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UNITED STATES v. FERRANTI

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK


May 20, 1996

UNITED STATES OF AMERICA against JACK FERRANTI, Defendant.

The opinion of the court was delivered by: WEINSTEIN

AMENDED MEMORANDUM AND ORDER

 Jack B. Weinstein, Senior United States District Judge:

 TABLE OF CONTENTS

 I. INTRODUCTION

 II. FACTS

 III. SENTENCING PROCEEDINGS

 IV. MOTION TO DISMISS ARSON CHARGES

 

A. Law

 

B. Application of Law to Facts

 V. MOTION TO DISMISS MAIL FRAUD CHARGES

 VI. STATUTORY AND SENTENCING GUIDELINES REQUIREMENTS

 VII. PRISON

 

A. Arson Resulting in Death

 

B. Conspiracy to Commit Arson

 

C. Mail Fraud

 

D. Tampering with a Witness

 VIII. PECUNIARY PENALTIES GENERALLY

 IX. FINES

 X. COST OF PRISON

 XI. RESTITUTION

 

A. Law

 

B. Application of Law to Facts

 

(i) Direct Victims

 

(1) Michelle and Shelly Anthony

 

(2) Estelle and William Cortes

 

(3) Zbigniew and Jaowica Kwiatkowski

 

(4) Charles Wagner

 

(5) Ronald Bass

 

(6) Thomas A. Ripley

 

(ii) Indirect Victims

 

(1) Cigna Fire Underwriters

 

(2) New York Fire Department

 

 

(iii) Total Payments

 XII. DISBURSEMENT OF FINES AND RESTITUTION

 XIII. SPECIAL ASSESSMENTS

 XIV. SUPERVISED RELEASE

 XV. CONCLUSION

 I. INTRODUCTION

 For the reasons indicated below, defendant, who was found guilty of arson resulting in death and other crimes, must be sentenced to a term of just less than life imprisonment. Maximum monetary penalties, and restitution are also required.

 II. FACTS

 Defendant owned and operated a retail women's clothing store on the ground floor of a three-story building in Maspeth, Queens. On the upper floors were four residential apartments.

 The business was not profitable. Defendant had fallen behind on rent. Fire insurance premiums were not current. Notice of imminent cancellation of the policy had been given.

 In the Fall of 1991, defendant began planning to set fire to the store in order to collect insurance proceeds and to avoid payment of future rent on what had become a burdensome lease. He paid the overdue premiums to ensure that his policy for fire damage would be in force. Months before the event he boasted of his plan to set the fire. He recruited a friend, Thomas Tocco, through his brother, Mario Ferranti, to help set the fire.

 On February 24, 1992, at 5:00 p.m., an employee shut off the lights and locked the doors of the store, planning to return next morning. Later that same night someone possessing one of the two available keys entered. The bulk of the merchandise was removed. An old electric space heater was placed in the rear to make it appear that this was an accidental electrical fire. Flammable liquid was spread near the heater. At approximately 11:00 p.m. the fire was lighted by defendant or someone working under his direction.

 The Fire Department arrived quickly. Fire and smoke were intense. Some of the building's eight residents had already fled in panic.

 To ensure that no one was left in the building, two firefighters, Lieutenant Thomas A. Williams and Michael J. Milner, searched the front portion of the second floor. Visibility was nil. Heat was intense. Lieutenant Williams directed Milner to break open a floor-to-ceiling window to help ventilate the area. As Milner did so, he observed a passing shadow. It was Lieutenant Williams who fell to the pavement. Death was almost instantaneous.

 Two dozen firefighters suffered minor injuries. Several tenants required treatment for smoke inhalation. Their possessions were destroyed. They were left homeless. Destruction of the building was close to complete. The fire also damaged adjoining premises.

 The next day fire marshals collected strong evidence of arson. Nine days after the fire, investigators located defendant. He claimed to know nothing about the fire, falsely stating that he had been visiting a girlfriend in New Jersey since the day prior to the fire. He lied about the financial difficulties his store was having. He lied when he asserted that the store was fully stocked with merchandise at the tire of the fire.

 Defendant accompanied investigators to the scene of the fire. When they entered the store, he walked directly towards the location where the heater had been placed; it had been removed earlier by investigators for testing. When questioned about the space heater, he falsely stated that it had been purchased a year or two before by one of his employees, and that it had been used intermittently in the store. In fact, the heater had not been purchased by an employee and was not brought to the store until the night of the fire.

 Defendant lied when he told investigators that he did not know the address of the employee who closed the store on the night of the fire. After the investigators left, defendant contacted this employee and convinced her to lie and say to the police that she had seen the space heater in the store the day of the fire. She agreed, at his request, to falsely report that she had not seen defendant the day of the fire when, in fact, she had observed him in his real estate office in Upper Manhattan. Defendant brought the employee to the police where she gave the false statements.

 Defendant and his secretary contacted another person who had been at the store on the day of the fire. They asked her to convey false information to the police. She, however, resisted and stated truthfully to the authorities that she had never seen a space heater in the store.

 Shortly after the fire, defendant mailed an insurance claim falsely asserting that $ 55,250.32 in merchandise had been destroyed. On his claim application, which generated repeated correspondence through the mail, he essentially reiterated the false statements he had made to investigators. He repeated those lies once again in a deposition related to his insurance claim. Subsequently defendant admitted to the insurance company's attorney that he had lied to the police about his whereabouts on the day of the fire. Defendant then withdrew his insurance claim.

 During grand jury proceedings defendant pressured one of his employees to continue supplying false information to authorities. He retained an attorney to represent her at the grand jury proceeding and accompanied her to the attorney's office prior to her grand jury appearance. Contrary to defendant's expectations, her testimony implicated him.

 A jury trial found defendant guilty on nineteen counts: conspiracy to commit arson, 18 U.S.C. § 371; arson resulting in death, 18 U.S.C. § 844 (i); sixteen counts of mail fraud, 18 U.S.C. § 1341; and tampering with a witness, 18 U.S.C. § 1512(b)(1).

 Defendant has a previous history of criminal convictions that include attempted possession of a weapon in the 3rd degree, and menacing. This prior conduct places defendant in criminal history category II under the Guidelines.

 There are adverse allegations of defendant's conduct that have not led to conviction. They include being a "slumlord" who used violence against tenants and others. Defendant denies their truth. His close family ties with his parents, siblings, wife, ex-wife and son are urged on his behalf. None of these derogatory and supportive contentions need to be considered on this sentence. The crime itself provides overwhelming evidence of depravity.

 III. SENTENCING PROCEEDINGS

 At sentencing the victims testified. The tenants remained deeply upset by terrifying memories of the event. Lt. Williams' daughter and wife were inconsolable.

 Defendant made no personal statement on his own behalf. He moved for a new trial.

 IV. MOTION TO DISMISS ARSON CHARGES

 A. Law

 Defendant contends that with respect to arson causing death, the government failed to prove the element "affecting interstate or foreign commerce." He also contends that the government did not provide sufficient evidence permitting prosecution in a federal court of what was essentially a state matter. United States v. Lopez, 115 S. Ct. 1624, 131 L. Ed. 2d 626 (1995).

 Title 18 U.S.C. § 844(i) provides that:

 

Whoever maliciously damages or destroys, or attempts to damage or destroy, by means of fire or an explosive, any building, vehicle, or other real or personal property used in interstate or foreign commerce or in any activity affecting interstate or foreign commerce shall be imprisoned ...

 (emphasis supplied).

 The Supreme Court in Lopez ruled that the criminal activity must "substantially affect interstate commerce in order to be within Congress' power to regulate it under the Commerce Clause." Id. at 1630 (emphasis supplied). The offense must affect an activity that

 

arise[s] out of or [is] connected with a commercial transaction, which, viewed in the aggregate, substantially affects interstate commerce.

 Id. at 1631.

 Lopez found an insufficient nexus between the federal government's regulation of interstate commerce and the location of guns near schools. That situation is far different from the traditional role the federal government has assumed in prosecuting arsons of establishments having an impact on interstate commerce. For example, in Russell v. United States the Supreme Court held that under the federal arson statute,

 

the rental of real estate is unquestionably an activity [that affects interstate commerce].... The local rental of an apartment unit is merely an element of a much broader commercial market in rental properties. The congressional power to regulate the class of activities that constitute the rental market for real estate includes the power to regulate individual activity within that class.

 471 U.S. 858, 862, 105 S. Ct. 2455, 2457, 85 L. Ed. 2d 829 (1985). The Russell case involved a defendant who was renting his apartment building to tenants at the time he attempted to destroy it by fire. The property was held to have been used in an activity affecting interstate commerce within the meaning of section 844(i).

 United States v. Mennuti, 639 F.2d 107 (2d Cir. 1981), supports the conclusion that arson of the combined store and multiple apartment rental property in the instant case affected interstate commerce. Mennuti held that a single family private residence does not fall within the category of a property involved in or affecting interstate commerce. It distinguished such residences from buildings that could be characterized as "business" property used for the sale of goods and services, Id. at 110, by implication approving application of section 844(i) to a retail store in a multiple apartment complex.

 B. Application of Law to Facts

 The typical retail dress shop involved here is the end point of a complicated interstate and international web of garment production and sale. Cotton is supplied by southern states, California and Egypt. Wool comes from the Far West and the Antipodes. Decorations and buttons are sent from all over the world. Artificial fabrics are made in factories and chemical plants scattered around the country. Sewing is performed in New York, Los Angeles, Latin America and the western rim of the Pacific. Designs originate in Paris, New York and Japan. Copper for electric wiring is mined in Arizona, Canada and elsewhere. The metal for hangers, clothing racks and display cases is produced in other states and countries. Glass comes from factories here and abroad. Gas and oil for heating and electricity is shipped from the American South West and the oil producing nations of the Middle East. The fire insurance was financed in New Jersey. Credit sales were approved by American Express in Florida.

 All these facts were known to the sophisticated jurors who live and work in or near New York City, one of the garment capitals of the world. Jurors need not park their experiences or knowledge of life outside the courthouse. Castillo-Villagra v. I.N.S., 972 F.2d 1017, 1026 at fn. 1. (9th Cir. 1992) (juries may rely on their common knowledge, observations and experience in the affairs of life in drawing inferences from evidence at trial); United States v. Heath, 970 F.2d 1397, 1402 (5th Cir. 1992) (same), cert. denied, 507 U.S. 1004, 113 S. Ct. 1643, 123 L. Ed. 2d 265 (1993); United States v. Cruz Valdez, 773 F.2d 1541, 1546 (11th Cir. 1985) (same) (en banc), cert. denied, 475 U.S. 1049, 106 S. Ct. 1272, 89 L. Ed. 2d 580 (1986). A reasonable jury had sufficient basis to find that the store's and building's activities substantially affected interstate or foreign commerce. The commercial activity at the store, which was the object of defendant's scheme and offense, falls well within the interstate business category. See Mennuti, 639 F.2d at 110-111. This type of business activity establishes a sufficient nexus to satisfy the Lopez standard for federal intervention.

 In addition to the commercial retail store space, the building fell within the class of multiple dwelling apartment buildings that is inherently a part "of a much broader commercial market in rental properties" affecting interstate commerce within the meaning of 18 U.S.C. § 844(i). Russell, 471 U.S. at 862.

 Defendant sought to defraud in connection with a New Jersey financed insurance policy. He affected interstate commerce by setting fire to a rental unit that served interstate commercial and residential purposes. His garment shop was connected to the world. The motion based on lack of proof of interstate or foreign commerce must be denied.

 V. MOTION TO DISMISS MAIL FRAUD CHARGES

 Defendant moves to dismiss 15 of the 16 counts of mail fraud as duplicative. Each represented a separate mailing as part of the arson scheme. No separate fines or other punishments are imposed with respect to the mail fraud charges. Only the special assessment is affected by the separate mail fraud counts. Concurrent sentences are imposed on all counts. The evidence supports each mail fraud count.

 VI. STATUTORY AND SENTENCING GUIDELINES REQUIREMENTS

 Section 3553 of Title 18 of the United States Code describes the factors the court must consider at sentencing. The statute directs the court to "impose a sentence sufficient, but not greater than necessary, to comply with purposes set forth in paragraph (2) of this subsection." 18 U.S.C. § 3553(a). It comprehensively states that the court

 shall consider --

 

(1) the nature and circumstances of the offense and the history and characteristics of the defendant [and]

 

(2) the need for the sentence imposed--

 

(A) to reflect the seriousness of the offense;

 

(B) to afford adequate deterrence to criminal conduct;

 

(C) to protect the public from further crimes of the defendant; and

 

(D) to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner;

 Id. See United States v. Guiro, 887 F. Supp. 66 (E.D.N.Y. 1995) (sentencing options available for defendants must be compatible with the statutory directives); United States v. Abbadessa, 848 F. Supp. 369, 378-79 (E.D.N.Y. 1994) (statute requires that the most appropriate sentence be imposed taking into account a defendant's special circumstances), vacated, remanded sub nom., United States v. DeRiggi, 45 F.3d 713 (2d Cir. 1995); United States v. Concepcion, 795 F. Supp. 1262, 1271 (E.D.N.Y. 1992) (the Sentencing Guidelines do not alleviate the court's sentencing burden with respect to the statutory directives under 18 U.S.C. § 3553(a)), disapproved on other grounds, United States v. DeRiggi, 45 F.3d 713 (2d Cir. 1995). Other factors the court considers in sentencing include the kinds and ranges of sentences found in the applicable Sentencing Guidelines, policy statements of the Sentencing Commission, the need to avoid sentencing disparity and the need to provide restitution to victims. 28 U.S.C. § 3553(a)(2), (4)-(7).

 VII. PRISON

  A. Arson Resulting in Death

  Sentencing for arson is controlled by Sentencing Guidelines § 2K1.4. Because death resulted, § 2K1.4(c)(1) directs utilization of the "most analogous guideline" from the homicide section of part A relating to chapter two -- offenses against the person. Guidelines § 2A1.1 provides for life imprisonment for murder in the first degree.

  Per 18 U.S.C. § 1111(a), murder in the first degree includes death caused by arson. First degree murder under Guidelines § 2A1.1 with a base offense level of 43 is the crime most analogous to the charged offense, arson causing death. United States v. Prevatte, 66 F.3d 840, 842-844 (7th Cir. 1995); United States v. Martin, 63 F.3d 1422, 1433 (7th Cir. 1995) (death of a firefighter requires application of Guidelines § 2A1.1); United States v. Ryan, 9 F.3d 660, 672 (8th Cir. 1993), cert. denied, 115 S. Ct. 1793, 131 L. Ed. 2d 721 (1995); United States v. El-Zoubi, 993 F.2d 442, 450-51 (5th Cir. 1993).

   Section 1111(a) of the United States Statutes, covering murder in the first degree, incorporates essentially the common law definition, including the phrase "killing" "in the perpetuation of" "any arson as first degree murder." The section provides:

  

Murder is the unlawful killing of a human being with malice aforethought. Every murder perpetrated by poison, lying in wait, or any other kind of willful, deliberate, malicious, and premeditated killing, or committed in the perpetration of, or attempt to perpetrate, any arson, escape, murder, kidnapping, treason, espionage, sabotage, aggravated sexual abuse or sexual abuse, burglary, or robbery; or perpetrated from a premeditated design unlawfully and maliciously to effect the death of any human being other than him who is killed, is murder in the first degree.

  (Emphasis supplied.)

  Murder in the first degree would normally be punishable by imprisonment for life or death. 18 U.S.C. § 1111(b). The Guideline commentary under first degree murder permits a discretionary downward departure based on reduced culpability. U.S.S.G. § 2A1.1 cmt. No. 1. It reads:

  

The Commission has concluded that in the absence of capital punishment life imprisonment is the appropriate punishment for premeditated killing. However, the guideline also applies when death results from the commission of certain felonies...

  

If the defendant did not cause the death intentionally or knowingly, a downward departure may be warranted. The extent of the departure should be based upon the defendant's state of mind (e.g., recklessness or negligence), the degree of risk inherent in the conduct, and the nature of the underlying offense conduct.

  (Emphasis supplied.) Neither the circumstances of the particular crime nor the history of punishment for arsons of this type supports a downward departure.

  Arson resulting in loss of human life is murder at common law under the felony murder rule and is first degree murder under most of the statutes which divide the crime into degrees. Rollin M. Perkins, Perkins on Criminal Law, 44 (2d ed. 1969).

  The New York state statute, while not directly applicable, provides a useful indication of how this crime would be treated in the United States. It would be characterized as arson in the first degree under New York Penal Law § 150.20(1). That provision reads

  

A person is guilty of arson in the first degree when he intentionally damages a building... by causing... a fire and when (a) such... fire... either (i) causes serious physical injury to another person other than a participant, or (ii) the... fire was caused with the expectation or receipt of financial advantage or pecuniary profit by the actor; and when (b) another person who is not a participant in the crime is present in such building... at the time; and (c) the defendant knows that fact or the circumstances are such as to render the presence of such person therein a reasonable possibility.

  The crime falls within each subparagraph of section 150.20(1). The fire "caused serious physical injury to a person other than a participant." The fire was "caused with the expectation... of financial advantage." "Another person who [was] not a participant... [was] present in the building." "The circumstances [were] such that as to render the presence of such person therein a reasonable probability." Arson in the first degree is a class A-1 felony in New York requiring an indeterminate term with a minimum of 15 to 25 years and a maximum of life.

  Arson of an occupied house is "punished severely because, in burning a dwelling, the defendant manifests a contempt for human life;" the crime was a capital offense. 3 Wharton's Criminal Law 325 (1995). While the fire was set in a store, it was directly under two stories of apartments occupied by four families. The staircase to the apartments was next to the store and the defendant must have known the apartments were occupied, especially in light of his own experience as an owner of tenant occupied real estate. The fire was knowingly set at night, when defendant was well aware that tenants would have been asleep or preparing to retire. One of the conspirators at the scene of the crime even asked one of the fleeing tenants if everyone was out of the building -- though he hurried away before obtaining an answer.

  Here the facts support a finding of depraved indifference to death of the victim. The arson was particularly malicious. Only through good fortune were the casualties limited to one death. Even though defendant may not have specifically intended to kill a tenant or a firefighter, he is not relieved of responsibility for the inherently dangerous nature of the crime. See United States v. Martinez, 16 F.3d 202, 208 (7th Cir.) ("felony murder is often found in situations of accidental death"), cert. denied, 114 S. Ct. 2150, 128 L. Ed. 2d 877, cert. denied, 115 S. Ct. 226, 130 L. Ed. 2d 152 (1994).

  The aggravating elements present in the instant case that would warrant the highest condemnation under a wide variety of statutes include: the building being a habitable structure; a person being present at the time of the burning; a person being injured; the defendant having had reason to believe that a person was present at the time of the burning; a firefighter being subject to substantial risk of bodily injury; the offense occurring at night; an accelerant being used; and scheming to defraud an insurance carrier. See, e.g., II American Law Institute Model Penal Code and Commentaries 3, 10, 11 (1980).

  Despite the strong support for a life sentence, in this specific case a sentence of less than life in prison is required. Defendant committed the offense in 1992. At that time a jury directive was required for a life sentence. 18 U.S.C. § 34. It was not until 1994 that the need for a jury directive as a predicate for a life sentence was eliminated. Pub.L. 103-322 § 60003 (a)(1), 1994 U.S.C.C.A.N. 1801.

  The ex post facto doctrine applies. It prohibits application of the 1994 amendment eliminating the need for jury approval of a life sentence for arson causing death. See Collins v. Youngblood, 497 U.S. 37, 43, 110 S. Ct. 2715, 2719, 111 L. Ed. 2d 30 (1990) (ex post facto doctrine prohibits the retroactive application of laws that make more burdensome the punishment for a crime after its commission).

  The required Guideline base offense level of 43 requires a life sentence. U.S.S.G. Sentencing Table (1995). In order to comply with the ex post facto doctrine and impose a sentence less than life a downward departure to a base offense level of 42 is mandated. This category provides for a term of imprisonment between 360 months (30 years) and life, regardless of the defendant's criminal history category.

  Even if second degree murder were relied upon as the applicable analogous provision with a base offense level of 33, a nine point increase would be imposed as a matter of discretion because of the aggravating factors. The defendant had long planned the arson. He had discussed it months before with at least one witness. He committed the arson for a financial advantage of some $ 50,000 in a possible insurance recovery and the breaking of an unprofitable lease. In view of his extensive wealth, the avarice that put so many people at risk must be condemned by imposing the most severe punishment. See United States v. Menzer, 817 F. Supp. 64, 66 (E.D.Wis. 1993) (second degree murder occurs where life is lost due to eminently dangerous and reckless conduct evincing a depraved mind), aff'd, 29 F.3d 1223, cert. denied, 115 S. Ct. 515, 130 L. Ed. 2d 422 (1994). In light of all the evidence, defendant's contention that he should be treated as if he were guilty of murder in the second degree, with a base offense level of 33 at a criminal history category of II and no upward departure, leading to a range of 151-188 months is not acceptable.

  The conflicting evidence about whether defendant was a loving family person, loyal to his employees, or a vicious hounder of tenants, are beside the point. Defendant is not being punished to deter or incapacitate him. He must be punished for general deterrence.

  Arsons in New York City are particularly dangerous. They represent one of the greatest hazards to the well being of those who reside, work, or visit here. In the last decade almost 400 civilian deaths attributed to arson in this city. In 1985, there were 26 deaths; in 1986, 22; in 1987, 25; in 1988, 35; 1989, 43; 1990, 126; 1991, 33; 1992, 23; 1993, 27; and in 1994, 28. Bureau of Fire Investigation, The New York Fire Department Annual Report, April 22, 1996. Six firefighters have lost their lives because of arson in the last decade. Id.

  The term imposed consonant to the ex post facto doctrine cannot equal or exceed defendant's life expectancy. A sentence lasting beyond defendant's expected lifetime would circumvent the jury directive requirement of 18 U.S.C. § 34 in effect when the crime was committed. United States v. Gullett, 75 F.3d 941, 951 (4th Cir. 1996). Here the government did not ask for such a jury verdict.

  The life expectancy of the defendant must be determined in order to avoid a life sentence in fact. Prevatte, 66 F.3d at 844; Gullett, 75 F.3d at 951. The defendant is 43 years old. His life expectancy is 31.0 years. See Statistical Bulletin - Metropolitan Life Insurance Company, 1995 WL 8300351 (July 18, 1995).

  Defendant will receive 54 days of good-time credit for each year of his prison sentence. 18 U.S.C. § 3624 (b). This credit is properly considered in determining whether defendant will probably complete his sentence before he dies. Gullett, 75 F.3d at 951. Defendant may thus be sentenced to 435 months, taking into account his 31.0 years life expectancy and a cumulative deduction of 5.36 years for good-time credit. If the good-time credit is considered, defendant will serve a sentence of 371 months measured from the time of his arrest, somewhat less than his 372 months life expectancy from the date of sentencing. The following table indicates the required sentence computation. TABLE A Terms of Computation Months Years Sentence at Criminal 435 36.25 History II, level 42 (U.S.S.G.) Good time credit 64.3 5.36 54 days per year Defendant's life 372 31 expectancy at 43 years of age Sentence less good 371 30.8 time credit Time served up to 14.4 1.2 date of sentencing Sentence less good 357 29.7 time credit and time served up to date of sentencing Release before end 15 1.3 of life expectancy

19960520

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