The opinion of the court was delivered by: ARTHUR SPATT, District Judge
MEMORANDUM OF DECISION AND ORDER
This criminal prosecution initially arose out of a series of
fires that occurred from 1987 to 1999 at a clothing factory in
the Williamsburg section of Brooklyn, New York. The factory was
once a place where women's clothing was manufactured for sale to
high end retailers such as Neiman-Marcus, Saks Fifth Avenue, and
Bloomingdales. On New Year's Eve 1998, the factory was the scene
of a suspicious fire in which a firefighter temporarily became
lost deep inside the factory while battling the blaze. The
investigation that followed resulted in a thirty-four count
indictment against one of the owners of the business that
occupied the factory on charges of arson, conspiracy, insurance
fraud, creditor fraud, and money laundering.
On May 19, 2005, after a four week jury trial, the defendant
Nat Schlesinger ("Schlesinger" or the "Defendant") was convicted
of one count of arson and one count of use of fire to commit a
felony in connection with the December 31, 1998 fire (the "1998
New Year's Eve Fire"). In addition, Schlesinger was convicted of
one count of conspiracy to commit mail and wire fraud with regard
to insurance claims, thirteen counts of mail fraud, and two
counts of wire fraud on the insurance claims, and one count of
conspiracy to engage in monetary transactions with insurance
fraud proceeds in connection with the scheme to fraudulently inflate insurance
claims on the losses suffered as a result of the 1998 New Year's
Eve fire and four other fires that occurred at the factory. This
fraudulent scheme was carried out by the Defendant through the
use of bribes and false documents involving fires spanning a
period from 1991 to 1999.
Schlesinger was also convicted of one count of conspiracy, four
counts of mail fraud, and three counts of engaging in monetary
transactions with fraudulent proceeds resulting from a second
scheme to defraud the creditors of the clothing manufacturing
businesses that he controlled. This scheme involved the use of
nominees and shell corporations to carry out what was, in effect,
two self organized bankruptcies. The Defendant, who with his
brother Jack Schlesinger, owned and controlled both companies
involved, was able to transfer the assets and operations of a
financially unstable company to an ostensibly new company. As a
result, on two occasions the creditors of the businesses were
deprived of their machinery and equipment collateral and left
with judgment proof debtors.
At the conclusion of the trial the Defendant moved for a
judgment of acquittal pursuant to Rule 29 of the Federal Rules of
Criminal Procedure on the counts of arson and use of fire to
commit a felony. The Defendant contended that there was
insufficient evidence at trial to support a conviction of arson
and that the jury was improperly influenced by the evidence
presented concerning the other counts. The Defendant also argued that an out of court statement allegedly
related to the fire should have been excluded by the Court as
inadmissible hearsay. At the conclusion of the Government's case,
at the end of the entire case, and after the verdict the Court
reserved decision on these Rule 29 motions. For the reasons set
forth below, the motion is denied.
Along with his brother Jack, the Defendant Nat Schlesinger
owned and operated a place of business in the Williamsburg
section of Brooklyn in a building that occupied an entire city
block bordered by Wallabout Street, Kent Avenue, and Classon
Avenue. The place of business was identified at various times as:
(1) 48-76 Wallabout Street, Brooklyn, New York; (2) 50 Wallabout
Street, Brooklyn, New York; (3) 750 Kent Avenue, Brooklyn, New
York; and (4) 1 Classon Avenue, Brooklyn, New York ("the
Premises"). The two brothers operated a clothing manufacturing
company at this location beginning in the 1980's under the names
Pous Apparel, Inc., Private Brands of Delaware, Inc., and
Goodmark Industries, Inc. At the time of the 1998 New Year's Eve
Fire, the business was operating under the name Goodmark
The Premises was designed and equipped as a knit clothing
factory. The three story building contained all the processes
necessary to design and manufacture women's clothing. The first
floor contained storage for the yarn as well as knitting,
slicing, and framing machines. The second floor housed sewing and
dying machines to wash, dye, and cut the fabric. The second floor also contained
a design room and an office. That office was primarily occupied
by Nat and Jack Schlesinger. The third floor was the shipping
area where the clothes were stored, boxed, and eventually shipped
out to the customers. The clothes were stored on the third floor
by hanging them in aisles of racks or by storing them in boxes.
On Thursday, December 31, 1998, at about 10:30 p.m., a fire
broke out in the third floor shipping area. On that day the
factory had closed at 5:00 pm for the New Year's Eve holiday.
Normally the factory operated twenty four hours a day, six days a
week, and was only closed on Friday nights and Saturdays for
religious reasons. At the trial, the following witnesses
testified concerning the events leading up to the fire: (1) Jack
Schlesinger's son-in-law Israel Schwimmer, (2) the manager of the
third floor shipping department Abraham Weiser, and (3) Jack
Schlesinger's son Victor Schlesinger.
Israel Schwimmer worked at Goodmark for several years.
Schwimmer testified that on the day of or a day prior to the 1998
New Year's Eve fire he observed the Defendant and his son David
removing about four or five bags of papers from the Defendant's
file cabinets. Schwimmer testified that before he left on the day
of the fire he stopped in to see Jack Schlesinger in the main
office. While in the office he overheard a conversation between
Abraham Weiser and the Defendant. Weiser told the defendant that
he was going to lock up the third floor for the day. The
Defendant told Weiser that he would take care of locking up the third floor
that day. Israel Schwimmer left the building at about 5:00 pm
that day and Jack and Nat Schlesinger remained at the factory in
the second floor office.
Abraham Weiser had worked for the Defendant for approximately
twelve years until the clothing business closed in 2000. At the
time of the fire, Abraham Weiser was the supervisor of the
shipping department located on the third floor. He was
responsible for packing the manufactured garments in boxes to
send by UPS or in bags via their own truck. Weiser testified that
no other employees worked with him in the shipping area in
December 1998. One of his responsibilities was to secure the two
entrances to the third-floor shipping area and turn off the
lights by closing the circuit breaker each night before he left.
In fact, Abrahm Weiser testified that it was his practice to
secure both doors and turn off the circuit breaker at the end of
the day and that the only other people with keys to that floor
were Jack and Nat Schlesinger. However, Abraham Weiser did not
have keys to the exterior entrances of the factory.
Weiser testified that on December 31, 1998, he was the only
person on the third floor during the day. He testified that he
did not smoke; that smoking was not permitted in the building;
and he did not observe anyone smoking on the third floor on the
day of the fire. Weiser stated that he "wouldn't let them smoke"
because he "can't take the smoke." Tr. at 616. Weiser further
testified that there were no flammable liquids, thinners, dyes,
linseed oils or the smell of smoke or any other unusual odor before he left on December 31, 1998. Weiser stated that
occasionally a small cleaning gun was used on the third floor to
remove stains from the finished garments. Weiser testified that
on December 31, 1998, at about 4:00 p.m., he locked up the third
floor and turned off the circuit breaker providing electricity to
the third floor, locked both doors, and left the building.
Victor Schlesinger testified that he had maintained an office
in the Premises on the second floor. Victor stated that he would
typically visit the factory and his father Jack daily at the end
of the day. He stated that he did not have keys to the factory
but that the security guard would let him in. On the day of the
fire, Victor went to his father's office and found his father
with Nat. While in the office, Victor told his father that he
wanted to come back to the building later that evening to get
some work done. The Defendant overheard this request and told
Victor, "No, you are not coming back here." Tr. 1490. In
response, Jack told Victor that he should listen to Nat and not
return to the building. While this conversation was occurring,
Victor observed Abraham Weiser enter the office and tell the
Defendant and Jack that he was closing up the third floor. Victor
testified that the Defendant told Weiser, "No, don't close up the
third floor, I'm going to close it." Tr. 1491.
At about 10:30 pm on December 31, 1998, the New York City Fire
Department received reports of a fire at the Premises. Several
fire companies were dispatched and confirmed that there was
visible fire coming from the third floor of the factory. All of the entrances to the Premises were locked and secure when the
fire department arrived. The fire department forced entry into
the factory and ascended the stairs to the third floor. At the
top of the stairs they found that the entrance to the third floor
was also locked and had to break down that door. Inside the third
floor there was a smokey fire that was difficult to find. One of
the firefighters became lost while searching for the fire and
sent out a "mayday." The firefighter was quickly rescued and was
unharmed by the incident.
The fire was eventually found to be located underneath a
mezzanine that was constructed above the third floor. Under the
mezzanine, clothes were hung from rows of racks. Above the
mezzanine boxed goods were stored. Firefighters testified that in
order to extinguish the fire they had to proceed through each of
the rows of clothes under the mezzanine. Part of the mezzanine
eventually collapsed due to the fire. The investigation that
followed revealed that the main body of fire was located under
the mezzanine and that the boxes stored above the mezzanine were
not charred as much as the goods stored below.
The New York City Fire Marshal was requested to go to the scene
the night of the fire, but was unable to respond until the
following Monday due to the New Year's holiday. On Monday,
January 4, 1999, the Fire Marshal conducted a quick investigation
and determined the cause of the fire to be "not ascertained." The
Fire Marshal explained that due to lack of resources the
investigator was unable to search under the partially collapsed mezzanine, and thus labeled the
location of the fire as the third floor, origin unknown. After
the Fire Marshal left the owners were allowed back inside the
Israel Schwimmer and Victor Schlesinger both testified with
regard to the events that took place the Monday following the
fire, which was the first day the owners were allowed back into
the factory. Israel Schwimmer testified that he went to the main
office where he saw the defendant with Jack Schlesinger, Milton
Jacobi, Abraham Weiser, and the Defendant's son, Sam Schlesinger.
There Schwimmer overheard a conversation between Nat Schlesinger
and his son Sam Schlesinger, who was an insurance claims
adjuster. The Defendant told him to "put together a nice claim"
and to "put everything, new fabric, old fabric, whatever he could
put in the claim." Tr. at 508-09. Schwimmer also recalled a
conversation between the Defendant and his son David. This
testimony was admitted without objection:
Q And what was that conversation?
A A week after the fire they were discussing the
fire, the fire was good. A job well done.
Q Who said a job well done?
Q Who did he say that to?
A His father, Nat. Q What did the defendant, Nat Schlesinger, say in
A We will wait for the claim that is going to go
Q Where were you when they were having this
A I was in the hallway out of the office.
Q Where was the defendant and his son, David
A In the office.
Tr. at 510.
Victor Schlesinger testified that he observed substantial
damage in the building and described it as a "whole mess." Tr.
507, 1493. When Victor went to see his father Jack in the second
floor office that day, he found him with the Defendant. The
Defendant was telling Jack Schlesinger to go slow in starting up
the business because adjusters needed to come down and assess the
damage. While they were in the office, the Defendant's son David
Schlesinger entered the room and stated "job well done." Tr.
1500. Victor testified that the statement was made with bravado
as a "happy thing," despite the fact that he was standing in the
midst of ...