The opinion of the court was delivered by: PRATT
GEORGE C. PRATT, District Judge.
Andrew DeLillo has been indicted on twelve counts for violations of 18 U.S.C. § 664 (theft or embezzlement from employee benefit plan).
Contending that the facts charged do not constitute an offense under § 664, he has moved for dismissal. For the reasons set forth below, his motion is granted.
In determining the motion, we must assume the indictment's factual allegations to be true. United States v. Sampson, 371 U.S. 75, 76, 83 S. Ct. 173, 9 L. Ed. 2d 136 (1962). These allegations can be summarized as follows.
The Pension and Retirement Fund of Local 138, 138A, and 138B of the International Union of Operating Engineers (the Union Fund) was, at all times here relevant, "an employee pension benefit plan" as defined in § 664. In September of 1972, the Union Fund sold its resort complex, Colonie Hill, to Colonie Hill, Ltd. (Colonie) pursuant to a contract executed the previous June. The contract provided for a purchase price of $18,800,000, $15,300,000 of which was payable in notes or bonds, secured by subordinated mortgages on the complex.
As to the remaining $3,500,000, the contract provided:
(1) that upon receipt of the deed, Colonie was to obtain a $3,500,000 first mortgage on the complex;
(2) that Colonie was to use the $3,500,000
(a) to discharge approximately $2,500,000 in debts previously incurred by the Union Fund in the complex's construction,
(b) to finance the construction of a clubhouse building on the land, and
(c) to cover certain costs incurred in the complex's management between the contract's signing and closing; and
(3) that "satisfaction of these obligations by Colonie * * * would constitute full payment of the said $3,500,000". No provision in the contract granted the Union Fund the right to receive any part of the $3,500,000, even if the entire amount was not ultimately needed to satisfy fully the obligations for which it was designated.
After Colonie received the deed and the $3,500,000 first mortgage proceeds, defendant DeLillo, who was then Colonie's president,
on twelve separate days made payments (totalling almost $1,500,000) from the $3,500,000, in a manner inconsistent with those specified in the contract. ...