The opinion of the court was delivered by: DUFFY
Defendants Louis Ostrer, his wife Rita Ostrer, Seymour Greenfield, and Cy Reeves Snyder were indicted by the Grand Jury on July 18, 1978. Count One charges the Ostrers and Seymour Greenfield with conspiracy to evade taxes. Count Two charges Louis Ostrer and Seymour Greenfield with evasion of payment. Counts Three through Seven charge defendants Louis Ostrer, Seymour Greenfield, and Cy Reeves Snyder with conspiracy to embezzle, embezzlement, interstate transportation of stolen money, and racketeering.
The latter Counts arise from defendant Louis Ostrer's activities as "insurance consultant." Through the assistance of the other named defendants, Louis Ostrer allegedly embezzled approximately.$ 1.2 million from Local 918, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America's Employee Welfare and Pension Benefit Funds. The total amount claimed by the government as a result of the tax evasion and embezzlement charges of this indictment is approximately $ 6.9 million. This total figure includes taxes due and owing from the individual returns of Louis Ostrer and employment taxes of Fringe Programs, Inc. assessed against Louis Ostrer.
Louis Ostrer has made the instant omnibus criminal motion in which defendants Rita Ostrer and Seymour Greenfield have joined. Included therein are various dismissal, suppression, severance, discovery, and miscellaneous motions.
Before discussing the merits of each of the instant motions, which I deny with the exceptions noted below, I note that contained in the voluminous documents and affidavits in this case, there is not one affidavit from Louis Ostrer personally. This is so despite the fact that several of the allegations made herein involve situations of which Louis Ostrer is in a position to have personal, first-hand information. For example, in the motion to dismiss based on government misconduct, it is alleged that Louis Ostrer was subjected to threats and intimidation to coerce his co-operation as an informer. Yet, there is no affidavit from Louis Ostrer. Also, one of the several motions to suppress alleges that during tax court settlement negotiations for the 1976 tax year, Louis Ostrer was promised by the government that no criminal prosecution would result from any stipulations made in connection with those settlements. Again, a personal affidavit from Louis Ostrer is conspicuously absent.
Defendant, Louis Ostrer, has moved to dismiss Counts One and Two on the grounds that they are based on transactions and assessments which were the subject of civil settlements. Furthermore, he asserts that the government expressly represented to him that these settlements would not be the basis for any criminal liability.
I see no evidence of such an agreement between the government and Mr. Ostrer. Moreover, Counts One and Two of the indictment concern evasion of Payment. Thus, even if the government had agreed not to use the tax settlements as a basis for criminal liability, it is inconceivable that it would have similarly agreed with respect to Enforcement of the settlement agreements. For these reasons, the motion to dismiss Counts One and Two is denied.
2. Counts Three through Seven
Defendants seek to dismiss Counts Three through Seven on the grounds "that the crimes alleged in those counts are "new domains,' unrelated to the tax investigation for which the Grand Jury was originally convened in January of 1976." Defendant's Notice of Motion, Affidavit of Counsel in Support of Motion, Memorandum of Law to Dismiss Counts Three thru Seven of the Indictment at 1.
The instant indictment was entered by a "special grand jury" empanelled pursuant to 18 U.S.C. § 3331. This grand jury's life was properly extended by the United States Attorney according to the terms of that section.
See Exhibit V to Government's Memorandum of Law in Response to Defendant's Pre-Trial Motions (hereinafter referred to as "Government's Memorandum") (grand jury empanelling and extension orders).
Even if the life of the grand jury was properly extended, defendants argue, based on United States v. Johnson, 319 U.S. 503, 63 S. Ct. 1233, 87 L. Ed. 1546 (1943), that the embezzlement and racketeering related offenses were not investigated during the original eighteen month term. They further argue that any investigation of these offenses, allegedly unrelated to the tax offenses, after the original period constitutes an impermissible entry into a "new domain."
In Johnson, the Court was analyzing recent changes in the grand jury statute.
In its analysis, the Court indicated that although the grand jury's function has, historically, been arbitrarily limited, the purpose for allowing extensions "was to make the grand jury a more continuous and therefore more competent instrument of what have become increasingly more complicated inquiries into violations of the enlarged domain of federal criminal law." 319 U.S. at 511.
Defining the scope of an extended grand jury's investigation, the Court went on to say that "(the grand jury) is not forbidden to inquire into new matters within the general scope of its inquiry but only into a truly new, in the sense of dissociated, subject-matter." Id.
First, it should be noted that Johnson, decided in 1943, preceded the "special grand jury" statute, 18 U.S.C. § 3331, which was enacted in 1970. Thus, the decision in Johnson was not construing the instant statute and if it is to apply at all, it is by analogy. It is not clear that the limitations in that Opinion should apply to the broad extension provision in § 3331.
This is a question I need not decide, however, for even under the test outlined in Johnson, I find that the embezzlement related offenses are not "truly new or dissociated" but were "within the general scope of the grand jury's inquiry." Indeed, as I noted in my Opinion denying the motions of Rita Ostrer and Seymour Greenfield for misjoinder and severance, "the plan to conceal assets that began in 1975 continued through 1978 and included the moneys embezzled from the Union Pension Fund. Viewed in this manner, the indictment does appear to allege participation by both defendants in a common scheme or series of transactions." U. S. v. Ostrer, 460 F. Supp. 1388, 1390 (S.D.N.Y.1978). Given the broad scope of potential grand jury inquiry described in Johnson, it appears that the embezzlement related charges are sufficiently connected with the tax evasion counts so as not to constitute an impermissible "new domain." To find otherwise would be to inhibit the grand jury function with unnecessary technicalities. Consequently, the motion to dismiss Counts Three through Seven is denied.
The final Count of the indictment is a charge under the Racketeer Influenced and Corrupt Organizations Act, (hereinafter referred to as "RICO") 18 U.S.C. §§ 1961 Et seq. The paragraphs specifically challenged by defendants read as follows:
21. At all times relevant to this indictment, 955 N.E. 125th St. Corp. ("955 Corp.") was a corporation established pursuant to the laws of the State of Florida. 955 Corp. maintained account number 5123895 at the Miami National Bank and this account listed CY REEVES SNYDER and "Jack Ostrer" as President and Secretary, respectively, and both were authorized to sign checks on the account. The corporation was engaged in the business of operating and maintaining an office building at 955 N.E. 125th St., North Miami, Florida, and as such constituted an "enterprise" as defined by Title 18, United States Code, Section 1961(4), Which enterprise was engaged in, and the activities of which affected, interstate commerce.
22. From on or about July 28, 1976, and continuing up to the date of the filing of this indictment, in the Southern District of New York and elsewhere, the defendant LOUIS C. OSTRER, a/k/a "Louis Cuple" and "Jack Ostrer," unlawfully, wilfully, and knowingly, did use and invest, directly and indirectly, in the acquisition of an interest in and the operation of the 955 Corp., an Enterprise engaged in, and the activities of which affected, interstate commerce, income which was received and derived from a pattern of racketeering activity, that is, acts of embezzlement in violation of Title 18, United States Code, Section 664 and interstate transportation of stolen property in violation of Title 18, United States Code, Section 2314.
Indictment No. 78-0535 at 15 (S.D.N.Y. July 18, 1978) (Emphasis added ).
Section 1962(a) requires, as a jurisdictional prerequisite to a RICO charge, that money derived from a pattern of racketeering be used or invested,
directly or indirectly, . . ., in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in or the activities of which affect, interstate or foreign commerce.
Defendants argue that Count Seven is jurisdictionally deficient because it merely asserts, in conclusory terms, that the 955 Corp. is an "enterprise engaged in, (and) the activities of which affect(ed), interstate commerce."
This argument is contrary to the law of this Circuit and, accordingly, the independent motion to dismiss Count Seven is denied. The Second Circuit has consistently held that
details need not be alleged as long as the indictment furnishes sufficient information as to the time, place and essential elements of the crime to enable the defendants to prepare for trial and avoid a claim of double jeopardy.
U. S. v. Weiss, 491 F.2d 460, 466 (2d Cir. 1974) (citation omitted).
As recently as 1978, it has been held that an indictment which tracks the statutory language is specific enough to withstand a motion to dismiss. U. S. v. Carr, 582 F.2d 242, 244 (2d Cir. 1978).
Paragraphs 21 and 22 of Count Seven clearly track the language of 18 U.S.C. § 1962(a) and, as such, are sufficient to withstand the instant motion under the holding of Carr. See also U. S. v. Cohen, 518 F.2d 727, 732 (2d Cir. 1975). Moreover, the language of Count Seven as a whole is sufficient to inform the defendants as to the essential elements of the crime and they have more than sufficient information to enable them to adequately prepare for trial.
Consequently, the motion to dismiss Count Seven is denied.
4. Motion to Dismiss on Grounds of Government Misconduct
In wholly conclusory terms, the defendants seek to dismiss the entire indictment on the grounds that "the government's dealings . . . reflect a continuing pattern of pervasive, aggravated, and unrepentant government misconduct." Notice of Motion in Support of Defendant's Motion to Dismiss on Grounds of Government Misconduct at 1. The only first-hand evidence in support of these allegations is the affidavit of Daniel Gamsin dated July 23, 1979 who testified before the grand jury.
At best, the charges in Mr. Gamsin's affidavit evince nothing more than a personality ...