for the Southern District of New York, D'Onofrio, and D'Onofrio's attorney, Steven Duke, Judge Weinstein denied the request for a new trial.*fn1 Although he concluded that there was a modicum of nondisclosure, Judge Weinstein found even that modest amount was inadvertent, that it did not relate to evidence which was of such high value to the defense that its existence could not reasonably have been overlooked by the government, and that disclosure of this evidence would not have affected the outcome of the trial. Since we must accord substantial weight to the findings of fact below, especially when as here those findings emerge from conflicting testimony, and because we conclude that the district court applied the correct legal standard in evaluating those facts, we affirm.


In order to understand the various claims of suppression made by Pfingst, an extended discussion of the relationship between D'Onofrio and the government, spanning more than three years from the summer of 1970 to the summer of 1973, is required.

On June 10, 1970, a Grand Jury was empanelled in the Eastern District of New York to conduct an investigation into the bankruptcy of a Suffolk County dairy, the Evans Amityville Dairy, Inc. and its affiliates, which had occurred in April, 1966. D'Onofrio, who had been a large stockholder in the dairy, learned of this and the fact that an FBI agent, Anthony Scuderi, had been investigating him as well. Accordingly, he decided to approach Scuderi. D'Onofrio offered Scuderi some information about criminal activities unrelated to the bankruptcy matter, and Scuderi referred D'Onofrio to Agent George Binney of the New York office of the FBI.*fn2

On July 17, 1970, D'Onofrio met Binney in New York. D'Onofrio expressed a desire to cooperate with the FBI and indicated a hope that, in return, the FBI might help him in the event that his current financial activities should lead to difficulties with the Securities and Exchange Commission. Binney replied that the FBI would make no promises of assistance and would not for any reason countenance illegal activities by D'Onofrio.

On August 31, 1970, D'Onofrio requested a meeting with Lombardino, then Chief of the Criminal Division of the United States Attorney's Office for the Eastern District of New York, to discuss the pending bankruptcy fraud investigation. Three days later, on September 3, the two men met at Lombardino's office, with Agents Scuderi and Binney also in attendance. D'Onofrio stated that he was willing to cooperate in the investigation and queried Lombardino about the possibility of receiving immunity in return. Lombardino flatly refused to grant this quid pro quo but suggested that D'Onofrio would be permitted to plead guilty and his cooperation would be made known to the district court upon sentencing. At no time did D'Onofrio mention his incipient problems with the SEC at this meeting and Lombardino testified at the hearing below that he was unaware of them.*fn3

The following day, September 4, D'Onofrio returned to Lombardino's office, accompanied by his attorney, Steven Duke. Duke expressed concern that his client, in recounting the details of the bankruptcy fraud, would be admitting perjury with respect to prior testimony before the New York State Department of Agriculture and Markets and other agencies investigating the bankruptcy, as well as subjecting himself to criminal and civil liability for tax evasion from the unreported bankruptcy fraud income. Duke, therefore, sought assurances from Lombardino that D'Onofrio would not be prosecuted for these bankruptcy fraud related crimes.*fn4 Lombardino responded that such assurances were possible but made no firm commitment to Duke and D'Onofrio. A few days later, however, after Lombardino had received approval from Judge Neaher, then United States Attorney for the Eastern District, Lombardino telephoned Duke and informed him that the Eastern District would use its best efforts to prevent D'Onofrio's prosecution for these two crimes.

Soon thereafter the bankruptcy fraud investigation was turned over to Ryan, and Lombardino ceased his involvement in the case. Ryan conducted a number of interviews with D'Onofrio in preparation for his forthcoming appearance before the Grand Jury. At one of these, D'Onofrio repeated his concern over a possible perjury prosecution arising out of his false testimony in the prior bankruptcy proceedings, and Ryan assured him that this should not be a matter of concern as long as D'Onofrio testified truthfully before the Grand Jury and at the subsequent trial. On December 20 and 21, 1970, D'Onofrio testified extensively before the Grand Jury and on February 8, 1971, the Grand Jury returned a ten count bankruptcy fraud indictment charging D'Onofrio, Pfingst and James Feeney with various violations of 18 U.S.C. § 152.

Almost immediately after this indictment was handed down, on February 11, 1971, Marcheso wrote to Neaher, the United States Attorney, seeking to expedite pretrial discovery. The letter began,

Pursuant to our conversation I am making with this letter a formal request for discovery. It is understood that this is done to expedite preparation of the trial and does not in any way prejudice my client's rights to make formal discovery motions.

It continued by requesting various documents including inter alia :

7. A brief statement indicating if any promises or assurances were made to defendant D'Onofrio which could reasonably give hope to defendant D'Onofrio for lenient treatment as a result of his testimony;

The record does not indicate whether the government responded to request #7 and it was not repeated by Marcheso in Pfingst's formal motion for discovery filed May 7, 1971.

During the early spring of 1971, Ryan was informed by an SEC official, who had read about the indictment in the newspaper, that the SEC was investigating D'Onofrio's involvement to certain securities transactions which included D'Onofrio's use of various Swiss bank accounts. Ryan subsequently learned that the SEC believed Pfingst had some connection with the Swiss bank accounts as well. Although these Swiss bank matters did not appear to Ryan to have a significant relationship to the bankruptcy fraud, Ryan thought it important to inquire about the scope of these activities in the event that Pfingst sought to use this information to undermine D'Onofrio's credibility on cross-examination. Ryan also testified at the hearing before Judge Weinstein that he was concerned Pfingst might argue that D'Onofrio had received some promise of immunity from prosecution for securities violations, in return for his testimony against Pfingst, and Ryan therefore emphatically told the SEC to continue its investigation. Ryan then spoke to Neaher about the Swiss bank account situation and Neaher communicated with Duke, requesting him to obtain information about the matter from D'Onofrio. Duke responded that such revelation might well entail self -incrimination by D'Onofrio but that he would convey the request to his client.

On July 1, 1971, Ryan met with Duke and D'Onofrio to discuss the entry of a guilty plea by D'Onofrio on the bankruptcy fraud indictment. At the meeting, Ryan queried the two men about whether they believed any promises had been made to D'Onofrio to induce his guilty plea, aside from dismissal of the remaining counts and a favorable sentencing recommendation. Duke then mentioned Lombardino's assurance that D'Onofrio would not be prosecuted for tax evasion flowing from the unreported bankruptcy fraud income.*fn5 Ryan responded that despite what Lombardino may have said, no one in the Eastern District could guarantee that D'Onofrio would not be prosecuted for tax evasion because the IRS initiated such prosecutions sua sponte and could not always be dissuaded from proceeding. Ryan added, however, that it was the policy of the office not to prosecute an individual twice for essentially the same conduct. The three men also discussed D'Onofrio's Swiss bank activities but, according to Ryan, only in sketchy terms since D'Onofrio was reluctant to say more.

On July 22, 1971, D'Onofrio pleaded guilty to one count of bankruptcy fraud before Judge Bartels. At the plea hearing, the court inquired about possible inducements to obtain the guilty plea and D'Onofrio stated that the only promise he had received from the government concerned the dismissal of the remaining counts and a favorable recommendation on sentencing. Pfingst's attorney, Marcheso, was also present at this hearing before Judge Bartels and made the rather extraordinary and unprecedented request that an evidentiary hearing be held to determine whether any additional considerations prompted D'Onofrio's plea. Marcheso's only specific reference was to D'Onofrio's alleged "failure to pay hundreds of thousands and probably more in income taxes from investigations arising out of the Eastern and Southern Districts of New York." Ryan denied that there were any considerations in addition to those explicitly noted by D'Onofrio, and Judge Bartels refused to accede to Marcheso's demand for a further inquiry.

Several weeks after the entry of the plea, there occurred a startling event which sharply altered what heretofore had been government preparation directed solely toward a bankruptcy fraud trial against Pfingst and Feeney. Frederick Fellman, a former Babylon Town Republican leader, confessed to the FBI that he had purportedly accepted a $50,000 bribe from Pfingst in order to secure the nomination for him as the Republican Party's candidate for Justice of the New York State Supreme Court in 1968. Although D'Onofrio had once mentioned the bribery scheme to an FBI agent in January, 1971, a bribery prosecution seemed insupportable until Fellman's confession. Now, however, Ryan thought the bribery case to be strong. Ryan realized, moreover, that the Swiss bank account activities, which had appeared to have no direct relevance to the bankruptcy fraud prosecution, would play a significant part in the bribery case because one of the Swiss accounts was the alleged source of the $50,000 bribe. Accordingly, recalling D'Onofrio's reticence at revealing information about these accounts, Ryan contacted John Keeney, Chief of the Frauds Section of the Department of Justice, to determine what measures might be taken to assure D'Onofrio's cooperative testimony concerning the Swiss accounts.

On August 18, 1971, Morse, who, through Gavin Scotti of the Department of Justice, had been informed of Keeney's response, wrote a memorandum to Ryan in which Morse indicated that Keeney believed a grant of formal immunity to D'Onofrio would be inappropriate, because of possible complications with the bankruptcy fraud charge to which he had already pleaded guilty. The memorandum continued, though, that Keeney thought D'Onofrio could be informed that

Grand Jury testimony will not be used for taxation prosecution and this would constitute a preclusion from prosecution for criminal tax violation and a letter would be put into the file. However, he would be responsible for civil penalties, all of which would add up to an informal grant of immunity.*fn6

Armed with this authorization to grant D'Onofrio "informal" immunity from tax evasion prosecution which might arise out of his Swiss bank account revelations, Ryan met with Duke and D'Onofrio on August 18. Ryan's advance preparation proved unnecessary, however, for, according to testimony by both Duke and Ryan at the hearing, the subject of tax evasion never was discussed at this meeting. Ryan testified, therefore, that he had no cause to utilize the authorization he had secured. Rather, Ryan and Duke focussed their discussion on the draft of the bribery indictment already drawn by Ryan, in which Ryan had included D'Onofrio as a co-defendant. Duke argued that D'Onofrio was simply too tangential a figure in the bribery scheme to be joined in the indictment. And, he added that the publicity attendant to the announcement of the indictment might make it difficult for D'Onofrio to obtain his Swiss bank account records. Although the meeting closed without any definite conclusions having been reached on the indictment, Ryan called Duke a few days later and informed him that D'Onofrio would not be recommended for indictment.

In late August, following this meeting, D'Onofrio testified before the Grand Jury that was investigating the alleged bribery of Fellman. On September 1, 1971, the Grand Jury returned a bribery indictment naming Pfingst and Fellman as co-defendants. Immediately, thereafter, the government moved for a trial preference in the bribery case and asked that it be held within 60 days; Pfingst successfully objected.

The government now commenced preparation in earnest for both trials. In November, 1971, in response to a pretrial discovery motion by Pfingst, Ryan was ordered to furnish a statement concerning all government investigations of D'Onofrio. Ryan thereupon requested such information from the SEC and the Internal Revenue Service. The SEC responded with two letters disclosing a total of seven investigations involving D'Onofrio. The letter which Ryan received from the IRS indicated that it had begun an investigation of D'Onofrio in May, 1971 but due to workload pressures and upon learning of the bankruptcy prosecution pending in the Eastern District, it had decided to temporarily suspend further investigation. The three letters were given to Pfingst.

During the period from November, 1971 to March, 1972, both the government and Pfingst pressed D'Onofrio for additional information concerning the Swiss bank accounts. On March 3, 1972, the court ordered D'Onofrio to produce various records in response to a subpoena issued on Pfingst's behalf. D'Onofrio refused and a hearing was set for March 10 to determine if this refusal was justified. At that hearing, D'Onofrio asserted his Fifth Amendment privilege against self-incrimination, which the court accepted as a bar to further discovery.

On March 10, the same day as the hearing, Judge Weinstein, acceding to Pfingst's specific request, set down the bankruptcy fraud case to proceed to trial before the bribery case, fixing the commencement of the trial for March 24, 1972. With the bankruptcy fraud trial now only two weeks away, Ryan and D'Onofrio met on a number of occasions to review D'Onofrio's testimony. During one such interview, Ryan asked D'Onofrio to state the extent of any promises made to him by the government, and D'Onofrio replied that he had been assured that he would not be prosecuted for income tax evasion on unreported income from the bankruptcy fraud. Ryan, according to his testimony at the hearing,

immediately picked up the phone, very excited by this statement of [D'Onofrio's], and . . . told . . . Duke: "D'Onofrio's now claiming some kind of informal immunity on income tax matters and you better get this straightened out right now . . . . I'm going to put him on the phone and you better talk to him because there is no such understanding, and you better clear up any misapprehensions.

And, at a subsequent pretrial interview, Ryan again asked D'Onofrio about his understanding with respect to any promises relating to tax evasion, to which D'Onofrio replied that he understood that there were none.

The bankruptcy fraud trial began on March 24, 1972 and, as expected, D'Onofrio was the key government witness. However, with respect to the critical issue -- whether the admitted payments to Pfingst by the bankrupt dairy corporations were bona fide legal fees for services rendered or illicit cash distributions to Pfingst as a stockholder -- the government submitted documentary evidence corroborating D'Onofrio's testimony that the latter was the case. Moreover, D'Onofrio's credibility was sharply attacked in the course of five days of vigorous cross-examination. Marcheso repeatedly questioned D'Onofrio about his various stock manipulation schemes, the subject of the multiple SEC investigations. D'Onofrio pleaded the Fifth Amendment at least thirty times in response to these inquiries. Little of D'Onofrio's cross-examination was directed to other crimes arising out of the bankruptcy fraud itself. Marcheso asked a mere six questions about the possibility of a perjury indictment resulting from the filing of a false affidavit in the bankruptcy proceedings by D'Onofrio, and asked not a single question about the likelihood of a tax evasion prosecution for unreported bankruptcy fraud income. The net effect of this assault on D'Onofrio's credibility was not without success. As we noted on Pfingst's direct appeal,

Indeed, on the charges of which Pfingst was acquitted the evidence was limited to D'Onofrio's testimony, while on the charges of which Pfingst was convicted, in contrast, documentary evidence and the testimony of other ...

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