The opinion of the court was delivered by: JOANNA SEYBERT
This is a criminal prosecution in which defendant Julius Isaacson, a union official, has been charged along with two other codefendants, inter alia, with embezzling money and conspiring to embezzle money from a labor union and four separate employee benefit funds. The Indictment alleges that the defendants participated in a scheme whereby the aforementioned entities would pay contractors inflated prices for renovation work performed on a union-owned building. The contractors would then pay kickbacks to the defendants in amounts approximating the excess consideration transferred. The Government now moves to disqualify defendant Isaacson's counsel because of a potential conflict of interest stemming from counsel's prior representation of at least two of the entities from which Isaacson allegedly embezzled funds. For the reasons discussed herein, the Government's motion is denied.
According to the Indictment, until recently, defendant Julius Isaacson was the president of the International Union of Allied Novelty and Production Workers (the "International"), a union that represents a variety of different factory workers, bus drivers, ambulance drivers and other service employees. During the period covered by the Indictment, Isaacson also served as president of Local 118, an affiliate of the International, and as president of Joint Board 18, an association consisting of Local 118 and Local 231 that was established for the purpose of assisting these local unions in administering their affairs. See Haydon Aff. Ex. A, at 1 (E.D.N.Y. Apr. 11, 1994).
Relevant to the Indictment, Local 118 and Local 231 both maintain welfare funds (the "Local 118 Welfare Fund" and the "Local 231 Welfare Fund") that are covered by the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). These funds provide medical benefits for their members. In addition, Local 118 maintains a pension fund (the "Local 118 Pension Fund") that is regulated by ERISA. Further, Local 231 maintains a General Fund (the "Local 231 General Fund") that is not covered by ERISA, and which is used to fund the administrative expenses of Local 231.
The Indictment alleges that in or about the Fall of 1990, defendant Julius Isaacson, acting on behalf of the International, signed an agreement with GHT Realty Company ("GHT") to purchase a building located at 25 Roslyn Road, Mineola, New York, for a total purchase price of $ 750,000. The building was to be used for union office space. A rider to the contract, which was dated December 1990, stated that as part of the contract of sale, the International would be entitled to a credit of $ 65,000 from GHT for renovation work that needed to be performed on the building. However, at the closing, which occurred in January 1991, the building's purchase price was not reduced by $ 65,000. Instead the International paid GHT the full amount of $ 750,000, and, in turn, GHT issued a check for $ 65,000 to Careccia & Sons, a construction company that had been hired by the International to perform the renovation work at 25 Roslyn Road. John Careccia, a principal of Careccia & Sons and an unindicted coconspirator, thereafter deposited the check from GHT and allegedly transferred approximately $ 55,000 in cash to codefendant James Baldo.
The Indictment further alleges that from January 1991 through September 1991, the period during which Careccia & Sons performed renovation work at 25 Roslyn Road, it received approximately $ 277,850 from the International and the employee benefit funds purportedly for construction services rendered at 25 Roslyn Road. During this same time period, Careccia transferred approximately $ 130,000 of this money, including the $ 55,000 earlier discussed, to James Baldo, who in turn distributed a portion of it to defendant Julius Isaacson. These fund transfers were allegedly concealed on the contractor's books by codefendant Bernard Miller, the accountant for Careccia & Sons at this time.
The Government moreover accuses defendants Isaacson and Baldo of obstructing law enforcement investigation of this theft. Further to this point, it is alleged that at a meeting in the Fall of 1993, these codefendants instructed Careccia what he should say if questioned about the payments that he received for the renovation work at 25 Roslyn Road. At this same meeting, Isaacson allegedly compensated Careccia for certain legal expenses.
On March 15, 1994, the Government filed a five-count Indictment accusing the defendants of participating in the aforementioned scheme. Isaacson has been named in Counts One through Four. Among the statutes that Isaacson has been accused of violating are 18 U.S.C. § 664 (entitled "Theft or embezzlement from employee benefit plan"), 29 U.S.C. § 501(c) (criminal provisions of ERISA punishing the embezzlement of assets), and 18 U.S.C. § 1512(b)(1) (imposing criminal liability upon anyone who "knowingly uses intimidation or physical force, threatens, or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person, with intent to . . . influence, delay, or prevent the testimony of any person in an official proceeding").
2. Counsel's Potentially Conflicting Professional Engagements
Defendant Isaacson is presently represented by Charles Haydon, Esq., a partner in the law firm of Dublirer, Haydon, Straci & Victor. In addition to representing Isaacson, either he or members of his firm have at different times represented the Local 118 Pension Fund, the Local 118 Welfare Fund, and the Local 231 Welfare Fund, each of which is a victim of the thefts alleged in the Indictment. See Indictment P 4.
The scope--as well as the legal implications--of counsel's prior representations of the named unions are disputed by the parties. In support of its position that both Haydon's and his firm's prior professional engagements with respect to the alleged victims were not inconsequential, the Government has submitted minutes from a meeting of the trustees for Pension Fund Local 118, held on April 15, 1992, in which Isaacson refers to Haydon as the attorney for Pension Fund Local 118. See Gov't Aff. Ex. B (E.D.N.Y. Apr. 5, 1994). Further, the Government has attached copies of I.R.S. Form 5500, Annual Return/Report of Employee Benefit Plan, for fiscal plan year ended June 30, 1992, for both the Local 118 Pension Fund and the Local 118 Welfare Fund. Each of these tax returns report payments during the fiscal year to "Dublirer, Haydon, et al" in the amount of $ ...