to receive, for his part in the MOTBY scheme." Liability Opinion, 812 F. Supp. at 1325. Carson argues that the Court should not have relied on the "Tony G" List because he was collaterally estopped, by his criminal conviction, from offering evidence to demonstrate that the List was an innocent partial memorialization of a give back presentation Gallagher made to the union. See Tr. at 5678-81. Carson contends that once his conviction was reversed, the collateral estoppel bar fell, and he should have been afforded an opportunity to demonstrate that the "Tony G" List was not what the government contended it was.
Carson raised this objection during the post-trial briefing before this Court. At that time the government took the position that the Court should not reopen the record to allow Carson to adduce evidence regarding the "Tony G" List because the evidence that Carson sought to admit was already part of the record; specifically the government withdrew its objection to Exhibit NOP-2, Carson and Gallagher's motion for a new trial in their criminal case, which outlined Carson and Gallagher's theory of the origin of the "Tony G" List and which contained certain deposition and affidavit testimony supporting this new theory.
Upon reconsideration, this Court concludes that it did not give due weight to Carson's objection to the "Tony G" List in this Court's Liability Opinion. There is no doubt that Carson was precluded from contesting the government's interpretation of the "Tony G" List during the trial in this civil case. We believe that the List should have been stricken from the record on that basis after the res judicata bar fell, given the government's opposition to the defendants' motion to reopen the record in the case. We disagree with the government that the admission of Exhibit NOP-2 will alleviate all prejudice to Carson. For, at trial, Carson was precluded from offering evidence which he proffered in addition to Exhibit NOP-2; specifically, he was precluded from calling Gallagher, who was incarcerated at the time, as a witness. Carson also suggests that he might have called eight other witnesses to bolster his explanation of the origin of the List had there been no res judicata bar. See Carson's Mem. at 8. For these reasons, this Court believes that it the "Tony G" List should be stricken from the record.
However, we note that this Court did not rely on the "Tony G" List to support its finding that Carson received 55 per container in return for the role he played in the MOTBY operation; Gallagher's criminal testimony was credited as direct evidence that Carson received a share of the MOTBY kickbacks. See Liability Opinion, 812 F. Supp. at 1324 ("admission of the 'Tony G' List is largely gilding the lily"). Therefore, the striking from the record of the "Tony G" List does not affect this Court's conclusion regarding Carson's liability for multiple Taft-Hartley violations.
4. Carson's Embezzlement of Salary & Expenses
Carson argues that the evidence does not support the Court's finding that Carson embezzled a full-time salary from Local 1588 from 1982 to 1988. After reviewing Carson's objections, we adhere to the findings of fact and conclusions of law set forth in our Liability Opinion with regard to Carson's embezzlement of a full-time salary. Liability Opinion, 812 F. Supp. at 1330-31.
Carson also contends that the Court erred in finding that Carson embezzled his "expenses" from the union. In the Liability Opinion, we noted that the ILA International's constitution provides that "all payments and expenditures of each Local Union shall be made by check upon authorization by resolution of the Local Executive Board." We found that Carson had received over $ 75,000 as "reimbursed expenses" from the Local's treasury which were not authorized by the Local Executive Board. We also found that Carson had the intent to embezzle these expense reimbursements. Applying Second Circuit law, see United States v. Butler, 954 F.2d 114, 118 (2d Cir. 1992), we concluded that Carson had embezzled these expense reimbursements in violation of 29 U.S.C. § 501(c). See Liability Opinion, 812 F. Supp. at 1330-31.
As we noted in our Liability Opinion, the Second Circuit has held that "authorization from and benefit to the union are the controlling lodestars to determine whether a defendant acted with the fraudulent intent to deprive the union of money." Butler, 954 F.2d at 118. Of course, the government bears the burden of demonstrating fraudulent intent with regard to each individual alleged embezzlement. While we adhere to our finding of fact that the Local's Executive Board did not authorize the reimbursement of Carson's expenses, upon reconsideration, we withdraw our finding that the evidence in the record supports the inference that Carson had the intent to embezzle each individual expense reimbursement.
However, the withdrawal by this Court of this finding does not effect our ultimate conclusion that Carson violated the civil RICO statute by the commission of two predicate acts.
5. The Forfeiture of Carson's Pension Benefit
Carson also objects to the Court's finding that he injured Local 1588's pension fund and therefore is estopped from claiming benefits from the union's "Top-Hat" pension plan.
See Liability Opinion, 812 F. Supp. at 1333-34. Carson has renewed his argument that the use of a mixed-labor force at MOTBY was "open and notorious," and that it did not harm the treasury of Local 1588, but instead actually benefited the union's treasury. He also renews his argument that Judge Stern's injunction required that a mixed-labor force be used at MOTBY. These familiar arguments did not prevail during post-trial briefings. Nothing in Carson's brief convinces the Court that it would be appropriate under Rule 52(b) to reverse any of the Court's findings. Accordingly, Carson's motion to amend the Court's findings of fact and conclusions of law with respect to the forfeiture of his pension is denied.
6. Gallagher's Objections
Defendant Gallagher's Rule 52(b) motion contains several objections to the Court's Liability Opinion. We will consider each in turn.
First, Gallagher objects to the Court's finding that Gallagher's Company, B & A Reefer, performed no work for United Terminals, Inc. ("UTI") and submitted bills to UTI for fictitious services. See Liability Opinion, 812 F. Supp. at 1321. Specifically, Gallagher challenges the Court's finding that it was "highly suspect" that UTI's normal 30- to 60-day billing cycle was ignored for bills from B & A Reefer. Id. Gallagher contends that it was common practice for B & A Reefer customers to pay his bills immediately. Even accepting Gallagher's belated assertion as true, Gallagher ignores the fact that the other four independent evidentiary bases cited by the Court, see id., provide ample support for the finding that Gallagher used UTI to siphon off a portion of the MOTBY profits. Accordingly, we reject Gallagher's claim that the record does not support this finding. To the extent that Gallagher requests that the Court add a finding of fact that all of the companies owned by Gallagher were paid immediately by their various customers, that request is denied.
Second, Gallagher objects to the fourth piece of evidence cited by the Court to support its finding that Gallagher used B & A Reefer to siphon off a portion of the MOTBY profits. The Court noted in its liability Opinion:
Finally, and perhaps most damning, the false invoices submitted to UTI by B & A Reefer were accounted for on UTI's profit and loss statement for MOTBY as "extra equipment" or "rent" and not as container moves. Tr. 3792-96 (Blickstein). This was so even though no "extra equipment" was ever provided to UTI by B & A reefer or by Gallagher. Indeed, Joseph Mickey testified that Gallagher provided UTI with the figures to include as "extra equipment" in its profit and loss statement on a weekly basis. Tr. 3949-53 (Mickey).
Liability Opinion, 812 F. Supp. at 1321.
Specifically, Gallagher objects to inclusion of the word "or rent" in this finding of fact on the ground that these words do not "exist in any testimony." Gallagher's Brief in Support of Rule 52(b) Motion. The government does not oppose Gallagher's application that these words should be deleted. Govt.'s Mem. at 5-6. After reviewing the relevant testimony, this Court agrees, and hereby orders that the words "and rent" be stricken from the Opinion. However, the striking of these words from the finding does not cast doubt on the Court's finding that the false invoices submitted to UTI by B & A Reefer were accounted for on UTI's profit and loss statement as "extra equipment" rather than as container moves. Nor does the striking of these words cast any doubt on Court's conclusion that Gallagher's Company, B & A Reefer, performed no work for UTI and submitted bills to UTI for fictitious services.
While conceding that "and rent" should be stricken from the above cited passage, the government also contends that the evidence in the record shows that Gallagher siphoned off the profits that UTI made through the MOTBY scheme in two ways. First, as noted in the Liability Opinion, Gallagher's company B & A Reefer submitted phony invoices to UTI. Second, the government claims, Gallagher's other company Consolidated Pier Deliveries ("CPD") obtained inflated "rent" payments from UTI. The government asks the Court to "expressly note that Gallagher manipulated the "rent" that UTI paid to CPD to siphon off additional profits from UTI." Govt.'s Mem. at 6. We note that the Government did not propose these specific findings of fact in their Proposed Findings of Fact and Conclusions of Law. Just as we have refused to allow the defendants to present new theories of their case at this late stage via a Rule 52(b) motion, so shall we refuse to let the government advance new theories of Gallagher's alleged wrongdoing at MOTBY. Accordingly, we decline to make further findings of fact with regard to Gallagher's alleged manipulations of "rent" to siphon off additional MOTBY profits. We do this in full recognition of the fact that the evidence upon which the government relies to support these proposed conclusions is already part of the record before this Court.
Of course, striking the reference in the Liability Opinion to "rent" does not affect the Court's conclusion that Gallagher aided and abetted multiple violations of the Taft-Hartley Act.
Third, Gallagher proposes that footnote 31 of the Liability Opinion be amended to note that the check cashing companies used by B & A Reefer to cash the checks received from UTI were owned by Gallagher. The Court is hard pressed to understand why Gallagher would want the Court to amend the Liability Opinion in a fashion that would tend to incriminate him further in the MOTBY scheme. In any event, Gallagher's proposal is denied, for Gallagher's assertion is not supported by any evidence in the record. Moreover, a Rule 52(b) motion should not be granted where the proposed additional findings of fact are not material to the district court's conclusions. Lyons, 793 F. Supp. at 991. Gallagher's proposed finding falls into this category, and should be denied on that basis.
Fourth, Gallagher alleges that the Court ignored Gallagher Exhibits NOP-2, Carson and Gallagher's motion for a new trial in their New Jersey criminal case. Gallagher continues to contend that this exhibit supports his theory that the "Tony G" list was not a record of $ 5 per container payoffs to Donald Carson, but rather was a note concerning a proposal made by Gallagher for union give backs. As noted above, the "Tony G" List has been stricken from the record; accordingly, Gallagher's objection is moot.
Fifth, Gallagher contends that a portion of footnote 32, in which the Court found that Gallagher borrowed money from Irving Held, should be amended to read that Gallagher borrowed money from Milton Held, Irving Held's brother. See Liability Opinion, 812 F. Supp. at 1322 n.32. At his deposition, Gallagher testified that he had borrowed money from Irving Held, Gallagher Dep. at 30, and from Milton Held. Id. at 134-35. Since Gallagher's own testimony supports this Court's finding that Gallagher borrowed money from Irving Held, we reject his objection. Indeed, if any amendment of footnote 32 were required, it would be to indicate that Gallagher borrowed money from both Irving and Milton Held.
Gallagher's other objections to the Liability Opinion have been reviewed by the Court and are rejected as being without merit.
For the reasons set forth above, this Court's January 14, 1993 Opinion is modified in the following respects:
(1) The "Tony G" List is stricken from the record. The Court's discussion of the admissibility of the "Tony G" List is withdrawn. See Liability Opinion, 812 F. Supp. at 1324-25. In addition, the Court's crediting the "Tony G" List as further evidence that Carson received $ 5 per container move as his share of the MOTBY kickbacks is withdrawn. The court's conclusion that Carson received $ 5 per container move is not affected by this holding.
(2) The Court's finding that Carson embezzled his expenses from Local 1588 is withdrawn. See id. at 1329-31.
(3) The Court's finding that the false invoices submitted to UTI by B & A Reefer were accounted for on UTI's profit and loss statement for MOTBY as "extra equipment" or "rent" is hereby amended to delete any reference to "rent." See id. at 1321.
The Court has considered the defendants' other objections and finds them to be without merit.
Nothing in the Opinion issued by the Court today undermines the ultimate conclusion reached by the Court in the Liability Opinion that defendants Carson, Gallagher, Lachnicht, and Mangano violated the civil RICO statute by the commission of two predicate acts.
Dated: August 19, 1993
New York, New York
Leonard B. Sand