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UNITED STATES v. BLAU

January 17, 1996

UNITED STATES OF AMERICA, against ARTHUR M. BLAU, Defendant.


The opinion of the court was delivered by: BATTS

MEMORANDUM and ORDER

 DEBORAH A. BATTS, United States District Judge.

 On June 26, 1995, Arthur Blau, the Defendant, was charged with a three-count Indictment alleging violations of 18 U.S.C. § 1954. *fn1" (Robert S. Franklin Aff. ("Franklin Aff.") P 2.) Defendant moves for dismissal of the Indictment on the ground that the Government used and/or derivatively used information from the Defendant which he was compelled to provide pursuant to immunity granted under 18 U.S.C. § 6002 et seq., or in the alternative for a hearing pursuant to Kastigar v. United States, 406 U.S. 441, 32 L. Ed. 2d 212, 92 S. Ct. 1653 (1972); and for an Order requiring the Government to produce an additional Bill of Particulars.

 I. BACKGROUND

 Beginning in or about February 1992, the United States Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation ("FBI"), the Department of Labor ("DOL") and the Internal Revenue Service ("IRS") commenced an investigation into certain real estate transactions involving the Mason Tenders District Council of Greater New York's ("Mason") trust funds. (Gov't Mem. Law at 2; Franklin Aff. P 3.) The investigation resulted in the issuance of numerous grand jury subpoenas, (Gov't Mem. Law at 3; Franklin Aff. P 3), including a 34-count Indictment, issued in September 1992, charging Ron Miceli, Frank Lupo and Charles Trentacosta with racketeering, conversion of pension fund assets, mail fraud and money laundering. (Gov't Mem. Law at 2.) The charges centered on the use of Mason pension funds to purchase real estate in Manhattan and Brooklyn at grossly inflated prices from associates of the Genovese Crime Family. (Id.) The bloated prices paid by the pension fund for the real estate were supported by false appraisals prepared by individuals associated with one of the organized crime associates. (Id.) Assistant United States Attorney Orin Snyder and FBI Special Agent Michael Brooks were assigned to the case. (Id.; Franklin Aff. P 3.)

 Part of the investigation of Mason included an interview of the Defendant. (Gov't Mem. Law at 2.) The relevant events leading to that interview are as follows: Defendant was a partner in Blau, Soloway, Goldstein & Co., an accounting firm which provided services to Mason since 1967. (Id.; Franklin Aff. P 4.) On March 16, 1992, Defendant was served with a grand jury subpoena. (Franklin Aff. P 4.) He hired the firm of Bernstein & Maffeo to represent him. (Id.) They contacted AUSA Snyder seeking information regarding the subpoena. (Id. P 5.) Upon learning of the background of the subpoena, counsel informed AUSA Snyder that the Defendant would invoke his Fifth Amendment rights when called before the grand jury. (Id. P 5.) The Defendant wrote a letter to AUSA Snyder which was accepted in lieu of his appearance before the grand jury. (Id. Ex. C.)

 On April 3, 1992, a subpoena duces tecum was served on the Defendant. (Id. P 6.) Upon discussion with AUSA Snyder it was agreed the subpoena would be addressed to Blau, Soloway, Goldstein & Co. (Id.) On August 28, 1992, a further subpoena was served on the Defendant requiring handwriting samples and fingerprints. (Id.) Defendant appeared, but Special Agent Brooks did not take any samples. (Id.)

 On September 9, 1992, by letter from AUSA Snyder, Defendant was informed that he was now a target of the investigation. (Id. P 7.) On September 17, 1992, a meeting was held and was attended by AUSA Snyder, representatives of the DOL and IRS, and Defendant's attorney. At that meeting it was suggested the Defendant make a proffer. (Id. PP 8-9.) On October 6, 1992, the Government sought a court order of immunity for the Defendant which was granted by Judge Kevin Thomas Duffy. (Id. P 10.) Pursuant to the Order, Defendant attended one debriefing session, conducted by AUSA Snyder and Special Agent Brooks, on October 28, 1992. (Id. P 11; Gov't Mem. Law at 2.)

 During the debriefing session Defendant provided information regarding the accounting services performed for Mason since 1967. (Franklin Aff. P 12.) Defendant explained that he acquired the Mason account through the employer trustees of the Bricklayers union. (Id.) Defendant discussed his relationship with both Gaspar and Frank Lupo, and any connection they had with organized crime. (Id. PP 12, 13.) The bulk of the debriefing, however, dealt with details of the Mason purchase of real estate, including the method of acquisition, appraisals, and forms used in the accountings performed by Defendant's firm. (Id. P 14; Gov't Mem. Law at 3.) It appears the Defendant made no incriminating statements or admissions about his involvement in the real estate transactions, or any other criminal activity. (Gov't Mem. Law at 3; Franklin Aff. PP 12-15.)

 Subsequent to the proffer, Defendant supplied, pursuant to subpoena, his personal diaries and telephone logs (collectively "diaries") under the assumption that they would be covered by the grant of immunity. *fn2" (Gov't Mem. Law at 3; Franklin Aff. PP 16-17.) The Defendant claims that it was the evidence in the diaries regarding meetings with Lupo, Roger Levin and others, that was used by the Government to bring the current Indictment against the Defendant. (Franklin Aff. P 18; Franklin Reply Aff. P 10.)

 In January 1993, Lupo and Trentacosta pled guilty to participating in racketeering activities. (Gov't Mem. Law at 3; Franklin Aff. P 20.) Miceli and James Massera also pled guilty to a superseding indictment issued in April 1993. (Gov't Mem. Law at 3.)

 In May 1993, Defendant was interviewed by DOL. (Franklin Aff. P 21.) He was questioned about his involvement in the accounting practices regarding another union pension fund, the Carpenters funds, and about his dealings with Levin. (Id. P 22.)

 The criminal investigation thereafter remained dormant until early 1994. (Gov't Mem. Law at 3.) At that time, Lupo began providing information to the Government, including information regarding the Defendant. (Gov't Mem. Law at 3-4.) That information, along with additional information, led to the three-count Indictment of the Defendant on June 26, 1995, *fn3" which charges the Defendant with bribery. (Gov't Mem. Law at 4.) At the time Lupo began providing information, AUSA Snyder and Special Agent Brooks no longer were involved in the Mason investigation. (Id. at 5.) The Government represents that neither Snyder nor Brooks participated in the Lupo debriefings, nor communicated the information Blau had provided to anyone involved in the Lupo debriefings. (Id.) The ...


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