The opinion of the court was delivered by: GRIESA
The Republic of Italy applies for the extradition of Michele Sindona from the United States to Italy.
The proceedings on this application are pursuant to 18 U.S.C. § 3184,
which provides in essence that, where there is an extradition treaty between the United States and a foreign government, a judge or magistrate of a court of record in this country may, upon complaint made under oath charging a person with the commission of a crime within the foreign country listed in the treaty, issue a warrant for the arrest of the charged person. The statute further provides that the judge or magistrate will hold a hearing and, if he deems the evidence sufficient to sustain the charge, he will certify this conclusion to the Secretary of State, so that a warrant may issue for the surrender of the person for extradition under the treaty.
The Republic of Italy is represented in this matter by the United States Department of Justice. The applicable extradition treaty provides that legal officers of the United States shall assist Italy in extradition proceedings before United States judges and magistrates. I will frequently refer in this opinion to "the Government," meaning the United States Department of Justice representing the Republic of Italy.
A complaint was issued September 7, 1976, sworn to by John J. Kenney, Assistant United States Attorney for the Southern District of New York. The complaint alleges that Sindona committed the crime of "fraudulent bankruptcy" under Italian law, by unlawfully taking 180 billion lire (equal to about $225 million) from an Italian bank, Banca Privata Italiana, and its predecessors, Banca Unione and Banca Privata Finanziaria, and by falsifying the books of those institutions. The complaint alleges that BPI was declared insolvent and a liquidator was appointed on September 29, 1974. The complaint alleges that the crime of fraudulent bankruptcy is among the offenses enumerated in the extradition treaty between the United States and Italy.
A warrant for Sindona's arrest was issued by this Court on September 7, 1976. Sindona was arrested in New York City and was subsequently released on bail pending the extradition hearing.
For the reasons hereafter set forth, the request of the Republic of Italy for the extradition of Sindona is granted.
Sindona is a 58-year old Italian businessman. He became vice president and a member of the board of directors of Banca Privata Finanziaria ("BPF") in 1960. He became president of that bank in September 1973. Sindona became vice president and a member of the board of directors of Banca Unione ("BU") in 1968. He ceased being a vice president of BU as of April 24, 1974, but continued thereafter as a director of that bank. Sindona owned 100% of the stock of BPF and 51% of the stock of BU.
As of August 1, 1974 BU and BPF merged. The merged entity was Banca Privata Italiana ("BPI").
It appears that Sindona was neither an officer nor a director of BPI. The record is not entirely clear as to precisely how long Sindona remained with the predecessor entities -- i.e., as a director of BU, and as president and a director of BPF. I will infer, for purposes of this opinion, that Sindona held these offices in BU and BPF until the date of the merger.
BPI was ordered into liquidation by a decree of the Italian Ministry of the Treasury dated September 27, 1974, and a liquidator was appointed. A judgment of the Civil and Criminal Court of Milan, Second Civil Division, dated October 15, 1974, declared BPI insolvent. This judgment of insolvency was affirmed by the Court of Appeal of Milan in July 1977, and was further affirmed by the Supreme Court of Italy on March 31, 1978.
A warrant for Sindona's arrest on criminal charges in Italy was issued October 4, 1974. A second arrest warrant was issued October 24, 1974. A third arrest warrant, the one referred to in the extradition request, was issued July 2, 1975.
Sindona could not be served in Italy with any of these arrest warrants. In 1974 he left Italy and has not returned to that country.
It appears that Sindona was tried in absentia in Italy for violating certain Italian bankruptcy regulations, was convicted on June 29, 1976, and was given a sentence of 3-1/2 years in prison. Extradition is not being sought with respect to this conviction. As already described, the criminal charge for which extradition is requested is what is referred to as "fraudulent bankruptcy."
The request for Sindona's extradition was originally made by the Republic of Italy in a diplomatic note to the United States Department of State dated March 11, 1975. Apparently there was some problem which prevented the further processing of the request at that time. In a diplomatic note dated November 25, 1975 and a supplemental note dated December 2, 1975 the Italian government renewed the extradition request. On February 9, 1976 Lucy A. Hummer, an attorney-advisor for the State Department, certified that she had reviewed the documents submitted by the Republic of Italy and had found them in proper form as required by the extradition treaty. As already described, Assistant United States Attorney Kenney filed the complaint pursuant to 18 U.S.C. § 3184 on September 7, 1976.
The applicable treaty is entitled "Treaty on Extradition Between the United States of America and Italy." 26 U.S.T. 493, T.I.A.S. No. 8052. It was signed on January 18, 1973. Following proceedings in both countries regarding ratification, it became effective March 11, 1975. It will hereafter be referred to as "the Treaty."
Article II of the Treaty provides in pertinent part:
"Persons shall be delivered up according to the provisions of this Treaty for any of the following offenses provided that these offenses are punishable by the laws of both Contracting Parties and subject to a term of imprisonment exceeding one year:
25. Fraudulent bankruptcy."
"Extradition shall be granted only if the evidence be found sufficient, according to the laws of the requested Party, either to justify his committal for trial if the offense of which he is accused had been committed in its territory or to prove that he is the identical person convicted by the courts of the requesting Party."
Article XI provides in part:
"The request for extradition shall be made through the diplomatic channel.
The request shall be accompanied by a description of the person sought, a statement of the facts of the case, the text of the applicable laws of the requesting Party including the law defining the offense, the law prescribing the punishment for the offense, and the law relating to the limitation of the legal proceedings or the enforcement of the penalty for the offense.
When the request relates to a person who has not yet been convicted, it must also be accompanied by a warrant of arrest issued by a judge or other judicial officer of the requesting Party and by such evidence as, according to the laws of the requested Party, would justify his arrest and committal for trial if the offense had been committed there, including evidence proving that the person requested is the person to whom the warrant of arrest refers."
As indicated in the quoted material, the Treaty provides for extradition for the crime of "fraudulent bankruptcy." The Government has submitted the texts of the Italian laws relating to fraudulent bankruptcy, which will be discussed in detail hereafter.
It is a requirement of the Treaty (Article II) and of international law that the offense for which extradition is sought must be considered a crime by both countries. Collins v. Loisel, 259 U.S. 309, 311, 66 L. Ed. 956, 42 S. Ct. 469 (1922); Shapiro v. Ferrandina, 478 F.2d 894, 906 n.12 (2d Cir.), cert. dismissed, 414 U.S. 884, 94 S. Ct. 204, 38 L. Ed. 2d 133 (1973). In this regard, it is not necessary that the name by which the crime is described in the two countries be the same, or that the pertinent statutes of the two countries be identical in their description of the elements of the particular offenses and penalties therefor. It is enough if the particular act charged is criminal in both jurisdictions. Collins v. Loisel, supra, 259 U.S. at 312; Shapiro v. Ferrandina, supra, 478 F.2d at 907-08.
Both Articles V and XI embody the concept, familiar in extradition cases, that evidence must be presented sufficient to justify the accused person's arrest and committal for trial under the procedures applicable in the requested nation. The authorities are clear that, in the United States, this means that the requesting nation must produce sufficient evidence to show probable cause that the extraditee has committed the crime of which he is accused. Collins v. Loisel, supra, 259 U.S. at 316; Shapiro v. Ferrandina, supra, 478 F.2d at 905, 907; Greci v. Birknes, 527 F.2d 956, 958 n.2 (1st Cir. 1976).
The Government has provided both the Italian original and an English translation of the Italian laws relied on regarding the criminal charge against Sindona. These provisions are contained in the Royal Decree of March 26, 1942, No. 267, which deals with bankruptcy, arrangements with creditors, receiverships, and forced administrative liquidations. It is apparently proper to refer to this decree as the Italian Bankruptcy Law. The relevant provisions of the Bankruptcy Law are Articles 216, 219 and 223, which in pertinent part read:
"216. (Fraudulent bankruptcy). A businessman is punished with imprisonment of from three to ten years, if declared to be bankrupt, when he:
1) has distracted, hidden, dissimulated, destroyed or dissipated all or part of his assets or, with the intent of damaging his creditors, has alleged or acknowledged the existence of nonexisting debts;
2) has subtracted, destroyed or falsified, wholly or partly, with the intent of procuring for himself or others an unjust profit or of damaging his creditors, the books and other accounting records or has so kept them as to make it impossible to reconstruct the assets or the transactions of the business."
"219. (Aggravating circumstances and extenuating circumstances). In those cases where the acts contemplated by Articles 216, 217 and 218 have caused substantial financial losses, the penalties provided by such articles are increased by up to one half. The penalties provided in the above mentioned articles are increased:
1) if the offender has committed several acts from among those contemplated by any of the articles mentioned;
2) if the offender was prohibited by law from engaging in a commercial enterprise.
In those cases where the acts contemplated in the first subsection have caused particularly small financial losses, the penalties are reduced by up to one-third."
"223. (Acts of fraudulent bankruptcy). The penalties provided in Article 216 are applied to the directors, the general managers, the auditors and the liquidators of companies which are declared to be bankrupt, who have committed any of the acts contemplated in the aforesaid article.
The penalty provided by the first subsection of Article 216 is applied to the aforesaid persons when:
1) they have committed any of the acts contemplated in Articles 2621, 2622, 2623, 2628, 2630 subsection 1, of the Civil Code;
2) they have caused by fraud or by the effects of fraudulent transactions the bankruptcy of the company.
In addition, the provision of the last subsection of Article 216 is applicable in all cases."
Article 216, insofar as relevant here, applies to a businessman who is declared bankrupt and who has committed certain acts prior thereto such as dissipating his assets and falsifying his books. Article 223 provides that, under certain conditions, the provisions of Article 216 apply to a director of a company which is declared to be bankrupt, where the director has committed any of the acts referred to in Article 216. In order for Sindona to be properly charged with the crime of fraudulent bankruptcy, the allegations against him must fit within Article 216, read in conjunction with Article 223.
An initial problem under Article 223 arises as to whether Sindona was a director of a company which was "declared to be bankrupt." Sindona was a director of both BU and BPF. Although these companies were the predecessors of the merged entity, BPI, Sindona did not become a director of BPI. It was BPI which was adjudged insolvent on October 15, 1974. Thus there is a question as to whether Sindona's directorships in the predecessor companies, BU and BPF, are sufficient to place him within the ambit of Article 223, when he was not actually a director of the merged entity, BPI.
Both the Government and Sindona have submitted affidavits from Italian lawyers on this question. Both of these lawyers agree essentially that if a director of a predecessor company commits illegal acts which cause the insolvency of the successor company, then that director may be prosecuted under Article 223, provided that other conditions are fulfilled (Viola aff. January 16, 1978; La Villa aff. January 30, 1978).
A further question in this connection is whether BPI was "declared to be bankrupt" within the meaning of Article 223. Both Article 223 and Article 216 contain the phrase "declared to be bankrupt," which is crucial to the application of these provisions. The Italian phrase in Article 223 is "dichiarate fallite." The Italian phrase in Article 216 is "dichiarato fallito."
The judgment of the Milan court of October 15, 1974 did not literally declare BPI bankrupt, but declared BPI to be insolvent. The Italian phrase used in the judgment is:
". . . dichiare lo stato di insolvenza della S.p.A. BANCA PRIVATA ITALIANA . . .."
The translation of this phrase is:
". . . hereby declares the state of insolvency of the Banca Privata Italiana. . . ."
The affidavit submitted by the Government states that "stato di insolvenza" is the equivalent of "fallimento" -- that is, that "state of insolvency" is the equivalent of "bankruptcy" (Viola aff. January 16, 1978).
The judgment of insolvency of the Milan court was rendered under Articles 195 and 202 of the Italian Bankruptcy Law, Royal Decree of March 16, 1942, No. 267. Another section of the Bankruptcy Law, Article 203 (see Viola aff. January 16, 1978), provides that where a state of insolvency has been adjudged under Articles 195 and 202, the provisions of Articles 216 and 223 shall apply. The pertinent language of Article 203 is:
"Once the state of insolvency has been ascertained pursuant to Arts. 195 and 202, the provisions of Title II, Chapter III, Section III shall apply, effective from the date of the Liquidation Order, also in respect of unlimited liability partners.
The provisions of Arts. 216 to 219 and 223 to 225 shall also apply in respect of the above-mentioned partners as well as of the directors, general managers, liquidators and members of the supervisory bodies."
I conclude that the judgment of "insolvenza" of October 15, 1974 falls within the meaning of the phrases "dichiarato fallito" and ...