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United States v. Sanzo

decided: March 10, 1982.

UNITED STATES OF AMERICA, APPELLEE,
v.
LOUIS SANZO, APPELLANT.



Appeal from a judgment of conviction for tax evasion in calendar years 1974 and 1977, 26 U.S.C. § 7201, and conspiracy to defraud the United States by obstructing the Treasury Department in the collection of income taxes, 18 U.S.C. § 371, entered in the Eastern District of New York, Mark A. Costantino, Judge. Affirmed.

Before Friendly, Oakes and Pierce, Circuit Judges.

Author: Oakes

This appeal is from a conviction for tax evasion in calendar years 1974 and 1977, 26 U.S.C. § 7201 (Counts 7 and 9), and for conspiracy with Ralph Trainello, Aberdeen Associates, Inc. (Aberdeen), and RNT Associates, Inc. (RNT), to defraud the United States by obstructing the Treasury Department in the collection of income taxes due and owing on funds due and disbursed by Trainello through Aberdeen and RNT (Count 4). After a jury trial before Mark A. Costantino, Judge, in the United States District Court for the Eastern District of New York, appellant Louis Sanzo was convicted on the above-stated counts, but acquitted on counts of conducting the affairs of Local 29 of the Blasters, Drillrunners and Miners Union through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c) (RICO) (Count 1); conspiring to conduct the affairs of Local 29 through racketeering (Count 2); obstructing justice (Count 5); and evading income taxes for the year 1975 (Count 8). On appeal Sanzo argues (1) that the Government used false testimony and thereby denied him due process of law; (2) that the evidence of guilt on the conspiracy count was insufficient to prove his guilt beyond a reasonable doubt; (3) that the district court's failure to dismiss the RICO counts prejudiced him in respect to the three counts on which he was convicted; and (4) that he was prejudiced by the admission into evidence of testimony relating to organized crime.

FACTS

The Government sought to show at trial that appellant Sanzo had accepted payments made through Aberdeen and RNT by their president, Ralph N. Trainello, in violation of the Taft-Hartley Act and had conducted the affairs of the union through a pattern of racketeering. The Government also sought to show that Sanzo had accepted a $500 bribe to let nonunion men on a job site, and had embezzled $291. The gist of the Government's case was that between 1974 and 1977 Aberdeen and RNT, both in the business of street excavation, disbursed over $400,000 to the several indicted defendants, at least $80,000 of which Sanzo received when he was an officer of Local 29. Later, according to the indictment, codefendant Ralph Trainello, an attorney and an owner of Aberdeen and RNT, demanded that unless Sanzo paid him the sum of $115,000 he would report the Aberdeen-RNT payoffs to the authorities. Sanzo acceded to the demand by making payment through a company in which he owned a hidden interest.

Aberdeen employed members of the Blasters Union for its profitable street excavation work, principally for various public utilities. From 1968 to 1971 Aberdeen was owned by Joseph Cipollone and ten others, eight of whom offered to buy out Cipollone, his brother, and Joseph Capogrosso. Sanzo suggested that the Cipollones and Capogrosso instead buy out the eight partners. He introduced them to Trainello, who handled the buy-out matter as their attorney. After the buy-out Trainello curiously was made president of Aberdeen and given ownership of 50% of its outstanding stock, though he invested no capital himself. The two Cipollone brothers and Capogrosso became the other nominal owners of Aberdeen.

The Government's evidence was that from 1974 through 1977 Sanzo and Joseph Matranga, then Local 29's president, requested various persons to cash checks totaling at least $80,000, drawn on the account of Aberdeen or its successor, RNT, and signed by Trainello. The surrogate check cashers for the most part "laundered" the checks through their own bank accounts and returned the cash proceeds to Sanzo or Matranga, but Sanzo did not report the proceeds as income. All payments were hidden by false entries made in the books of Aberdeen and RNT, which deducted the payments as expense items. In 1974 Albert Moschella, a contractor, and his wife, laundered three Aberdeen checks totaling more than $34,000 for Sanzo. Mario Montuoro, then secretary-treasurer of Local 29, laundered a $10,000 check in the same year. Joseph Bastone, a restaurant keeper and Montuoro's landlord, cashed a $1,000 Aberdeen check payable to cash in 1975 and returned the proceeds to Sanzo. In May 1976 Anna Stamulis, a former claims adjuster for Local 29, laundered a $5,000 Aberdeen check payable to cash and signed by Trainello. In May 1977 at Trainello's request Rose DiBiase, his former secretary, cashed an Aberdeen check payable to cash in the amount of $5,000 and returned the cash to Trainello, who gave it to Sanzo in exchange for a receipt. DiBiase also cashed Aberdeen checks payable to cash at Trainello's request and returned the money to him on other occasions.

In late 1977, as a result of a falling-out between Trainello and the Cipollones, Trainello formed RNT and the Cipollones formed Cipoco Construction, Inc., Jo-Lo Leasing Corp., and Berth-Ange Realty Corp. Jo-Lo entered the business of leasing construction equipment purchased in part through money provided by Sanzo. Berth-Ange purchased the building in which Cipoco was located, in part through money provided by Sanzo. RNT and Cipoco both continued in the business of street excavation. In September 1977 Sanzo gave John Pelosi, an attorney representing him in several matters, an RNT check in the amount of $4,000 payable to Ralph Trainello and endorsed by Trainello. Part of the proceeds were used to cover Sanzo's legal fees, and Pelosi returned the balance in cash to Sanzo. Joseph Cipollone testified that in October 1977 at a sandlot baseball game Sanzo asked him to cash an RNT check in the amount of $5,000 signed by Trainello. Cipollone's wife deposited the check in their personal savings account; Cipollone then gave Sanzo $5,000 in cash withdrawn from a Cipoco bank account. In December 1977 Joseph Cipollone's brother John cashed another $5,000 RNT check signed by Trainello for Sanzo, and gave Sanzo the cash. Income of $14,000 derived from the Aberdeen checks cashed by Pelosi and the Cipollone brothers was not reported on Sanzo's 1977 tax return.

The evidence said to relate to organized crime was as follows. Sometime in January or February 1978, according to Joseph Cipollone, Sanzo asked him to attend a meeting with Samuel "Big Sam" Cavalieri, whom Sanzo considered to be his "boss" and whose son was the administrator of Local 29's pension fund. Sanzo told Cipollone that the meeting was called about Aberdeen-RNT checks which Trainello claimed to have cashed for Sanzo after Sanzo had used Cavalieri's name to threaten Trainello. On the way to the meeting at Cavalieri's "social club", Sanzo asked Cipollone to tell Cavalieri that the cash generated by the Aberdeen-RNT checks had been returned to Trainello, although Sanzo had in fact kept the money for himself. At the meeting Trainello produced a number of Aberdeen checks and told Cavalieri in Sanzo's presence that the checks had been used to pay $200,000 to Sanzo. Sanzo denied this. At the end of the meeting Trainello was assured that Cavalieri's name would not be used to threaten anybody.

Shortly thereafter Sanzo asked Joseph Cipollone to place Cavalieri on the payroll of Cipoco as a night watchman. Routinely the paychecks were given to Sanzo by Frank Panico, Cipoco's controller, and cashed by Sanzo, who then returned the proceeds to Panico.

The evidence of obstruction of justice and blackmail was as follows. The falling-out between the Cipollones and Trainello resulted in the institution of a civil suit. In the course of the suit Trainello told Joseph Cipollone that he wanted to speak to Sanzo "because he wanted money." In later meetings with Sanzo, while Aberdeen and RNT were being audited, Trainello demanded that he be paid $115,000 "to pay the taxes." He warned Sanzo that he would "go to the FBI and ... would get everybody in trouble" if Sanzo failed to pay. Sanzo, a silent partner with Cipollone in Jo-Lo and Berth-Ange, requested to be bought out of those companies for $112,000 to generate money with which to pay off Trainello. Three Cipoco checks totaling $115,000 were deposited in Trainello-controlled bank accounts in order to buy Trainello's silence on Sanzo's behalf. Trainello, however, apparently used only $23,000 to pay back withholding taxes unrelated to Sanzo payments.

Subsequently an undercover agent, posing as a contractor who would be hiring members of Local 29, met with Sanzo at a diner and agreed to pay Sanzo $5,000 for permission to use fewer people on a fictitious job site than the union contract required. Payment of $500 front money was recorded on a tape played to the jury.

After severing the trial of Trainello and another codefendant, the Government compelled Trainello to testify as a Government witness with an order of immunity issued under 18 U.S.C. § 6001. Trainello testified that he paid Sanzo about $200,000 over the years by cashing Aberdeen and RNT checks. He was not questioned on direct examination about the threats allegedly made by Sanzo. On cross-examination, however, Sanzo's attorney adduced testimony from Trainello that the payments were made under duress created by threats from Sanzo. The prosecution attacked this extortion aspect of Trainello's testimony by having Trainello acknowledge on redirect that Sanzo signed a receipt for one payment, that Trainello ...


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