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UNITED STATES v. RIVIECCIO

March 16, 1994

UNITED STATES OF AMERICA and NATIONAL CREDIT UNION ADMINISTRATION BOARD, Plaintiffs,
v.
BARTHOLOMEW RIVIECCIO, BART DEVELOPMENT & CONSTRUCTION CORP., ANGELO D'ACUNTO, KING BROKERAGE CO., DEMETRIOS KARELAS, JOHN VILLANELLA, ISAAC ERLICH, EDMUND LEE, IAN GROSSFIELD, MILTON MORGANSTERN, FRIENDS REALTY CORP., AMBER REALTY CORP., 914 EIGHTH AVENUE REALTY CORP., 914 EIGHTH AVENUE REALTY ASSOCIATES, BID REALTY CORP., KLEM REALTY ASSOCIATES, INC., CORAL REALTY CORP., 1113 8TH AVENUE REALTY CORP., 305 EIGHTH AVE. REALTY CORP., 83 SEVENTH AVE. REALTY CORP., 512 HENRY STREET ASSOCIATES, INC., ROSEBUD REALTY CORP., 434 12TH STREET CORP., 440 12TH STREET REALTY CORP., 444 12TH STREET REALTY CORP., ALPHA BERKELEY CORP., BETA BERKELEY CORP., 437 16TH STREET REALTY CORP., and CINEMA REALTY CORP., Defendants.



The opinion of the court was delivered by: I. LEO GLASSER

 GLASSER, United States District Judge:

 This is a motion for partial summary judgment by plaintiffs the United States of America (the "Government") and the National Credit Union Administration Board ("NCUAB"), pursuant to Rule 56 of the Federal Rules of Civil Procedure, against defendants Bartholomew Rivieccio ("Rivieccio") and Bart Development & Construction Corp. ("Bart D&C"). *fn1" The individual defendant is appearing pro se and neither he nor Bart D&C has submitted a memorandum of law or a Local Rule 3(g) Statement in opposition to plaintiff's motion. *fn2"

 FACTS

 The underlying facts pertinent to this action were reported in United States v. Rivieccio, 661 F. Supp. 281 (E.D.N.Y. 1987), familiarity with which is assumed. Briefly, this action stems from a conspiracy to defraud the HYFIN Credit Union ("HYFIN"). The Second Supplemental and Amended Complaint (the "Complaint") alleges that beginning on or before September, 1981 and continuing up to April 9, 1986, funds were directly and indirectly and in an illegal manner transferred from HYFIN to Rivieccio, Bart D&C, and others, and used to purchase and develop numerous real properties. Complaint, P 41.

 The undisputed facts reveal that in or around 1980-81, Rivieccio and others formed the Omega Realty Corp., a real estate sales and brokerage business (the "Omega Realty Group"). Pls.' 3(g) Statement, P 44. In or about December 1981, Rivieccio and certain officers of HYFIN met at the offices of Omega Realty Corp. to discuss the use of HYFIN funds to acquire and develop real property. Id., P 52. Rivieccio and the others agreed that HYFIN money would be used to finance the purchase and construction of the properties, and that Rivieccio and certain others would select the properties to be purchased and develop them after acquisition. Id. Pursuant to this agreement, Bart D&C was to do the construction work on the properties to be purchased with HYFIN funds; the construction would be financed through the use of HYFIN funds; and the individual defendants would receive distributions from the sale of the properties upon the completion of the renovations. Id., P 53.

 Under the laws of New York State, however, HYFIN was empowered to lend its members' monies to individual members only. Id., P 1. HYFIN was neither empowered to lend its members' monies to corporate entities nor was it authorized to extend credit in amounts exceeding the sum of $ 40,000. Id. In order to circumvent these legal requirements, Rivieccio and co-defendant Lee, Treasurer of HYFIN, agreed that the diversion of HYFIN funds would be accomplished by Lee creating loans in the names of fictitious individuals. Id., P 49. Other methods of circumventing these requirements included, but were not limited to, having checks made payable to certain corporate entities, the "Realty Corporations," but routed through the law firm escrow account of Morganstern, Vice President of HYFIN. Id., P 63.

 Between 1981 and 1986, approximately $ 9 million of HYFIN funds were disbursed from HYFIN to several Realty Corporations and/or Morganstern's law firm. Id., P 82. This figure, as with all of plaintiffs' assertions, is not disputed. These funds were diverted by Rivieccio and others pursuant to the agreement among the individual defendants described above and in Paragraph 52 of the Government's 3(g) Statement. As of April 9, 1986, there was owing to the National Credit Union Share Insurance Fund in excess of $ 12 million which includes the $ 9 million discussed supra and lost interest in the amount of approximately $ 3 million had the HYFIN funds been distributed in a legal manner. Id., P 84

 There have been numerous indictments and guilty pleas stemming from these activities. In addition, on October 26, 1989, the Clerk of this Court entered a judgment in the criminal action United States v. Bartholomew Rivieccio, No. 88-CR-2835, which resulted from a jury verdict, convicting Rivieccio of, among other things, conspiracy to commit mail fraud in violation of 18 U.S.C. § 371 and of committing mail fraud in violation of 18 U.S.C. § 1341. Pls.' 3(g) Statement, P 24, Ex. I. *fn3" Plaintiffs now move for summary judgment against defendants Rivieccio and Bart D&C.

 DISCUSSION

 I. Summary Judgment Standard

 Summary judgment "shall be rendered forthwith if . . . there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In opposing a properly supported summary judgment motion, "an adverse party may not rest upon the mere allegations or denials of [its] pleading, but [its] response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). "The moving party is 'entitled to a judgment as a matter of law' [if] the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). "In assessing the record to determine whether there is a genuine issue of fact, the court is required to draw all factual inferences in favor of the party against whom summary judgment is sought." Ramseur v. Chase Manhattan Bank, 865 F.2d 460, 465 (2d Cir. 1989).

 In deciding a summary judgment motion the court need not resolve disputed issues of fact, but need only determine whether there is any genuine issue to be tried. Eastman Mach. Co. v. United States, 841 F.2d 469, 473 (2d Cir. 1988). A genuine factual issue exists if there is sufficient evidence favoring the nonmovant such that a jury could return a verdict in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). The nonmoving party, therefore, must come forward with facts, and not doubts, as to the veracity of the moving party's allegations: "Rule 56(e) . . . requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the 'depositions, answers to interrogatories, and admissions on file,' designate 'specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324. One of the purpose's of summary judgment, therefore, "is to isolate and dispose of factually unsupported claims or defenses." Id. at 323-24.

 In this regard, Rule 3(g) of the Local Civil Rules for the Eastern District of New York provides in relevant part that "the papers opposing a motion for summary judgment shall include a separate, short and concise statement of the material facts as to which it is contended that there exists a genuine issue to be tried." The rule also provides that,

 
All material facts set forth in the statement required to be served by the moving party will be deemed to be admitted unless controverted by the statement ...

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