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UNITED STATES v. MAALOUF

April 28, 1981

UNITED STATES of America
v.
Elias MAALOUF and Ghassan Maalouf, Defendants



The opinion of the court was delivered by: NEAHER

MEMORANDUM AND ORDER

Indictment 80 CR 217(S) charges defendant Elias and Ghassan Maalouf in 16 counts with violations of various federal laws arising out of the allegedly illegal use of MasterCharge and VISA credit cards. The case is before the Court on defendants' motion to dismiss the indictment. For the reasons which follow, the motion is denied.

 In an introductory section, the indictment recites that defendants, as officers of various corporations, opened merchant's credit card accounts at four banks in Brooklyn, New York, "for the purpose of exchanging, for money, credit card sales drafts reflecting sales" by the named corporations. It is further alleged that the deposits of the four banks are insured by the Federal Deposit Insurance Corporation ("FDIC").

 Counts 1-7 charge defendants with violations of 15 U.S.C. § 1644(a) and allege, in the language of the statute, that they

 
"did knowingly and willfully, in transactions affecting interstate commerce, conspire together to use lost, stolen and fraudulently obtained MasterCharge and Bank Americard/VISA credit cards ... to obtain money in an amount in excess of $ 1,000.00 for each card ...."

 Count 8 charges defendants under 18 U.S.C. § 371 with

 
"conspiring to make false statements and to overvalue property for the purpose of influencing the action of banks insured by the Federal Deposit Insurance Corporation upon the purchase of Bank Americard/VISA and MasterCharge sales debts and upon a commitment by the banks to pay on Bank Americard/VISA and MasterCharge sales drafts"

 in violation of 18 U.S.C. § 1014. This count, as well as setting forth in detail five overt acts in furtherance of the conspiracy, alleges that defendants presented "false and fraudulent" credit card sales invoices for deposit to the accounts at the four banks. In addition, defendants are alleged to have withdrawn substantial sums of money from these accounts. Counts 9-16 each allege a substantive violation of 18 U.S.C. §§ 1014 and 2 in the making of false statements in connection with the deposit to one of the banks of credit card sales invoices that defendants knew did not represent bona fide sales made by their corporations.

 Initially, defendants move to dismiss the entire indictment on the ground that the Grand Jury was presented with evidence that one of their corporations entered into an agreement with Citibank when in fact, defendants assert, the agreement was with a "non-banking" subsidiary of Citicorp not insured by the FDIC. Even if such evidence had in fact been put before the Grand Jury, at this stage of the proceedings it would be wholly speculative to say that it was in any sense materially inaccurate. In all events, since the indictment tracks the statutory language and clearly specifies the nature of the alleged criminal activity, it is sufficient on its face to withstand a motion to dismiss, United States v. Carr, 582 F.2d 242, 244 (2d Cir. 1978), and "thus the Fifth Amendment does not require that we look behind it to consider the character of the evidence upon which it is based." United States v. Schlesinger, 598 F.2d 722, 726 (2d Cir. 1979). See Costello v. United States, 350 U.S. 359, 363, 76 S. Ct. 406, 408, 100 L. Ed. 397 (1956).

 In addition, defendants move to dismiss counts 1-7

 
"because there is no evidence available to show that any of the individual credit cards named in those Counts were used in any separate corporate credit card accounts maintained by the defendants to obtain money in an aggregate amount in excess of $ 1,000.00 in a one year period, as required by § 1644(a)." Motion at 2.

 This contention is clearly without merit. Because the indictment tracks the language of 15 U.S.C. § 1644(a) and is valid on its face, Costello v. United States, supra, it is beyond doubt that the "Government is not required to set forth evidentiary matter." See United States v. Carr, supra. See also United States v. Bernstein, 533 F.2d 775, 786 (2d Cir.), cert. denied, 429 U.S. 998, 97 S. Ct. 523, 50 L. Ed. 2d 608 (1976). Precisely how the government will seek to prove its legally sufficient allegations is a question whose resolution must await trial.

 Defendants concentrate their fire most heavily on counts 8-16, basing their motion to dismiss these charges brought under the bank fraud statute on a restrictive interpretation of that enactment. Section 1014 of Title 18, U.S.C. states in relevant part:

 
"Whoever knowingly makes any false statement or report, or willfully overvalues any land, property or security, for the purpose of influencing in any way the action of ... any bank the deposits of which are insured by the Federal Deposit Insurance Corporation ... upon any application, advance, discount, purchase agreement, repurchase agreement, commitment, or ...

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