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U.S. v. CUSACK

September 17, 1999

UNITED STATES OF AMERICA, PLAINTIFF,
v.
LAWRENCE X. CUSACK JR., A/K/A "LAWRENCE X. CUSACK III," A/K/A "LEX CUSACK," DEFENDANT.



The opinion of the court was delivered by: Cote, District Judge.

    OPINION AND ORDER

After a jury trial, defendant Lawrence X. Cusack ("Cusack") was convicted on April 30, 1999, of thirteen counts of wire and mail fraud in violation of 18 U.S.C. § 1341, 1343 for his role in a fraudulent scheme involving the sale of a number of documents that he claimed contained the handwriting of President John F. Kennedy and other prominent figures. On May 26, 1999, the Government gave notice of several sentencing adjustments and departures. Subsequently, on June 28, 1999, the Court also gave notice of several possible adjustments and departures and set a schedule for the briefing of those issues by the parties. In particular, the Court required the parties to address a possible adjustment for abuse of trust, a possible criminal history category departure based on the defendant's conduct, and the appropriateness of any adjustment or departure based on the defendant's wearing of a military uniform. At a conference with the parties on July 12, 1999, the Court indicated that the conduct cited as a basis for a criminal history departure would also be considered as a basis for a departure under Section 5K2.0 of the Sentencing Guidelines.

On August 24, 1999, the Probation Department issued a Presentence Investigation Report (the "PSR"). The PSR calculated an adjusted offense level of twenty-eight as follows: a base offense level of six, an increase of fourteen levels based on a total loss of $7 million, an increase of two levels for more than minimal planning under Section 2F1.1(b)(2), an adjustment of four levels for Cusack's role in the offense under Section 3B1.1(a), and an adjustment of two levels for obstruction of justice based on the provision of handwriting exemplars under Section 3C1.1.

By letter dated September 3, 1999, counsel for defendant indicated that it was only objecting to the obstruction of justice adjustment. By a series of letters, counsel for defendant has also objected to the adjustments and departures not included in the PSR that have been noticed by the Government and the Court. Finally, on September 13, 1999, the defendant moved for a downward departure based on the defendant's diminished mental capacity.

BACKGROUND

The evidence at trial overwhelmingly established the following. In 1993, Cusack was working as a paralegal at the law firm founded by his father, Cusack & Stiles, and was earning between $25,000 and $35,000 a year. His wages at the firm were being garnished because of a number of judgments obtained against him by creditors. Months earlier, Cusack had met John Reznikoff, a dealer in autographs and stamps, and had learned how valuable the autographs of famous people could be. Cusack told Reznikoff that he had found documents in his father's files that contained the writing and signatures of President John F. Kennedy, Marilyn Monroe, and Robert F. Kennedy (the "Cusack Documents"). According to Cusack, his father, Lawrence Cusack Sr. ("Cusack Sr."), had for years been a secret adviser and confidant to President Kennedy.

According to Cusack and as "corroborated" by the Cusack Documents, Cusack Sr. assisted President Kennedy with a number of intrigues that included (1) the payment of hush money to Marilyn Monroe to cover up an extramarital affair; (2) the cover-up of a supposed secret marriage and subsequent secret divorce prior to Kennedy's marriage with Jacqueline Kennedy; (3) the cover-up of Kennedy's interactions with organized crime figures; (4) Kennedy's attempts to prevent J. Edgar Hoover, the former director of the FBI, from blackmailing him; and (5) Kennedy's addiction to pain killers. The documents depicted prominent figures in the Catholic Church, including Cardinal Spellman, as facilitators of these intrigues.

Cusack represented himself to Reznikoff as a lawyer and as a decorated former Navy lieutenant commander who had served in Vietnam and Cambodia. In one of their early meetings, Cusack wore a bomber jacket with a three-leaf colonel's cluster. The two eventually traveled to Annapolis together where Cusack appeared in full military dress and exchanged salutes with naval officers. On this occasion, Cusack wore a number of awards on his chest, including a Navy cross, one of the military's highest honors. As their friendship developed, Cusack began to share the documents with Reznikoff, and the two eventually entered into an agreement whereby Reznikoff would act as Cusack's agent. Cusack and Reznikoff then enlisted Thomas Cloud, a dealer in rare documents with access to rich clients, to sell the documents. The three believed that the Cusack Documents could be privately placed with investors and later resold in an auction after they were made public through a book or movie. To attain the high prices for the documents that they sought, the three located a number of collectors of Kennedy memorabilia to "authenticate" the Cusack Documents. In the ensuing years, the three sold between 250 and 275 documents for a total of approximately $7 million. Cusack earned approximately $5 million from the sales, which he invested in a life of luxury.

In time, Cusack came into contact with journalists who were interested in the Cusack Documents. Pulitzer prize-winning author Seymour Hersh wanted to include the Cusack Documents in his new book on the Kennedy presidency. The television network ABC and a producer named Mark Obenhaus wanted to do a documentary on the documents. Once these efforts intensified in 1997, however, the journalists discovered that the documents were forgeries and refused to proceed. In the process, the Cusack Documents were exposed to the public as fakes and Cusack, Reznikoff, and Cloud were forced to cease selling the documents. In 1997, the scheme came to a close.

The evidence at trial conclusively demonstrated that all of the Cusack Documents are indeed fakes and were authored by Cusack. As a paralegal at Cusack & Stiles, Cusack stole documents from his father's files, the files of Cusack & Stiles, the Surrogate's Court, and the Archdiocese of New York. Cusack altered and embellished these documents with the forged handwriting of President Kennedy and others and sold them as the Cusack Documents.

Several different types of proof supported these conclusions. First, many of the documents are highly implausible on their face. For example, an index card containing a citation to a tax practitioner's article was altered to suggest that Cusack Sr. and President Kennedy shared a grin over how the article could help them foil Hoover. Second, several of the documents contain zip codes which were not in use until after President Kennedy's death. Third, expert analysis revealed that the typefaces used in many of the documents did not exist at the time the documents were supposedly authored. Fourth, additional expert analysis concluded that the handwriting on the documents did not belong to President Kennedy and was likely a forgery made by Cusack. Finally, evidence showed that only Cusack had the ability and opportunity to carry out the fraud.

The evidence at trial also established that the stories Cusack invented about himself and others were false. Cusack Sr. had never had any relationship, professional or otherwise, with President Kennedy. Cusack himself was not a lawyer and had never served in the military.

DISCUSSION

I. Objections Related to Adjustments

A. Obstruction of Justice — Section 3C1.1

The Government argues that an obstruction of justice adjustment is appropriate on either of two grounds: (1) the defendant's disguising of his handwriting in exemplars provided to the Government in response to a subpoena, and (2) the filing of a pair of civil suits by the defendant against potential witnesses. Cusack disputes that the handwriting exemplars show he intended to obstruct justice. With respect to the filing of civil suits, Cusack argues that there is no evidence of threats by him against any witness and that the record is insufficient to support a finding of specific intent to obstruct justice.

Section 3C1.1 of the Sentencing Guidelines authorizes a two-point adjustment:

  If the defendant willfully obstructed or impeded, or
  attempted to obstruct or impede, the administration
  of justice during the investigation, prosecution, or
  sentencing of the instant offense. . . .

U.S.S.G. § 3C1.1.*fn1 In November 1998, in order to clarify the relationship between the obstruction and the offense, language was added to require explicitly that "the obstructive conduct related to (i) the defendant's offense of conviction and any relevant conduct; or (ii) a closely related offense. . . ." U.S.S.G. § 3C1.1 (1998). See also United States v. McKay, 183 F.3d 89, 95 (2d Cir. 1999).

The willfulness requirement in the text of Section 3C1.1 requires that "the defendant consciously act with the purpose of obstructing justice." United States v. Case, 180 F.3d 464, 467 (2d Cir. 1999) (internal quotation omitted) (emphasis in original). See also United States v. Reed, 49 F.3d 895, 900 (2d Cir. 1995). In order to impose an adjustment for obstruction of justice, a "specific finding of intent" must be made by the sentencing court where the defendant raises the issue of his state of mind. United States v. Bradbury, 189 F.3d 200, 204 (2d Cir. 1999) (internal quotation omitted). This finding of intent may be based on circumstantial evidence. United States v. Sisti, 91 F.3d 305, 313 (2d Cir. 1996).

Application Note 3 contains a "non-exhaustive list of examples" of obstruction that includes the following:

  (a) threatening, intimidating, or otherwise
  unlawfully influencing a co-defendant, witness, or
  juror, directly or indirectly, or attempting to do
  so;
  (b) committing, suborning, or attempting to suborn
  perjury;
  (c) producing or attempting to produce a false,
  altered, or counterfeit document or record during an
  official investigation or judicial proceeding;
  (f) providing materially false information to a judge
  or magistrate;
  (g) providing a materially false statement to a law
  enforcement officer that significantly obstructed or
  impeded the official investigation or prosecution of
  the instant offense. . . .

Where the basis for the adjustment is false testimony, the sentencing court is required to make findings that the witness made false statements regarding a matter material to the instant action with the willful intent to provide materially false testimony. United States v. Zagari, 111 F.3d 307, 328-29 (2d Cir. 1997). In addition, "an unsworn denial of guilt — even a false and material unsworn denial — cannot become the predicate for an obstruction of justice adjustment." United States v. Johns, 27 F.3d 31, 34 (2d Cir. 1994) (interpreting language of App. Note 1 to Section 3C1.1, which is currently App. Note 2).

1. Handwriting Exemplars

The Government first argues that Cusack obstructed justice by giving disguised handwriting exemplars on July 22, 1998 in response to a subpoena. The Second Circuit has noted that

  there are few better examples of a classic
  obstruction of justice than a defendant who refuses
  to give handwriting samples when compelled by a
  subpoena. [The defendant's] disguise of his
  handwriting made difficult the comparison of his
  writing with that in the [defendant's papers] seized
  by the government, thus hindering the government in
  its investigation.

United States v. Valdez, 16 F.3d 1324, 1335 (2d Cir. 1994).

As evidence that the defendant intentionally disguised his handwriting and thereby obstructed justice, the Government relies on the December 17, 1998 report of handwriting expert and trial witness Gus Lesnevich and a follow-up affidavit from Mr. Lesnevich, as well as the exemplars. Lesnevich's expert report states that the handwriting exemplars "do not contain Mr. Cusack's normal or natural handwriting habits or characteristics and are indicative of intentionally disguised writings." Mr. Lesnevich also provides a chart comparing different samples of Mr. Cusack's handwriting from which, in the opinion of Mr. Lesnevich,

  [i]t is obvious . . . that Mr. Cusack lowered his
  writing skill and abilities, embellished his letter
  formations and changed his slant of writing when he
  provided handwriting specimens on July 22, 1998.

In accordance with Lesnevich's conclusion, the exhibits to the report comparing samples of Cusack's handwriting plainly show them to be very dissimilar to the exemplars provided. Finally, Lesnevich's July affidavit states that his conclusions do not change when the defendant's ability to write in a wide variety of styles is taken into account.

The Court has also examined the handwriting exemplars and the samples of Cusack's daily writing. The record clearly establishes that the defendant intentionally disguised his handwriting in the exemplars he provided on July 22, 1998, with the specific intent of frustrating the pending investigation of him. An adjustment for obstruction of justice is therefore appropriate.

2. Filing of Civil Suits

The Government argues that the adjustment is also appropriate because of Cusack's filing of two civil suits, one in federal court and another in state court, against defendants that included eventual trial witnesses. Improper threats against witnesses are listed in the application notes and may form the basis for an obstruction adjustment. See, e.g., United States v. Sovie, 122 F.3d 122, 128-29 (2d Cir. 1997) (obstruction adjustment appropriate for threat to accuser to induce her to drop charges against the defendant); United States v. Hernandez, 83 F.3d 582, 585 (2d Cir. 1996) (threats made with intent to obstruct may serve as basis for adjustment).

Suits were filed in both federal and state court. The federal amended complaint is dated May 6, 1998, and is signed by plaintiffs' attorney. The plaintiffs in the federal actions are Cusack, his wife, Thomas Cloud, and several entities controlled by them. The eighty-page complaint alleges that the Cusack Documents were found in Cusack Sr.'s files and that the documents are of historical importance. The defendants are the television network ABC and a number of entities and individuals affiliated with it, including trial witness and producer Mark Obenhaus and trial witness and journalist Seymour Hersh. The complaint is replete with personal attacks on the defendants based on a documentary that was to be produced that ultimately became an expose on the Cusack Documents.

The complaint includes the following causes of action against all defendants: fraud based on "ambush journalism," libel, interference with contractual relations, breach of contract, and malicious instigation of a frivolous grand jury investigation. With respect to Hersh, the complaint alleges that after he initially entered into an agreement to produce a television documentary, he and his partners conspired to "denounce [the Cusack Documents], defame plaintiffs and embark on a libelous attack." Obenhaus is alleged to be the head of Lancer, which was created to "keep the dirty work away from ABC" in the production of a documentary that defames the plaintiffs.

The federal suit was dismissed by the Honorable Judge John S. Martin on September 9, 1998, for a failure to follow the basic rules of pleading. At the time of dismissal, Judge Martin gave the following admonition to defendant's criminal counsel:

  I was surprised, after the criminal indictment was
  filed, that this case was going forward. . . . Should
  the criminal case result in a conviction, it would be
  my absolute intention, if this case continues, to
  write the judge who will have that sentencing and
  state that, in my view, this pursuance of a civil
  case in these circumstances — if the facts prove this
  claim to be fraudulent — is, indeed, an additional
  obstruction of justice. . . . I thought you should be
  on notice of this, because this is a dangerous tactic
  that is being pursued in this case.

Cusack apparently did not replead in response to the dismissal.

A second action was filed in New York state court. The amended state complaint is dated June 10, 1998, and was apparently signed by Cusack's attorney, although the copy provided to the Court is unsigned. The plaintiffs in that suit are Cusack, his wife, Cloud, entities controlled by each of them, and a number of purchasers of the documents. The one hundred and three page complaint is again based on the historical importance of the documents and the nefarious deeds by the defendants to prove their falsity. Rather than ABC, however, the defendants are individuals and entities related to the television show 60 Minutes, which produced a story that concluded that the Cusack Documents were forgeries. Among the defendants are journalist and trial witness Seymour Hersh; handwriting expert Duayne Dillon, who was retained by 60 Minutes as an expert, appeared in the 60 Minutes show on the Cusack Documents, and eventually became a witness at trial; and Kennedy memorabilia collector and trial witness Robert White. The claims alleged include the following: a fraud claim based on "fraudcast" journalism in connection with the 60 Minutes story, libel based on allegations by the defendants that the documents were forgeries, interference with contractual relations with respect to the purchasers of the documents, breach of a number of agreements, breach of fiduciary duties owed to the plaintiffs, deceptive business practices, intentional and negligent infliction of emotional distress, and malicious instigation of a frivolous grand jury investigation.

With respect to Hersh, the Complaint alleges that he participated in the improper actions of the 60 Minutes defendants and that he made a number of disparaging statements with respect to Cusack and the documents to several different journalists and media outlets. With respect to Dillon, the complaint attacks his credentials as an expert and alleges that his opinion was misrepresented on 60 Minutes. Regarding White, it is alleged that he falsely held himself out as a handwriting expert and made false statements on 60 Minutes defaming the plaintiffs, and that he is liquidating his assets and planning to flee the United States to escape criminal and civil liability. Even after Cusack's guilty verdict, it appears that Cusack and the other plaintiffs in the state action are seeking to continue their civil claims against all of the defendants.

The Government first argues that the filing of these suits amounts to obstruction of justice because the suits constitute improper threats against witnesses. The Court agrees with the Government that the complaints are facially outrageous in light of the overwhelming evidence at trial that Cusack was the author of the documents and invented a relationship between Cusack Sr. and President Kennedy to feed his voracious lifestyle. Cusack did not even defend the authenticity of the documents at the trial. Instead, his counsel argued that someone else, even Cusack Sr., may have fabricated them. The Court also agrees that, under the appropriate circumstances, the filing of a civil suit may support an obstruction of justice adjustment. Nonetheless, the record is insufficient to support a finding that Cusack specifically intended to obstruct justice by filing these lawsuits. The Government has provided no evidence of the context in which the filing of the suits occurred, the status of the investigation at the time of the filing, or any actions or statements by Cusack in connection with the civil suits. As a result, the record will not support a finding that Cusack filed the suits with the specific intent of threatening witnesses to obstruct a criminal investigation.

Although it does not make entirely clear the extent to which this argument is independent of the argument based on threats, the Government also argues that an adjustment for obstruction of justice is appropriate on the ground that "[v]erified false statements by [Cusack] in a complaint in a related civil case would logically be on the same footing as civil-case perjury." There can be little doubt as to the falsity of the statements contained in the complaints, but the Government has provided no authority for the proposition that the filing of a civil complaint containing false statements amounts to perjury within the meaning of the Sentencing Guidelines. Instead, the definition of perjury in the Application Note to Section 3C1.1 is modeled on 18 U.S.C. § 1621, and requires a statement under oath that the defendant knows to be false. See United States v. Bonds, 933 F.2d 152, 155 (2d Cir. 1991). See also Zagari, 111 F.3d at 329 (adjustment for perjury in civil deposition upon finding intent and false testimony regarding a material matter). The complaints, which are not even signed by Cusack, are simply not statements made by him under oath and do not constitute perjury. For these reasons, the record is insufficient to support an obstruction of justice adjustment for the filing of the civil suits.

B. Use of Special Skill — Section 3B1.3

The Government seeks an adjustment for use of special skill under Section 3B1.3. That section states that "if this adjustment is based solely on the use of a special skill, it may not be employed in addition to an adjustment under § 3B1.1 (Aggravating Role). . . ." U.S.S.G. § 3B1.3. Since the Court has adopted the PSR's recommended adjustment under Section 3B1.1 for the defendant's role in the offense, the Guidelines do not permit it to consider a special skill adjustment.

C. Abuse of trust — Section 3B1.3

Unlike the special skill adjustment, however, Section 3B1.3 provides that, "[i]f this adjustment is based upon an abuse of a position of trust, it may be employed in addition to an adjustment under § 3B1.1 (Aggravating Role)." U.S.S.G. § 3B1.1. The Government initially sought an adjustment for abuse of trust based on the defendant's "looting" of his father's estate after his father's death in 1985. The Court subsequently gave notice of a possible adjustment for abuse of trust based on Cusack's taking of documents from the Surrogate's Court, the Archdiocese, and the files of Cusack & Stiles. The Government argued that an adjustment may be available for the thefts from Cusack & Stiles and the Archdiocese but not for the theft from the Surrogate's Court. Cusack argues that the listed entities cannot be called victims since they suffered neither loss of money nor status, and that the adjustment is inapplicable because it only applies where the victim entrusts discretion to the defendant.

Section 3B1.3 authorizes an adjustment of two levels "[i]f the defendant abused a position of public or private trust . . . in a manner that significantly facilitated the commission or concealment of the offense." U.S.S.G. ยง 3B1.3. Like any adjustment under Chapter 3, the ...


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