The opinion of the court was delivered by: MACMAHON
Petitioner Raymond J. Donovan, United States Secretary of Labor, seeks removal to this court of a state criminal prosecution pending against him and eleven codefendants
under Indictment No. 3571/84, filed on September 24, 1984 in the Supreme Court of the State of New York, Bronx County. Seventy-two counts of the 137-count indictment charge petitioner with the commission of state felonies while serving as Secretary of Labor. On October 1, 1984, petitioner, due to his indictment, took a leave of absence without pay from his cabinet office.
Since it did not appear on the face of the petition that it should be dismissed summarily as insufficient, we held an evidentiary hearing on December 12, 13, 17 and 18, 1984, pursuant to the mandate of 28 U.S.C. § 1446(c)(5).
Invoking the protection of 28 U.S.C. § 1442(a)(1), petitioner asserts that he is entitled to removal on three grounds.
First, the indictment, on its face, charges petitioner with acts which he took or refrained from taking, under color of his federal office. Second, one of his primary defenses arises out of his duties under federal conflict of interest laws. Third, respondent Mario Merola, District Attorney, Bronx County, is wrongfully attempting to interfere with the operations of the federal government.
Respondent opposes the petition, contests petitioner's allegations of fact, and denies any wrongful interference with the federal government. He contends that the indictment, as clarified by a supplemental bill of particulars and the evidence upon the hearing, charges petitioner solely with private acts which have no connection with his federal office, and that the federal conflict of interest laws provide petitioner with no colorable defense. Intervenors, petitioner's codefendants,
oppose removal of the prosecution against them, as urged by respondent, if we grant removal of the case against petitioner.
Having observed the witnesses, considered the documents, and heard the arguments of the parties, we now make the following findings of fact and conclusions of law.
Petitioner was employed by Schiavone Construction Company ("SCC") from 1959 until February 1981, and during his later years with SCC served as executive vice president and owned 40% of the company. SCC is a heavy construction company engaged in large projects, such as building bridges, roads, subways, and sewage and water treatment plants. In late 1978, SCC, as part of a joint venture, obtained a contract on a project to construct a portion of a subway line running from Third Avenue and 63rd Street in Manhattan to the East River, known as "the 5-B job." The contract was 80% funded by the Urban Mass Transit Authority ("UMTA") at a fixed price of $186 million.
In 1981, petitioner was nominated for the office of Secretary of Labor. The Senate confirmed petitioner's nomination after holding hearings, and, on February 4, 1981, he was sworn in as Secretary of Labor. As required by applicable federal laws and regulations concerning conflicts of interest, petitioner resigned from all his positions with SCC, its subsidiaries and affiliates, their pension and profit sharing trusts, and the joint venture. Petitioner, however, has retained his stock interest in SCC and its affiliated companies but has placed it in trust. He served as Secretary of Labor from February 4, 1981 until October 1, 1984.
On December 29, 1981, the United States Department of Justice applied to the United States Court of Appeals for the District of Columbia Circuit for the appointment of a Special Prosecutor, pursuant to 28 U.S.C. § 591, to investigate whether petitioner had violated any federal criminal laws. The court designated Leon Silverman, Esq., an experienced and able member of the bar of this court, to investigate allegations of criminal conduct concerning petitioner, SCC, the 5-B job, and Jopel Contracting and Trucking Corporation ("Jopel"). Early in 1982, Mr. Silverman began presenting evidence to a federal grand jury in the Eastern District of New York, and after six months concluded that there was insufficient credible evidence to take any action against petitioner.
On September 24, 1984, the Bronx County grand jury, on the basis of evidence similar to that considered by Mr. Silverman, returned the subject indictment against petitioner and his codefendants. The indictment, on its face, charges petitioner and his codefendants with grand larceny (N.Y. Penal Law § 155.35 (one count)), falsifying business records (N.Y. Penal Law § 175.10 (125 counts)), and offering a false instrument for filing (N.Y. Penal Law § 175.35 (11 counts)), all during the period October 1, 1979 through September 24, 1984.
The indictment, as clarified by the bill of particulars and the evidence upon the hearing, stems from the SCC-New York Transit Authority ("TA") contract for the 5-B job and a related subcontract between SCC and Jopel to haul away excavated materials. The TA contract required that 10% of the $186 million bid price be paid to minority business enterprise ("MBE")
subcontractors. Allegedly, before petitioner became Secretary of Labor but continuing thereafter, he and his codefendants, acting in concert, defrauded the TA by falsely representing that Jopel, a sham MBE and the creation of SCC, was a genuine and independent MBE. It is charged that money which appeared to be paid to Jopel and which was allocated falsely to the MBE 10% requirement was actually kept by or passed to SCC. Specifically, it is alleged that an SCC check, payable to Jopel for $200,000 and co-signed by petitioner, evidences an interest-free loan to start Jopel's operations; that SCC financed Jopel's payroll; that Jopel had no responsibility for work in the tunnel and no contact with the workers; that defendants created false business records which purported to reflect Jopel's payment of rent to SCC for Jopel's use of SCC equipment; and that, based on these false records, documents were submitted to the TA and, in turn, to UMTA which falsely reported that Jopel was paid certain amounts of the MBE 10% requirement.
We emphasize at the outset that the sole question before us is whether petitioner has adequate grounds for removal, and we make no findings or conclusions as to any other issue, such as the validity of the indictment,
the sufficiency of the ...