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United States v. Federal Maritime Commission

decided: December 18, 1980.

UNITED STATES OF AMERICA, PETITIONER
v.
FEDERAL MARITIME COMMISSION, RESPONDENT GULF-UNITED KINGDOM RATE AGREEMENT SEA-LAND SERVICE, INC. JAPAN/KOREA-ATLANTIC AND GULF FREIGHT,ET AL PACIFIC WESTBOUND CONFERENCE ET AL SEATRAIN INTERNATIONAL, S.A. PACIFIC COAST EUROPEAN CONFERENCE, ET AL., ATLANTIC AND GULF/PANAMA CANAL ZONE, ET AL., INTERVENORS



Petition for Review of an Order of the Federal Maritime Commission

Before Mulligan and Timbers, Circuit Judges, and Nickerson,*fn* District Judge.

Author: Mulligan

Michele Sindona appeals from a conviction by a jury which found him guilty on 65 counts of a 69 count indictment. The conviction followed a nine week trial in the United States District Court for the Southern District of New York (Thomas P. Griesa, Judge). We affirm the conviction on all counts.

The appellant, an Italian financier, was alleged to have controlled an international group of banks and corporations in the early 1970s. Partially as a result of conduct underlying this prosecution, the Franklin National Bank (Franklin), in which Sindona owned 21.6% of the outstanding stock and was a director, was declared insolvent on October 8, 1974. On January 11, 1980, a superseding indictment consisting of sixty nine counts*fn1 was filed against Sindona. The first count charged the appellant, Sindona, and Carlo Bordoni*fn2 with conspiracy to defraud the United States and various departments and agencies thereof in violation of 18 U.S.C. §§ 656, 1001, 1005, 1014, 1341, 1343; 15 U.S.C. §§ 78j(b) and 78ff; and Rule 10(b)(5) (17 C.F.R. 240.10-b-5). The remaining substantive counts charged Sindona with a scheme to defraud Franklin and the United States by: misapplying $15 million of bank funds in October 1972 in violation of 18 U.S.C. § 1343 (Counts 2-7) and 18 U.S.C. § 656 (Count 8); making secret payments or bribes to a senior officer of Franklin, Peter R. Shaddick, thereby inducing Shaddick to enter false information in Franklin's books in violation of 18 U.S.C. § 1343 (Counts 9-11); and causing Franklin to enter into fictitious foreign exchange transactions in order to portray a profit in violation of 18 U.S.C. §§ 1341 and 1343 (Counts 12-48). Sindona was further charged with causing false entries to be made in Franklin's books, reports and statements in violation of 18 U.S.C. § 1005 and 12 U.S.C. §§ 1841(a)(1) and 1847 (Counts 49-51); causing falsified statements of Franklin to be submitted to the Manufacturers Hanover Trust Company in order to obtain a loan and extension of credit in the amount of $35 million to Franklin in violation of 18 U.S.C. § 1014 (Counts 51-53); perjury before the Securities and Exchange Commission in violation of 18 U.S.C. § 1621 (Count 54); and use of the United States mails to engage in a manipulative scheme with respect to the purchase and sale of Franklin stock in violation of 15 U.S.C. §§ 78j(b) and 78ff as well as Rule 10(b)(5) (17 C.F.R. 240.10-b-5) (Counts 55-69). Counts 56, 63, and 68 were dismissed by the court with the remaining counts renumbered 1 through 66. The jury, after six days of deliberations, found Sindona guilty on all but count 9, one of the wire fraud counts. Judge Griesa sentenced Sindona to twenty-five years and a fine of $207,000.*fn3

TABLE

The financial machinations of Sindona were indeed massive, complicated and unscrupulous, wreaking financial disaster upon banking and financial institutions as well as economic and personal tragedy upon the persons involved including, of course, the principal architect of the scheme, Sindona himself. Sindona does not attack his conviction on all counts on his appeal but focuses upon six specific alleged errors. We see no point in setting forth in detail all the manipulations employed but will address the facts so far as they are applicable to the errors claimed.

I. Paragraph 35

Viewing the evidence as we must in the light most favorable to the Government, Glasser v. United States, 315 U.S. 60, 62 S. Ct. 457, 86 L. Ed. 680 (1942), there clearly was sufficient evidence for the jury to have found that in mid-1972, Sindona acquired 21.6% of the outstanding shares of Franklin at a price of $40 million. The money was obtained from Italian banks through the use of a fiduciary deposit system. Under this system, Banca Privata Finanziaria (BPF) and Banca Unione (BU)*fn4 placed the money on time deposits at the Privat Kredit Bank and Amincor Bank in Zurich, Switzerland and recorded these placements on their books. The Swiss banks, however, transferred the funds to a Sindona owned corporation, Fasco International, by means of a secret "fiduciary contract" whereby the Swiss banks would not be liable for repayment to the Italian banks unless and until the Sindona corporation repaid the Swiss banks. These arrangements were concealed from the Italian authorities and were not reflected in the banks' records. On July 24, 1972, Sindona falsely represented, in a statement filed with the Securities and Exchange Commission, that the funds used to acquire Franklin were his personally. Although this statement was later amended to indicate that the funds belonged to Fasco International, no mention was made of the fiduciary contract. Moreover, in 1974 Sindona once again stated during an SEC investigation into the collapse of Franklin that the funds were his personally and that there was no debt connected with them. In April, 1973, Sindona and Bordoni employed a similar scheme whereby Sindona received slightly over $27 million with which he acquired Talcott, a large American financial corporation. It was Sindona's intention to bring about the merger of Franklin and Talcott in order to improve Franklin's earnings as well as securing greater credit for Franklin in the international banking network. Once again, Sindona reported to the SEC that the funds used to acquire Talcott were his personally.

This conduct formed the basis of paragraph 35 of the indictment which was alleged to have been the first object of the conspiracy. In addition, the original indictment filed against Sindona on March 19, 1979 included twelve substantive counts based upon these transactions. These substantive counts were later dropped from the indictment on a motion by the Government.

Paragraph 35 states that:

(i)t was part of said conspiracy that Sindona and Bordoni, among others, would fail to disclose and would actively conceal from the interested United States authorities and other persons, that the money used to purchase Sindona's interest in the Franklin N.Y. Corp. and Talcott was fraudulently and illegally removed from the general deposits of BU and BPF, banks which Sindona controlled in Italy.

Sindona's only defense to this or any charge in the indictment was documentary evidence which showed that Sindona had repaid the $67 million involved and, therefore, these transactions were legitimate loans with no fraud or illegality involved. The court below, however, instructed the jury that it could convict Sindona of conspiracy based upon paragraph 35 as long as they found that Sindona concealed from the regulatory authorities material facts of whatever nature relating to the source of the funds and that they need not find that the funds were fraudulently and illegally removed from Italian banks. This charge to the jury is alleged to be an impermissible variance from the charge in the indictment and constitutes appellant's first claim of error on appeal. In addition, Sindona claims that the Government failed to show a separate agreement to conceal these alleged Italian loans, or "crimes," and thus, the conspiracy conviction should be reversed pursuant to Grunewald v. United States, 353 U.S. 391, 77 S. Ct. 963, 1 L. Ed. 2d 931 (1957); Lutwak v. United States, 344 U.S. 604, 73 S. Ct. 481, 97 L. Ed. 593 (1953).

Paragraph 35 of the indictment in sum, charged that one of ten objects in the conspiracy between Sindona and Carlo Bordoni was to "fail to disclose and ... actively conceal from the interested United States authorities ..., that the money used to purchase Sindona's interest in the Franklin N.Y. Corp. and Talcott was fraudulently and illegally removed from the general deposits of BP and BPF, banks which Sindona controlled in Italy." (emphasis added). Sindona contends that throughout the pretrial discovery period, and even during the presentation of its case in chief, the position of the Government was that Sindona had been charged with concealment of the Italian crimes of embezzlement and fraud. Thus, he argues that if the Government failed to prove that the method utilized to obtain the acquisition funds was illegal then there could not be a conviction for conspiracy based upon the object in paragraph 35. Sindona urges that the Government suddenly changed positions by arguing to the judge below that he could be convicted based upon paragraph 35 as long as the jury found that he had concealed material information of whatever nature. Thus, if the jury found that Sindona concealed the source of the funds used to acquire the Franklin and Talcott shares from the SEC, it would be able to convict Sindona of conspiracy to defraud the United States in violation of 18 U.S.C. §§ 656, 1001, 1014, 1341, 1343; 15 U.S.C. §§ 78j(b) and 78ff; as well as Rule 10(b)(5) (17 C.F.R. 240.10-b-5). This turnabout is alleged to constitute an illegal amendment of a grand jury indictment by the Government. Stirone v. United States, 361 U.S. 212, 215-16, 80 S. Ct. 270, 272, 273, 4 L. Ed. 2d 252 (1960).

In response, the Government argues that there never was an amendment or "variance" from the indictment. We agree. In response to a defense request for a bill of particulars relating to paragraph 35, the Government referred defense counsel to the original counts 2 through 13 of the original indictment which had been dismissed. Paragraph 5(iii) of the original indictment states that the transfers from the Swiss banks to the Sindona corporation "would be treated by the Swiss bank(s) as a loan made on behalf of BU or BPF." (emphasis added). Moreover, at paragraph 8 of that same indictment, the grand jury stated:

8. It was further a part of said scheme and artifice to defraud that SINDONA at all times represented that these moneys were his personally, belonged to companies he owned or to investors. At no time did he reveal that the source of these funds were the general deposits at BU or BPF or that the funds had been fraudulently and illegally removed from said banks. (emphasis added).

A fair reading of these paragraphs would put one on notice that the core of the crime charged was the concealment of the source of the funds and not the illegality of the fiduciary system employed in Italy. Indeed, an ...


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