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U.S. v. RUSSOTTI

December 2, 1991

UNITED STATES OF AMERICA
v.
JOHN RUSSOTTI, DEFENDANT.



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

ORDER AND OPINION

Defendant John Russotti ("Russotti") has moved this Court to dismiss a one-count Information in which the United States of America (the "Government") charges Russotti with violating 18 U.S.C. § 2314 and § 2. For the reasons stated below, Russotti's motion is denied.

Background

The facts relevant to this motion are not in dispute.*fn1 In September 1990, Russotti requested that accounts payable personnel at his former employer, The Home Insurance Company ("Home Insurance"), issue a check for $837.30 (the "$837.30 check"), payable to the order of Reynolds, Rappaport & Kaplan ("RR & K"). RR & K is a Massachusetts law firm to which Home Insurance owed no debt. As a result of Russotti's request, the $837.30 check was signed by two employees of Home Insurance who were authorized to sign such checks, and was delivered to Russotti. The signatures on the $837.30 check were genuine, and the check contained no forged signatures. Russotti caused the check to be transported from New York to RR & K in Massachusetts. RR & K received the $837.30 check and deposited it by October 15, 1990.

The $837.30 check was one of five checks, totalling $125,904.71, that Russotti admits causing Home Insurance to issue between September 1990 and November 1990 to payees who were not entitled to such payments. The other four checks were all made payable to an entity in whose name Russotti had opened a bank account in New York. The government does not allege that Russotti violated any federal law either by causing these four checks to be issued or by transporting them, entirely within New York. Russotti has since, through counsel, tendered full restitution of $125,904.71 to Home Insurance.

The Information charges Russotti with violating 18 U.S.C. § 2314, which provides in part that:

  Whoever, with unlawful or fraudulent intent,
  transports in interstate or foreign commerce any
  falsely made, forged, altered, or counterfeited
  securities or tax stamps, knowing the same to have
  been falsely made, forged, altered, or
  counterfeited . . . Shall be fined not more than
  $10,000 or imprisoned not more than ten years, or
  both.

Under 18 U.S.C. § 2311, the term "securities," as used in 18 U.S.C. § 2314, includes "any . . . check." The Government's theory of the case against Russotti is that he violated 18 U.S.C. § 2314 by causing a "falsely made" security — the $837.30 check, made payable to RR & K, which was a false payee — to be transported in interstate commerce, from New York to Massachusetts. The Government relies on the Supreme Court's December 1990 decision in Moskal v. United States, ___ U.S. ___, 111 S.Ct. 461, 112 L.Ed.2d 449 (1990), which held that a "genuine" security containing false information is a "falsely made" security for purposes of 18 U.S.C. § 2314.

Discussion

I.  Second Circuit Law Prior to December 1990

Second Circuit cases decided prior to the Supreme Court's Moskal decision indicate that a "genuine" security containing false information — as opposed to, for example, a forged document — was not considered "falsely made" for purposes of 18 U.S.C. § 2314. In United States v. Brown, 246 F.2d 541 (2d Cir. 1957), the defendant was convicted of the transportation of "falsely made securities" in foreign and interstate commerce in violation of 18 U.S.C. § 2314. The "securities" were four separate drafts, accompanied by supporting documents. The supporting documents included bills of lading and assayer's certificates that were forged, and genuine insurance certificates that included false information. The Second Circuit reversed the conviction and dismissed the indictment, in part on the grounds that "[t]he phrase `falsely made' as used in the statute relates to the execution of . . . a security rather than to whether its content be true or false." [Id. at 542. The Court went on to state that "[m]anifestly, none of the drafts, taken by themselves, were [sic] falsely made within the meaning of the statute since they were just what they did on their face appear to be, genuine drafts executed by the actual drawer, the [defendant]." Id.

An earlier decision, United States ex rel. Starr v. Mulligan, 59 F.2d 200 (2d Cir. 1932), provides further support for the proposition that the Second Circuit did not consider a "genuine" security containing false information to be a "falsely made" security. Mulligan involved a statute with language very similar to 18 U.S.C. § 2314. Former 18 U.S.C. § 73 (now 18 U.S.C. § 495) provided in part that

  Whoever shall falsely make, alter, forge, or
  counterfeit . . . any deed, power of attorney,
  order, certificate, receipt, contract, or other
  writing, for the purpose of obtaining or receiving
  . . . from the United States, or any of their
  officers or agents, any sum of money . . . shall
  be fined . . . and imprisoned.

The Court held that "[i]t has been authoritatively established" that this statutory provision "is limited to the false making, that is, the forging, of writings," and does not cover "writings genuine in execution but ...


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