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U.S. v. WALLERT

March 28, 1990

UNITED STATES OF AMERICA, PLAINTIFF,
v.
CHARLES WALLERT, JR., DEFENDANT.



The opinion of the court was delivered by: Nickerson, District Judge.

MEMORANDUM AND ORDER

In January, 1990, defendant was charged by superceding indictment with sixteen counts of RICO, embezzlement, receipt of unlawful payments, filing a false loan application, mail fraud, tax evasion, and wilful failure to file his tax return. The government moves to disqualify his trial counsel Patrick M. Wall.

I

As charged in the indictment, defendant was a vice president of Local 452 of the Candy and Confectionery Workers of the Bakery, Confectionery and Tobacco Workers International Union (the Local), and served as the administrator for its Pension and Welfare Funds from January 1982 to October 1986. He was an officer of a partnership Benefit Management Associates formed by himself and Frank Salmaggi, another administrator of the Pension Fund. The partnership was organized to service the Local's funds. Defendant was also the controlling figure of Rendezvous Records, which produced and marketed recordings of vocal artists.

Between 1982 and 1987, defendant allegedly conspired with three others to commit a pattern of racketeering activity in violation of 18 U.S.C. § 1962. The three alleged co-conspirators were (1) Frank Salmaggi, (2) Anna Rizzo, the now-deceased president of the Local, the funds' chairperson of the board of trustees, and grandmother of the defendant, and (3) Charles Wallert, Sr., the now-deceased president of the Local, administrator of the Pension Fund, chairperson of the Funds, and father of the defendant.

The alleged purpose of the racketeering enterprise was to enrich defendant and his co-conspirators by embezzling monies and assets of the funds and by receiving kickbacks from those seeking to do business with the funds. Defendant is charged with receiving kickbacks between 1982 and 1984 from several insurance agents who sought business from the funds and from Joseph Kaufman who wished to influence selection of an administrator. The other charged racketeering acts allegedly occurred in 1985 and 1986.

It is pertinent to this motion that defendant is charged with obtaining in 1985 through fraud involving the use of the United States mails a $275,000 mortgage loan from the Freedom National Bank (the Bank). With the proceeds of the loan, defendant purchased a $350,000 house in Long Island. He is also charged with two separate counts that involve this same loan transaction, the making a false loan application and mail fraud.

Wall admits to receiving $10,000 of the proceeds from the loan for brokering the sale of the Long Island house. However, he claims not to know any "details" of the loan application, stating that he only arranged for the defendant to see the house. The government suggests that Wall may have done more, such as advising defendant on how to prepare the application. As evidence of Wall's involvement, the government cites the application itself listing Wall as "Attorney for Purchaser or Mortgagor," the Closing Statement noting payment to Wall of $10,000 as a broker's fee, and the Bank's Loan Settlement Statement, signed by the defendant, listing the $10,000 paid as an attorney's fee.

Wall has represented or is currently representing several parties that have more than a passing interest in this prosecution. He previously represented Salmaggi on two matters, the first in connection with the purchase of an auto-service franchise and the second involving an investigation by the Kings County District Attorney's office. The government asserts that Salmaggi will be a critical witness at trial. Wall is currently defending Benefit Management Services, Rendezvous Records, and the defendant in a related civil RICO proceeding, Radutzky v. Wallert, No. 87-4340 (EHN), 1988 WL 142666. Other facts are stated in the government's affirmations.

II

Retaining counsel of choice is "a right of constitutional dimension." See U.S. v. Arrington, 867 F.2d 122 (2d Cir. 1989), citing United States v. Wisniewski, 478 F.2d 274, 285 (2d Cir. 1973). However, the right is not absolute. As the Supreme Court has recently stated, "the essential aim of the [Sixth] Amendment is to guarantee an effective advocate for each criminal defendant rather than to ensure that a defendant will inexorably be represented by the lawyer whom he prefers." See Wheat v. U.S., 486 U.S. 153, 108 S.Ct. 1692, 1697, 100 L.Ed.2d 140 (1988). While there is a "presumption in favor of counsel of choice," the courts have "an independent interest in ensuring that criminal trials are conducted within the ethical standards of the profession and that legal proceedings appear fair to all who observe them." Id. Thus, the court must "balance the defendant's constitutional right against the need to preserve the highest ethical standards of professional responsibility." See United States v. Cunningham, 672 F.2d 1064, 1070 (2d Cir. 1982).

Defendant desires to retain Wall as counsel and is willing to waive any right to claim Wall has a conflict of interest. Wall has served as defendant's attorney since 1983, has defended him in, among other matters, a successful appeal of a criminal conviction, the subsequent retrial, and a civil lawsuit related to the criminal matter, and is familiar with the facts of the present case.

The government presents several grounds for disqualifying Wall as counsel for defendant. It says Wall is a witness either sworn or unsworn to defendant's alleged fraud on the Bank. He also formerly represented the co-conspirator Salmaggi, an important government witness, who will have a materially adverse interest from the defendant in this case. Wall is currently representing the partnership of defendant and Salmaggi as well as Rendezvous Records in a related civil RICO case which may materially limit Wall's ability to fully represent the defendant, especially if Salmaggi does not agree to waive the ...


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