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UNITED STATES v. BIAGGI

June 17, 1993

UNITED STATES OF AMERICA,
v.
MARIO BIAGGI, STANLEY SIMON, PETER NEGLIA, JOHN MARIOTTA, BERNARD EHRLICH, RICHARD BIAGGI, AND RONALD BETSO, Defendants.



The opinion of the court was delivered by: CONSTANCE BAKER MOTLEY

 Mario Biaggi has moved, pursuant to Fed. R. Crim. P. 33, for a new trial on the basis of newly discovered evidence, namely, the discovery that one of the Government's witnesses, Anthony Guariglia, committed perjury at Biaggi's trial. *fn1" The perjury relates to Guariglia's declaration that he had stopped gambling but in reality had not and to Guariglia's skimming of cash from a company called A & H Toys. *fn2" Co-defendants Richard Biaggi, Mario Biaggi's son, and Stanley Simon have also moved under Rule 33 for a new trial. Mario Biaggi has also requested an evidentiary hearing into the extent of Guariglia's perjury at trial. The Government has answered all motions. Mario Biaggi has submitted a Reply, but the other defendants have not submitted a reply to the merits of the Government's Answers.

 I. Mario Biaggi *fn3"

 Mario Biaggi was convicted after a five month jury trial of participating and conspiring to participate in the affairs of Wedtech through a pattern of racketeering in violation of 18 U.S.C. § 1962(c) and (d) (Counts One and Two); extortion, bribery, and receipt of an unlawful gratuity in violation of 18 U.S.C. § 1951, 201(c) and (g) in connection with his demand and receipt of five percent of Wedtech's stock (Counts Three, Four, and Five); mail fraud in violation of 18 U.S.C. § 1341 in connection with his participation in a scheme to defraud the Department of Defense by concealing John Mariotta's ownership of less than 50% of Wedtech (Count Six); extortion, bribery, and mail fraud in violation of 18 U.S.C. §§ 1951, 201(c), and 1341 in connection with his demand for $ 50,000 in exchange for influencing public officials to grant Wedtech the One Loop Drive lease (Counts Ten, Eleven, and Twelve); false statements in violation of 18 U.S.C. § 1001, the Ethics in Government Act-Financial Disclosure Statements in concealing his ownership of Wedtech stock (Counts Seven, Eight, and Nine); filing false income tax returns in violation of 26 U.S.C. § 7206(i) for failing to report income derived from acquisition of Wedtech stock (Counts Fourteen and Fifteen); and perjury in violation of 18 U.S.C. § 1623 in connection with falsely testifying before a grand jury (Count Eighteen).

 While the Court of Appeals affirmed each conviction, in June, 1991, this court reduced Biaggi's *fn4" sentence to time served on the basis of his medical condition.

 The instant motion relies on Biaggi's argument that "Guariglia committed perjury at the Biaggi trial when he testified about his post cooperation activities and involvement with A & H Toys and Hobbies Inc." (Mario Biaggi's Motion for a New Trial, 2).

 The core of petitioner Biaggi's rather convoluted motion is the claim that Guariglia's perjury in reference to his post-cooperation gambling and his alleged perjury in reference to his skimming of cash from A & H Toys somehow necessitates a new trial. "The newly discovered evidence consisting of skimming cash from A & H is the basis for this new trial motion. . . . By denying post cooperation criminal activity he was committing the crime of perjury to conceal his crime of tax evasion." (Biaggi's Motion for a New Trial at 3, 5). Biaggi argues that the Government should have known of Guariglia's perjury and therefore that a new trial should be granted. Richard Biaggi and Stanley Simon piggyback on Biaggi's work and in all relevant aspects make essentially the same claims. As is clear, however, under the governing legal standards neither Biaggi nor his co-defendants are entitled to a new trial based on this claim since it merely goes to the credibility of a witness.

 The conduct for which Mario Biaggi was convicted related to his efforts on behalf of Wedtech Corporation to secure Government military contracts. In essence, he was convicted of extorting stock in Wedtech for these efforts, for fraudulently concealing this stock and his income from these efforts and for other violations in connection with his position as an elected official. Apart from over $ 900,000 charged by his law firm as "fees" for services, Mario Biaggi extorted two bribes from Wedtech: a grant of 5% of its stock in 1982 for obtaining on its behalf a $ 27 million Army contract, and a $ 50,000 payment for exerting influence over public officials and co-defendant Stanley Simon, then-Bronx Borough President, in order to obtain official approval for a lease of One Loop Drive, a property in the Bronx required by Wedtech in order to satisfy Government contracting requirements. *fn5"

 Biaggi introduced himself to Wedtech's two equal shareholders, John Mariotta and Fred Neuberger, after learning of its existence in 1978. At this time Wedtech was known as Welbilt. Biaggi told them that he could be useful to them in securing military contracts, and he and his law firm, Biaggi, Ehrlich & Lang (later just Biaggi & Ehrlich) were retained at a $ 20,000 annual fee. Mario Biaggi immediately exerted influence on certain officials, lobbying government agencies for contracts on Welbilt's behalf. In 1980, Biaggi demanded that his retainer be upped to $ 40,000 per annum, and then a year later to $ 55,000. Both demands were met.

 In the late 1970s and early 1980s Biaggi began to intervene with various government officials, federal and state, on behalf of Welbilt, seeking a tremendously large contract for aircraft engines which for the first time had been place in the Section 8(a) program. *fn6" Welbilt eventually received a $ 900,000 commitment of Federal funds for use in locating and acquiring a building for the engine contracts. However, Welbilt paid the price.

 While seeking the contract for Welbilt, Biaggi and Ehrlich learned that Mario Moreno *fn7" was to receive 9% of the company stock. They, too, desired stock and, as a quid pro quo for their work, the law firm of Biaggi and Ehrlich was granted 5% of the company's stock in 1982. Biaggi also demanded a 5% share of all Government contracts but settled for the grant of shares. Welbilt granted the stock because they feared that without Biaggi's influence with then newly-elected Senator Alfonse D'Amato, they would not be able to obtain the contracts they sought. Welbilt also feared that Biaggi had the power to destroy the company were they to refuse to accede to his demands.

 In 1983 Welbilt decided to go public. It retained the services of Main Hurdman, an accounting firm, to conduct the necessary audit. One of the Main Hurdman accountants was Anthony Guariglia whose testimony at Mario Biaggi's trial and whose subsequent trial for perjury form the basis of this motion. Even though Guariglia learned of various fraudulent practices, he nonetheless joined the company in May of 1983. The company name was changed to Wedtech when it went public.

 At this time Mario Biaggi and Ehrlich began to demand their shares. The shares were granted but were put in the names of Richard Biaggi, Mario's son and an associate in his law firm. Mario Biaggi filed false tax returns by declaring the income on the returns of Richard Biaggi, in 1983, when the stock was awarded, and again in 1985, when part of it was sold.

 An investigation into Wedtech's affairs began in the summer of 1986. During this investigation Mario Biaggi testified falsely before a grand jury that, aside from writing a few letters in 1978 and 1979, he made no official contacts on Wedtech's behalf.

 II. Richard Biaggi

 When Mario Biaggi extorted the grant of 5% of Wedtech's stock, half of the stock was given to his law partner, Ehrlich, and the other half was put in the name of Richard, his son, who was at that time a recently hired associate at Biaggi's law firm. The first drafts of the stock agreement called for the 225,000 shares to be granted to the firm of Biaggi & Ehrlich (GX 15).

 Thus, since the stock was really Mario Biaggi's, Richard filed false tax returns for 1983 when the stock was awarded and in 1985 when part of it was sold by declaring the income on his return and not his father's. (GX 40C, 40E, 46A, 46C).

 III. Stanley Simon

 Several years after Mario Biaggi introduced himself to the Welbilt principals, his law partner, Ehrlich, introduced Moreno to Stanley Simon, the Bronx Borough President, as an important figure to cultivate. Some time later Ehrlich told Moreno that Simon wanted his brother-in-law, Henry Bittman, to work at Welbilt four days a week, a demand repeated by Simon in person when he met Moreno at a political banquet. Moreno agreed, and Mariotta approved when Moreno explained that Simon had to be placated in order for Welbilt to obtain a building in the Bronx. (Tr. 560-76). Bittman was hired as a clerk on April 13, 1981, and although he was a poor performer, he not only was retained but was even given raises making him the highest paid clerk at the company because of his connections to Simon. (Tr. 615-19, 4021, 4027-44, 4207-11, 10,728-29, 11,584-86: GX 501B).

 After the Wedtech public stock offer, Simon demanded a salary increase for Bittman in excess of that earned by other clerks, a demand acceded to because of Moreno's desire to acquire more buildings in the Bronx to perform the pontoon contract. (Tr. 1038-41, 1048, 8967).

 When Wedtech received the 1984 Navy contract to build pontoons, Wedtech sought to lease One Loop Drive, a city-owned property located in the Hunts Point section of the Bronx. The final approval for this lease had to come from the New York Board of Estimate, since abolished. Simon, as a Borough President, was a member. He met with Ehrlich and Moreno before the June 27, 1984 meeting of the Board. However, the item did not make the calendar. Later, Ehrlich told Moreno that Biaggi had punished Simon for not having the lease on the calendar by warning him that his next election relied on Biaggi's support and aid. (Tr. 1119). The One Loop Drive Lease was then placed on the July Calendar of the Board. Simon supported it and it was approved. (Tr. 1115-20, 5111-20, 5130-36, 6932-34).

 After this approval Ehrlich notified Moreno that Wedtech would have to pay an additional $ 50,000 fee over its retainer because of work spent to convince the Borough Presidents, including Donald Manes of Queens. (Tr. 1123). Biaggi stated that the fee was minor in proportion to the work done to secure the approval. (Tr. 1121-24, 11,569-79).

 At a 1984 function at Yonkers Raceway, Simon told Neuberger personally that due to an upcoming campaign, Simon expected a contribution of $ 75,000 to $ 100,000. When Neuberger expressed reluctance due to the illegality of such a contribution, Simon told him the money could come in the form of donations to charities and other expenses. Neuberger agreed to pay $ ...


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