The opinion of the court was delivered by: NEAHER
This case arises out of a 24-count indictment charging the defendant, Valerie Helgesen, with the knowing use of lost, stolen or fraudulently obtained credit cards to obtain substantial sums of money from Citibank, N.A., in violation of 15 U.S.C. § 1644(a), and with making false statements to that bank, which is federally insured, for the purpose of influencing its action with respect to her merchant's credit card account, in violation of 18 U.S.C. § 1014.
With the approval of the Court and the consent of the government, Rule 23(a), F.R.Cr.P., defendant signed a waiver of her right to a trial by jury. After hearing the government's evidence, and that offered by the defendant, the Court finds the defendant guilty as charged on all counts except count 8. The following constitute the Court's special findings of fact and conclusions of law. Rule 23(c), F.R.Cr.P.
In November 1978, defendant and Jane Blangiardo opened a retail decorating business called the Brooklyn Heights Home Boutique, Ltd. ("HHB") at 216 Hicks Street in Brooklyn, New York. Defendant was the president and treasurer of the corporation and Blangiardo was its vice-president and secretary.
Just prior to their establishment of the business, defendant and Blangiardo opened a business checking account for HHB with Citibank, N.A., at a branch located on Montague Street in Brooklyn. Citibank's deposits are insured by the Federal Deposit Insurance Corporation ("FDIC").
In January 1979, defendant and Blangiardo applied to Citibank Sales Management Systems ("CSMS") for a merchant's credit card account which would allow them as proprietors of HHB to accept MasterCharge and VISA cards in making sales to customers. CSMS, like Citibank, is a subsidiary of Citicorp and is authorized to act for the latter in connection with credit card transactions. Although the contract opening a credit card account is entered into between the merchant and CSMS acting for Citicorp, the signatory for the latter is another subsidiary called Citicorp Credit Services, Inc. ("CCSI").
HHB's inventory consisted mainly of paint and related supplies such as brushes and rollers having a wholesale value ranging between $ 1,000 and $ 4,000. Other decorating items, such as wallpaper, curtains, blinds and shades were not kept in inventory but had to be ordered specially pursuant to a customer's selection from catalogues kept by HHB. The dimensions of HHB's store premises were approximately 20 feet by 40 feet. The business had incurred debts in starting up and, because of difficulties in developing a regular sales clientele, Blangiardo and defendant never "quite brought it above water."
Although the agreement opening the HHB credit card account provided for deposits to be made through the mail, direct deposits to a Citibank branch were accepted and credited to the account as cash deposits on the following business day. Prior to August 1979, HHB credit card sales invoices were deposited by mail, using pre-addressed envelopes provided at the time the merchant's credit card account was opened.
During the first seven months of 1979 the following monthly deposits of credit card sales invoices were made at Citibank:
January $ 1,008.66
February $ 805.13
March $ 593.57
April $ 1,174.16
May $ 1,318.50
June $ 1,485.96
July $ 532.41
These deposits reflected the volume of credit card sales normally experienced by HHB from January through July, 1979.
Defendant and Blangiardo jointly owned and operated HHB until, due to business and personal differences, they agreed that after July 30, 1979, defendant would operate the store alone. Except for the completion of a single decorating commitment, Blangiardo engaged in no activities relating to HHB's business after July 30, 1979.
Consuelo DiCiera was employed as an assistant in HHB from September 11, 1979, through September 21, 1979, when the store terminated operations. Her work schedule was irregular since defendant would tell her each day what hours she was to work the following day; but HHB was usually open for business Tuesdays through Fridays and on some Saturdays. DiCiera estimated that defendant was at the store 35% of the time. While at the store, DiCiera received two telephone calls, one a complaint about the repeated and unauthorized use of a stolen credit card, and the second from an employee of VISA inquiring about the use of the store's charge card plates. DiCiera reported both calls to the defendant, who said that she would take care of them.
During the time she worked at HHB, DiCiera took in an approximate total of only $ 30, since there were not many customers, and none involving credit card sales. She observed only one credit card transaction, which defendant handled.
Between August 17 and September 21, 1979, however, on almost every banking day, batches of HHB credit card sales invoices were submitted by direct branch deposit to the HHB account at Citibank. Citibank investigator Peter Jacina identified Government Exhibits 10 through 20, 51 through 67, 114, 129 and 174 as bank copies of credit card sales invoices retrieved from the regularly maintained archives of Citibank relating to the HHB account. In all, Citibank records reflected that 45 batches were deposited at the Montague Street branch representing a total face value of $ 221,384.34. More particularly, with regard to counts 18 through 24 of the indictment, Government Exhibits 10 through 20 establish that on the days noted below batches of invoices totaling the following face amounts were deposited:
Total face value
Date of invoices
August 20, 1979 $ 7,032.18
August 30, 1979 $ 5,758.00
September 4, 1979 $ 10,083.66
September 6, 1979 $ 7,932.89
September 7, 1979 $ 9,114.43
September 10, 1979 $ 14,108.16
September 11, 1979 $ 10,173.13
During this period also, funds were being regularly withdrawn, and on October 11, 1979, the balance of the HHB account was at zero. Most, if not all, of the credits generated by the deposits of the sales invoices were withdrawn by means of HHB checks, which had been written in whole or in part by defendant and presented to the bank for certification or for cashing.
Thomas Donovan, Director of the United States Postal Service Crime Laboratory and an expert questioned documents examiner, identified the handwriting which appeared on 29 HHB checks totaling $ 117,435.28 as that of defendant either as maker or endorser, or both. This handwriting testimony was corroborated by Blangiardo, who had seen defendant sign her name hundreds of times in the past three years.
Defendant was also identified by four Citibank tellers as the individual associated with the presentation for certification or cashing of an additional group of checks totaling $ 54,363.09. As already noted, defendant and Blangiardo were the only authorized makers of checks drawn on the HHB account at Citibank; and since Blangiardo had terminated her active participation in HHB on July 30, 1979, there were no checks bearing her signature after that date. Moreover, none of the Citibank tellers who testified identified Blangiardo as a person they associated in any way with the HHB account.
In signing the agreement of January 2, 1979, which established the HHB merchant's credit card account at Citibank, defendant, as "Seller" of credit card sales invoices, termed "items of indebtedness," represented and warranted to the bank
"(that) such Indebtedness represents a valid obligation of a Cardholder;
"(that) the transaction out of which such Indebtedness arose was in all respects a legal purchase of goods or services by a Cardholder ...."
In addition, each "sales/credit summary," the bank form accompanying and totaling each batch of credit card sales invoices deposited, expressly incorporated the representations and warranties contained in the January 2, 1979 agreement.
The sales/credit summaries accompanying deposits to the HHB account made on August 20 and 30 and September 4, 6, 7, 10 and 11, 1979 the deposits underlying counts 18-24 of the indictment bear the imprint of the HHB name and account number. The summaries accompanying the deposits underlying counts 10 through 15 also bear defendant's name on the line identifying it as "Seller's Signature." Also, Government Exhibit 115 contains summaries which accompanied deposits to the HHB account on 12 separate days between August 17 and September 14, 1979.
Donovan, the Postal Service handwriting analyst, identified the "Valerie Helgesen" signatures appearing on sales/credit summaries of HHB as those of defendant. These summaries accompanied batches of sale invoices for deposits made to the HHB account at Citibank on August 17, 20, 21, 22, 27, 29 and 31, 1979, and September 4 and 13, 1979. Inspector Donovan's identification is supported by the Court's own comparison of those signatures with unquestioned signatures of defendant on Government Exhibits 119, 120 and 121 (reproduced as Government Exhibit 203).
Four Citibank tellers who had handled banking transactions with defendant identified her as the principal person who made deposits of batches of credit card sales invoices to the HHB account in August and September, 1979. Although defendant was accompanied at times by a man identified as Adeeb "Eddie" Asaad, it was she who obtained during that same time period certified checks in amounts ranging up to $ 18,100 drawn on the HHB account and endorsed them for cashing. Also, when asked by the tellers why so many large checks were being cashed, it was defendant who explained that cash was needed for various business purposes and to pay customers who would not accept checks. The Court finds that defendant knowingly made this series of deposits and withdrew the cash generated by these credits.
VISA-USA, based in San Francisco, California, and Interbank, New York City, provide credit card security and informational services relating to the use of VISA and MasterCharge cards issued by member banks. This includes the compilation and regular updating of computer files of credit card numbers and maintenance of "status code" files indicating credit cards whose use is ...