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United States District Court, S.D. New York

March 29, 2004.


The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge


Defendant Milton Bialostok ("Bialostok") pled guilty on November 18, 2003 to Conspiracy to Commit Money Laundering in violation of 18 U.S.C. § 1956(h). He conspired, along with others, to commit unlawful financial transactions and participated in an offense involving the proceeds of illegal gambling and bookmaking that affected interstate and foreign commerce, in violation of 18 U.S.C. § 1956(a)(1)(A)(i) and 18 U.S.C. § 1956(a)(1)(B)(i). Bialostok avoided transaction reporting requirements, in violation of 18 U.S.C. § 1956 (a)(1)(B) (ii), and engaged in monetary transactions in criminally derived property having a value greater than $10,000, in violation of 18 U.S.C. § 1957. Bialostok will be sentenced to 24 months' imprisonment, to be followed by two years of supervised release. A special assessment fee of $100 is mandatory. Page 2

The Defendant

  Bialostok was born on April 5, 1925 in Lebanon, Pennsylvania to the marital union of Samuel Bialostok and Elsie Lantz. Bialostok's parents are deceased.

  Bialostok completed the twelfth grade in January of 1943 and enrolled in Brooklyn College in June of the same year, where he took evening courses on a part-time basis until June 1953.

  In January of 1949, Bialostok commenced service in the U.S. Army. He held the rank of private, and was honorably discharged in February 1950.

  In September of 1956, Bialostok married the former Joan Alberti in Woodmere, New York. Mrs. Bialostok is currently employed as a sales representative for her husband's vending company. Bialostok and his wife have three adult children together, and Mrs. Bialostok has a son from her first marriage.

  From 1960 through 1986, Bialostok, along with his father-in-law, was the co-owner of Burt Burtaine Tire Company, formerly located in Ozone Park, New York. Bialostok was subsequently employed by Janus Funding from 1986 through 1988 and by Sharpe Home Improvement, formerly located in West Hempstead, New York, from 1988 through 1990. Page 3

  In 1991, Bialostok started his own business, M and B Vending, which, according to Bialostok, rents video, pinball and vending machines to businesses. From 1999 through November of 2002, Bialostok had a one-third ownership interest in Sinderella, an adult entertainment store located in Brentwood, New York. In 2001, Bialostok along with two partners incorporated Long Island Town Car, Inc., located in Ronkonkoma, New York.

  Bialostok's monthly income from M and B Vending is approximately $1,000. His monthly income from his share in Long Island Town Car, Inc. is approximately $500. Bialostok's share of his and his wife's net assets totals $204,984.50.

  The instant offense does not represent Bialostok's first conviction. Bialostok was sentenced to pay a $50 fine in February of 1966 following a conviction for Disorderly Conduct. In March of 1977 Bialostok was sentenced to pay a $500 fine after conviction for Possession of Gambling Records in the Second Degree.

  In January of 1987 Bialostok was arrested in connection with his role in a gambling operation relating to illegal sports betting. On March 9, 1989 he was convicted at trial of four counts of Promoting Gambling in the First Degree, and one count of Conspiracy in the Fifth Degree. He was sentenced to a one-to three-year term of imprisonment and a $150,000 fine. Bialostok began to serve his custodial term on May 24, 1993, and he was Page 4 paroled on April 18, 1994. Bialostok was discharged on the maximum expiration date of April 18, 1996.

  On November 13, 2002, Bialostok was arrested and charged with Enterprise Corruption. According to the Felony Complaint prepared in that matter, Bialostok and his co-defendants are also charged with the offenses of Coercion in the First Degree and Criminal Usury in the First Degree. Those charges are still pending.

  Bialostok suffers from atrial fibrillation, asthma and ileitis, and requires monthly blood monitoring as well as ongoing maintenance procedures as the result of an ileostomy performed in 1963. Among other things, Bialostok also suffers with osteoporosis and scoliosis of the back. He has mild to severe hearing loss in each ear. Bialostok has previously acknowledged experimenting with cocaine and marijuana.

 The Offense

  Bialostok pled guilty to Conspiracy to Commit Money Laundering. Bialostok, along with others, conducted an illegal sports-bookmaking operation in the New York City metropolitan area from May of 1993 through April of 1999. Bialostok was the supervisor of the operation. He engaged in "layered" transactions to make the criminally derived funds appear legitimate, including Page 5 by accepting gambling debt payments by personal checks made out to cash which were then negotiated through the bank accounts* of Bialostok's nominees in such a way as to avoid having Currency Transaction Reports generated by the financial institutions involved. During the course of the conspiracy, Bialostok caused approximately $1.3 million worth of checks from a single bettor to be negotiated or cashed through such "layered" transactions.

  Pursuant to a written plea agreement dated October 28, 2003, Bialostok has admitted to the forfeiture allegation in the indictment and has agreed to forfeit to the United States a sum of money equal to $750,000, pursuant to 18 U.S.C. § 982.

 The Guidelines

  The November 5, 2003 edition of the United States Sentencing Commission Guidelines Manual has been used in this case.

  The parties stipulate that the guideline applicable to Count One is § 2S1.1. Pursuant to § 2S1.1(a)(1), the base offense level is the offense level for the underlying offense from which the laundered funds were derived. As the underlying offense was gambling, pursuant to § 2E3.1(a)(1), the base offense level is 12.

  The offense level is increased by two levels pursuant to § 2S1.1(b)(2)(B) because Bialostok was convicted under 18 U.S.C. § 1956. Page 6 Pursuant to § 2S1.1(b)(3), the offense level is further increased by two levels because the offense involved sophisticated money laundering. As Bialostok was a supervisor in the criminal activity, which involved fewer than five participants, the offense level is increased by another two levels pursuant to § 3B1.1(c).

  Based on Bialostok's acceptance of responsibility, the offense level is reduced by two levels pursuant to § 3E1.1(a). The offense level is further reduced by one level due to Bialostok's timely notification of his intention to plead guilty, pursuant to § 3E1.1(b). In accordance with these calculations, the applicable Guidelines offense level of 15.

  The criminal convictions set forth above result in a subtotal criminal history score of three, pursuant to §§ 4A1.1(a) and 4A1.2(e)(1). As the instant offense was committed while Bialostok was on parole, two points are added pursuant to § 4A1.1(d). The instant offense was also committed less than two years after Bialostok's release from custody on April 18, 1994 for the sentence imposed on March 9, 1989. Pursuant to § 4A1.1(e), one point is added, as two points were added under § 4A1.1(d). The total of the criminal history points is six, which establishes a Criminal History Category of III.

  Based on these calculations, the guideline range for imprisonment is 24 to 30 months. The maximum term of imprisonment Page 7 is 20 years, pursuant to 18 U.S.C. § 1956(h). The parties stipulate that neither a downward nor an upward departure from the guideline range is warranted.

  If a term of imprisonment is imposed, a term of supervised release of not more than three years may be imposed pursuant to 18 U.S.C. § 3583 (b)(2). The guideline range for a term of supervised release is at least two years but not more than three years, pursuant to § 5D1.2(a)(2). Supervised release is required if a term of imprisonment of more than one year is imposed or when required by statute, pursuant to § 5D1.1(a).

  As the applicable guideline range is in Zone D of the Sentencing Table, Bialostok is not eligible for probation, pursuant to § 5B1.1, application note 2.

  A special assessment of $100 is mandatory, pursuant to 18 U.S.C. § 3013.

  The maximum fine is $2,640,400 (twice the value of the monetary instruments), pursuant to 18 U.S.C. § 3571(d). The fine range for the instant offense is from $4,000 to $2,640,400, pursuant to §§ 5E1.2 (c) (3)(A) and 5E1.2(c)(4). Subject to Bialostok's ability to pay, the expected costs to the government of any imprisonment, probation, or supervised release shall be considered, pursuant to § 5E1.2(d)(7). The most recent advisory Page 8 from the Administrative Office of the United States Courts suggests a monthly cost of $1,848.02 to be used for imprisonment, a monthly cost of $270.59 for supervision, and a monthly cost of $1,383.50 for community confinement.

 The Sentence

  In light of his deteriorating health and the significant time that has elapsed since his last conviction, Bialostok will be sentenced at the lower end of the guideline range to 24 months' imprisonment, followed by two years of supervised release.

  No fine will be imposed due to Bialostok's lack of financial resources at this time in light of his agreement to forfeit $750,000 to the government, $500,000 of which has already been received by the government. If Bialostok has not done so prior to sentencing, he shall forfeit to the United States his interest in $250,000 in U.S. currency.

  A special assessment fee of $100 is mandatory and is due immediately.

  Bialostok shall report to the nearest Probation Office within 72 hours of his release from custody, and supervision shall be in the district of residence. As mandatory conditions of supervised release, Bialostok shall (1) abide by the standard terms Page 9 of supervised release (1-13); (2) not commit another federal, state, or local crime; (3) not illegally possess a controlled substance; (4) not possess a firearm or destructive device; (5) provide the probation officer with access to any requested financial information; and (6) not incur new credit charges or open additional lines of credit without the approval of the probation officer unless the defendant is in compliance with the forfeiture payment schedule. The mandatory drug testing condition is suspended based on Bialostok's low risk of future substance abuse.

  This sentence is subject to modification at the sentencing hearing now set for April 1, 2004.

  It is so ordered.


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