of the alleged conspiracy's eight overt acts (P58), for they readily divide into four earlier acts taken at Gabriel's behest to further the initial scheme to defraud and four later acts taken by Vitti to try to cover up the now-discontinued scheme.
Specifically, overt acts "a" and "b" refer to the directions given by Gabriel in 1985 and 1986 to use the allegedly inferior Hastelloy W material in repairing the bearing seals, and overt act "c" specifies that hundreds of bearing seals were thereby improperly welded between 1986 through November, 1989. Overt act "d" specifies the direction given by Gabriel in August, 1989 (after the initial discoveries by Air India but before the improper welding had been terminated), directing the backdating of a Chromalloy specification in order to prevent Pratt and the FAA from delving further into the fraud and bringing it to a close. (PP48, 58).
By contrast, acts "e" through "h" are alleged to have occurred after the termination of the improper welding in November, 1989, and to have consisted of the efforts made in 1990-1991 by the new player, Vitti, to limit the damage from the emerging Air India and Pratt enquiries by concealing the scope and nature of the fraud in written and oral communications with Air India. (P58).
The substantive counts of the Indictment (Counts 7-11) that are premised on the allegations set forth in Count Six are likewise more consistent with two conspiracies than with one. Thus, Count Seven, a substantive mail fraud count embracing the improper welding fraud, alleges a scheme lasting from 1985 through only February, 1990, and names Gabriel as the sole defendant. By contrast, Count Eight, embracing the cover-up scheme, is alleged to have begun only in August, 1989, and to have lasted until March, 1991, and names both defendants.
While Count Nine, a false statement count naming both defendants and covering a period from 1986 through 1992, at first seems an exception to this analysis, on careful scrutiny it proves otherwise. When read in conjunction with the paragraphs from Count Six that Count Nine expressly incorporates by reference, Count Nine alleges that the false statements consisted of documents (notably packing slips) and entries prepared at the direction of Gabriel and unnamed others during the 1988-1989 period in conjunction with the improper welding scheme. By contrast, Vitti's liability under Count Nine stems from his and Gabriel's permitting such documents to be "maintained" in Chromalloy's files (and therefore to continue to be subject to FAA inspection) in the 1990-1991 cover-up period. (See PP46, 52, 64.)
Finally, Counts Ten and Eleven charge defendant Vitti with Misprision of Felony and Accessory After The Fact for having taken steps as early as January, 1990 to help conceal the prior fraudulent scheme perpetrated by Gabriel. While these counts have now been dismissed on consent, their inclusion in the Indictment was necessarily premised on a theory of the underlying facts more consistent with the notion of two conspiracies than one, to wit: an underlying Gabriel welding fraud conspiracy terminated in late 1989 as a result of growing exposure, and a Gabriel/Vitti cover-up conspiracy undertaken in 1990-1991 in direct response to that exposure and in an effort to minimize new liabilities resulting therefrom.
In sum, this Court finds that Count Six, on any but a superficial reading, appears to actually allege two distinct conspiracies and thus to offend the prohibition against combining multiple conspiracies within a single conspiracy count. E.g., United States v. Aracri, 968 F.2d 1512, 1518 (2d Cir. 1992); United States v. Beech-Nut Nutrition Corp., 659 F. Supp. 1487, 1492 (E.D.N.Y. 1987); United States v. Payden, 613 F. Supp. 800, 808 (S.D.N.Y. 1985); see also Fed. R. Crim. P. 8(a). Accordingly, if it were within the power of the Court to do, this Court would dismiss Count Six for duplicity -- and, indeed, defendant Vitti has so moved. But the Court of Appeals has repeatedly cautioned that the determination of whether a conspiracy is single or multiple is an issue of fact "singularly" well suited to determination by a jury. E.g., United States v. Johansen, 56 F.3d 347, 350 (2d Cir. 1995); United States v. Maldonado-Rivera, 922 F.2d 934, 962 (2d Cir. 1990), cert. denied, 501 U.S. 1233 (1991); United States v. Potamitis, 739 F.2d 784, 787 (2d Cir.), cert. denied, 469 U.S. 934, 83 L. Ed. 2d 269, 105 S. Ct. 332 (1984). Given Count Six's boilerplate allegations of a single conspiracy, the Court cannot conclude on the basis of the pleadings alone that there is no set of facts falling within the scope of Count Six that could warrant a reasonable jury in finding a single conspiracy.
Since, however, the primary ground on which the defendants move to dismiss Count Six is not multiple conspiracies but statute of limitations, there is more to be considered, both factually and legally. Factually, the Court can not blind itself to the fact that Count Six of the original indictment in this case, filed in February, 1995, named only Gabriel as a defendant and alleged only the four overt acts, "a" through "d" (P58), that occurred prior to 1990. For this reason, as the Government concedes, Count Six of the original indictment was barred by the applicable five-year statute of limitations. Accordingly, in April, 1995, the Government attempted to save Count Six by filing a first superseding indictment (essentially identical to the instant Indictment so far as Count Six is concerned) that enlarged the allegations to include the Vitti cover-up activities of 1990-91. Legally, this attempt to extend the length of a conspiracy to avoid a statute of limitations bar directly implicates the doctrine of United States v. Grunewald, 353 U.S. 391, 1 L. Ed. 2d 931, 77 S. Ct. 963 (1957).
In Grunewald, the Court held that "the crucial question in determining whether the statute of limitations has run is the scope of the conspiratorial agreement, for it is that which determines both the duration of the conspiracy, and whether the act relied upon as an overt act may properly be regarded in furtherance of the conspiracy." Id. at 397. In determining this scope, the Court held, "attempts to cover up after the crime begins to come to light" cannot alone serve to extend the period of the conspiracy. Id. at 403. This is because "acts of covering up, even though done in the context of a mutually understood need for secrecy, cannot themselves constitute proof that concealment of the crime after its commission was part of the initial agreement among the conspirators." Id. at 402.
Viewed by these standards, the relevant inquiry becomes not so much whether Count Six represents a strained attempt to bind two conspiracies together through conclusory language of unity as whether it constitutes an impermissible attempt to save an otherwise time-barred conspiracy through allegations of acts of concealment that, under Grunewald, are legally insufficient to extend the scope and duration of the conspiracy.
To be sure, some acts of concealment are distinctly part of the original conspiratorial agreement, even if not executed until years later. See, e.g., Forman v. United States, 361 U.S. 416, 423-24, 4 L. Ed. 2d 412, 80 S. Ct. 481 (1960); United States v. Portner, 462 F.2d 678, 680-81 (2d Cir.), cert. denied, 409 U.S. 983, 34 L. Ed. 2d 246, 93 S. Ct. 319 (1972). Here, the Government contends that at least one of the alleged objects of the original conspiracy -- the maintenance of falsified Chromalloy records subject to FAA inspection (PP54, 57) -- was still in the process of being implemented well beyond 1990. Such an allegation, however, does not save Count Six from being time-barred, since for statute of limitations purposes, it is the making, and not the maintaining, of these records that is relevant. United States v. Sloan, 389 F. Supp. 526, 528-29 (S.D.N.Y. 1975); see also Toussie v. United States, 397 U.S. 112, 114-15, 25 L. Ed. 2d 156, 90 S. Ct. 858 (1970). Moreover, none of the alleged overt acts ("e" through "h") that fall within the statute of limitations appear to relate directly to the object of defrauding the FAA. Finally, as discussed supra, the Indictment's conclusory allegation of a continuing fraud on the FAA, when scrutinized in terms of the more particularized allegations of the Indictment, reduces to a combined allegation of two different activities: Gabriel's original making and maintaining of the falsified records in order to facilitate the underlying fraud and Vitti's continued maintenance of the falsified records, after the fraud had been exposed, in order to limit liabilities. Indeed, if it were otherwise, Count Six of the original indictment would doubtless have alleged Gabriel's maintenance of the falsified records as a post-1990 overt act saving the count from dismissal.
Pointing to another of the original objects of the conspiracy -- the fraud on Chromalloy's customers (P55) -- the Government attempts to bring Mr. Vitti's overt acts of deceiving Air India within the scope of the original conspiracy by referring to them as examples of "lulling" activity designed to help continue the fraud, rather than to obstruct its detection. But this does not fairly comport with the particularized allegations of the Indictment. The communications to Air India specified as the only overt acts in the Indictment that fall within the statute of limitations are not alleged to have been undertaken in furtherance of lulling Air India into continuing its purchases of faulty engine parts, but rather as attempts to prevent Air India, after it had already uncovered evidence of the fraud, from detecting the full scope and nature of the scheme, and thereby demanding fuller restitution. (PP49-51). Indeed, by contrast with the backdating (overt act "d") that Gabriel procured in August, 1989 in an effort to prevent the underlying fraud from unraveling, Vitti's overt acts of deception toward Air India were all undertaken, as the Indictment alleges, after the fraudulent welding had ceased in November, 1989. See United States v. Marcus Schloss & Co., Inc., 710 F. Supp. 944, 949 (1989) (SEC investigation served both to end insider trading scheme and to precipitate cover-up scheme; accordingly, the cover-up activities were not part of the original conspiracy and were barred by Grunewald).
In short, when the conclusory allegations of Count Six are scrutinized against the background of the original pleading and the more particularized allegations of the Indictment itself, they provide no basis for concluding that the added overt acts were undertaken in furtherance of an aim of the original conspiracy. It is one thing to accept a facially sufficient indictment at face value (see Hamling, supra); but it would be quite another to allow broad conclusory allegations to override more particularized allegations of the same pleading, especially when an earlier version of the pleading containing many of the same conclusory allegations was concededly defective. Cf. Papasan v. Allain, 478 U.S. 265, 283, 92 L. Ed. 2d 209, 106 S. Ct. 2932 (1986); Moscowitz v. Brown, 850 F. Supp. 1185, 1190 (S.D.N.Y. 1994) (civil cases holding that the legal sufficiency of a pleading will be assessed by reference to its well-pleaded allegations of fact, not by reference to its unsupported conclusions).
The Court, therefore, finds that, on the face of the pleading, Count Six remains time-barred. Unlike the situation involving multiple conspiracies, the Court is unaware of any authority that requires submission of this issue to a jury. Indeed, Grunewald, although a post-conviction case, decided the issue as a matter of law.
Besides, postponement of the issue until the submission of the evidence would be a futility, for the Government has indicated that its proof that the original conspiracy embraced the added overt acts will consist largely of inferences and implications to be drawn from the acts of concealment themselves. This will not suffice, for as the Court stated in Grunewald:
Allowing such a conspiracy to conceal to be inferred or implied from mere overt acts of concealment would result in a great widening of the scope of conspiracy prosecutions, since it would extend the life of a conspiracy indefinitely. Acts of covering up, even though done in the context of a mutually understood need for secrecy, cannot themselves constitute proof that concealment of the crime after its commission was part of the initial agreement upon the conspirators. For every conspiracy is by its very nature secret; a case can hardly be supposed where men concert together for crime and advertise their purpose to the world. And again, every conspiracy will inevitably be followed by actions taken to cover the conspirators' traces. Sanctioning the Government's theory would for all practical purposes wipe out the statute of limitations in conspiracy cases. . . .
Grunewald, 353 U.S. at 402.
Accordingly, Grunewald required that the Government adduce direct evidence that the particular acts of concealment relied on to extend the statute of limitations were fully embraced within the original aims of the conspiracy. Id., at 404. But at the hearing before this Court on March 15, 1996, the Government, with commendable candor, represented that it would not be able to adduce such direct evidence at trial (despite having entered into a cooperation agreement with one of Gabriel's admitted co-conspirators). This representation obviates the necessity of requesting in camera submissions of proof, as in Marcus Schloss, supra, let alone postponing application of the Grunewald doctrine until trial.
It may be noted that Marcus Schloss was in some respects a worse case for pre-trial application of Grunewald than the instant case because the indictment in that case specifically recited not only that all the activities described were in furtherance of a single conspiracy but that a specific object of that conspiracy was the cover-up activities of trying to obstruct and divert the SEC's inquiries into the defendants' insider trading. Marcus Schloss, 710 F. Supp. at 947. The Government argued that these facially sufficient allegations in the indictment were sufficient to preclude pre-trial application of the Grunewald doctrine. Id. But the court declined to accept these conclusory allegations as dispositive in the absence of any direct "proof of an express original agreement on the part of the conspirators to commit and suborn perjury before the SEC if the conspiracy was detected." Id. at 950.
In so holding, Judge Haight indicated that he was concerned about the prejudice that would inure to certain of the defendants if Grunewald were not applied prior to trial. Specifically, two of the co-conspirators in Marcus Schloss had no role whatever in the cover-up activities, and yet, if those activities had not been stricken from the indictment at the outset, would have been linked to those activities throughout the trial, subject only to the Court's rulings at the conclusion of the case. Here, the threat of such prejudice is even more severe, for defendant Vitti, who concededly had no personal role in the underlying fraud of 1985-90 (see Count Seven) will, if application of Grunewald is postponed until the close of evidence, be linked for weeks to extensive testimony regarding the presumptively time-barred welding conspiracy in which he is named.
There is, moreover, an even stronger reason for applying Grunewald here than was the case in Marcus Schloss and that is the very policy that gave rise to Grunewald itself, viz., the policy of the statute of limitations in preventing a defendant from having to defend against stale and ancient charges. See Toussie, 397 U.S. at 114-15. Indeed, the Government argued in Marcus Schloss that a primary reason why Grunewald should not be applied on a pre-trial basis in that case was the absence of a statute of limitations concern. Marcus Schloss, 710 F. Supp. at 946. Here, that concern helps make this case especially appropriate for pre-trial application of Grunewald.
It is true that, in one respect, Marcus Schloss represents a less onerous application of Grunewald than that undertaken here, in that the effect of such application in Marcus Schloss was simply to delete the offending paragraphs of the conspiracy count, whereas here it leads to dismissal of the entire count. This Court therefore invited supplemental briefing by the parties as to whether Count Six could be saved by redacting the offending paragraphs of the count, leaving only the 1990-1991 cover-up conspiracy. Upon review of the supplemental submissions, the Court concludes that it has the power to make such redactions, e.g., United States v. Miller, 471 U.S. 130, 144, 85 L. Ed. 2d 99, 105 S. Ct. 1811 (1985); United States v. Rosenthal, 9 F.3d 1016, 1022 (2d Cir. 1993), and that, while somewhat awkward, such redaction might be accomplished here. Nevertheless, the Court concludes that such an approach would be highly artificial in this case. The history of Count Six demonstrates that the central focus of its charges was always upon the original conspiracy of 1985-1989. To recast it as a 1990-1991 cover-up conspiracy, to which the events of 1985-1989 are relevant (if at all) as background or as proof of motive and intent, would be to close one's eyes to history and to elevate words over reality. The Court declines to do so.
Accordingly, for the reasons set forth above, the motion to dismiss Count Six is granted.
III. The Remaining Motions (re: Counts 4, 8, 9, 13, 14, 15, 16, 17, 18)
The defendants also move to dismiss the mail fraud, wire fraud, and false statement counts of the Indictment, on the ground that they fail to specify with particularity the particular mailings, interstate wire communications, and false documents on which these counts are predicated, describing them, instead, in terms of categories. But these counts, as pleaded, are more than sufficient, on their face, to place the defendants on notice of the charges they are being forced to meet. Hamling, 418 U.S. at 117-18; Salazar, 485 F.2d at 1277; United States v. Gordon, 780 F.2d 1165, 1169 (5th Cir. 1986). The greater particularization of such specifications, mandated in a civil proceeding by Rule 9(b) of the Rules of Civil Procedure, is provided in a criminal case, not by particularity in the indictment, but by the requisite responses to a bill of particulars. Cf. United States v. Upton, 856 F. Supp. 727, 740-41 (E.D.N.Y. 1994). At the hearing of March 15, 1996, the defendants acknowledged that they had now received particularization as to which phone calls, wire transmissions, and false documents the Government was planning to rely on with respect to each of the counts here challenged, and the Government agreed to be bound by such specifications. No policy would be served by requiring more.
The Court has also considered the various other claims and arguments of the parties, and finds no basis for disturbing any of the rulings set forth above or made from the bench on March 15, 1996.
JED S. RAKOFF
Dated: White Plains, New York
March 27, 1996