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United States v. Gigante

July 5, 2006

UNITED STATES OF AMERICA
v.
LOUIS P. GIGANTE, DEFENDANT.



The opinion of the court was delivered by: Denny Chin, D.J.

AMENDED OPINION

In this case, defendant Louis P. Gigante, the operator of a popular restaurant called "Mulino's" in White Plains, New York, is charged with making false statements in connection with a bankruptcy proceeding, fraudulent concealment, and income tax evasion. He was first indicted in November 2003, one day before the statute of limitations was to expire. Four superseding indictments were filed over the course of the next twenty-one months, each adding counts shortly before the applicable statutes of limitations were to expire. The initial indictment and each of the superseding indictments were sealed. The final superseding indictment was not unsealed until August 2005, when Gigante was arrested. Thus Gigante -- whose whereabouts were never unknown, who had been aware for several years that he was under some type of investigation, and who had volunteered to surrender if a grand jury returned an indictment -- was not apprised of the charges against him until more than six years after the last criminal act alleged in the operative indictment, nearly two years after the earliest of the relevant statutes of limitations expired, and about six weeks after the last of the relevant statutes of limitations expired.

The Government contends that the statutes of limitations were tolled by the sealing of the various indictments until August 2005, when the unsealing of the final superseding indictment made the charges public. Gigante moves to dismiss the indictment as barred by the statute of limitations, arguing that the Government has not shown that it had a proper purpose for the sealing of the indictments. I agree. Accordingly, the motion is granted and the indictments are dismissed.

BACKGROUND

A. Gigante's Financial Difficulties

The Gigante saga dates back to February 1992, when the Internal Revenue Service ("IRS") filed a tax lien against Gigante for unpaid federal income taxes for the years 1986 through 1990. Over the next few years the IRS filed more tax liens, and in November 1998 Gigante commenced a bankruptcy action in the Southern District of New York for the discharge of his personal debts. In his bankruptcy petition, Gigante acknowledged that he owed the IRS more than $1 million and stated that he had assets totaling just over $3,000 and a yearly income of approximately $67,000. On June 28, 1999, the bankruptcy court entered an order declaring that Gigante's tax debts were dischargeable in bankruptcy.

B. The Investigation and the Indictments

Some time in 2000, the Government commenced an investigation of Gigante for possible income tax evasion, suspecting that in the bankruptcy proceeding Gigante had deliberately misrepresented his income and assets -- including ownership interests in Mulino's and a limousine business called "Capricorn Limousine Service, Inc." ("Capricorn") -- in an effort to reduce his personal income tax liability.

After three years of investigation, Gigante was indicted for the first time on November 5, 2003. This first indictment contained one count, alleging that on November 6, 1998, Gigante made a false statement in a bankruptcy proceeding. This indictment, which was sealed, was thus filed one day before the statute of limitations on this charge was to expire. See 18 U.S.C. § 3282.

The Government investigation continued, and approximately six weeks later, on December 17, 2003, the grand jury returned a superseding indictment that contained the same count as the previous indictment, and added a count alleging that on December 22, 1998, Gigante gave false testimony under oath before a United States Trustee in a personal bankruptcy hearing. The statute of limitations on this count would have expired five days later, on December 22, 2003. See 18 U.S.C. § 3282. This superseding indictment was also sealed.

On March 15, 2004, after yet more investigation, the grand jury returned a second superseding indictment, containing the two counts from the previous indictments, plus seven additional counts charging bankruptcy fraud, concealment of assets, and false statements. The statutes of limitations for the crimes charged in the newly added counts had various expiration dates, ranging from June 3, 2004, to June 28, 2004. See 18 U.S.C. §§ 3282, 3284. This superseding indictment was also sealed.

On May 23, 2005, after another year to investigate, the grand jury returned a third superseding indictment, alleging facts substantially similar to the previous indictment but adding more detail and referencing two alleged co-conspirators (who were not indicted). It contained ten counts, including the nine counts from the previous indictment as well as, for the first time, a tax evasion count. This count, unlike the other alleged crimes (which carry a five-year statute of limitations), has a six-year statute of limitations. See 26 U.S.C. § 6531. The statute of limitations on the tax evasion count therefore was to expire on June 28, 2005. This third superseding indictment was also sealed.

Finally, on August 8, 2005, after some ten weeks to investigate Gigante's assets, the grand jury returned yet another superseding indictment, containing no new counts but adding allegations to support the forfeiture of those assets. This final indictment (the "Indictment") was unsealed on August 9, 2005. Gigante was arrested the same day. (Lefcourt Aff. ¶ 17).

Over the course of the five-year investigation the Government interviewed approximately thirty witnesses and collected approximately twenty boxes of documents -- an average of one witness every other month, and one box of documents every three months. The Government represents that the investigation is ongoing and anticipates receiving additional documents in response to subpoenas served, in its words, "long ago." (See Gov't Br. at 5).

C. Gigante's Knowledge of the Government's Investigation

During the more than six years between June 28, 1999 (the date of the last alleged criminal act in the Indictment), and August 9, 2005 (the date on which the Indictment was unsealed and Gigante was arrested), Gigante and his attorneys were generally aware that the Government was investigating him. For example, Gigante knew that in December 2000 both Mulino's and Capricorn received grand jury subpoenas. (Lefcourt Aff. ¶ 10). Gigante also knew that grand jury subpoenas had been served upon two banks with which he then did business. (Id.). Gigante's counsel was in contact with both the FBI and the United States Attorney's Office around the time these subpoenas were served in 2000, and in March 2002 Gigante's attorneys spoke with an Assistant United States Attorney about the investigation of Gigante. (Lefcourt Aff. ¶ 11). Gigante's attorneys indicated that while they were unaware of the precise nature of the investigation, they were aware generally that Gigante was being investigated, and they expressed a desire to meet with the Government in an effort to avoid prosecution. (See Greene Reply Aff. ¶ 4; Lefcourt Aff. ¶¶ 10-11). Gigante's counsel also made a practice of notifying the FBI whenever Gigante planned to travel out of the jurisdiction for any reason, with the purpose being to keep the Government apprised of his whereabouts so that he could surrender if he were indicted. (See Greene Reply Aff. ¶ 6).

In early 2004, Gigante was aware that waiters, line chefs, and other employees of Mulino's had received early-morning visits from the FBI, and he also knew that FBI agents attempted to interview his wife. (See Lefcourt Aff. ¶ 15; Greene Reply Aff. ¶ 5). In February 2004, in response to what seemed to be an increased level of Government activity, Gigante's attorney wrote to another Assistant United States Attorney, indicating that "Mr. Gigante has been aware of the government's investigation for some time," and asking that Gigante be allowed to surrender voluntarily if an arrest warrant were issued. (Lefcourt Aff. Ex. J). At this point Gigante was unaware that he had already been indicted in November 2003.

When the Indictment was unsealed and Gigante was arrested on August 9, 2005, Gigante's attorney inquired of the Government how it intended to proceed, given that none of the alleged criminal activity in the Indictment fell within the applicable statutes of limitations. At that point the Government informed him for the first time that there had been a series of sealed indictments dating back to late 2003. (See Lefcourt Aff. ¶ 18).

D. The Government's Reasons for Sealing the Indictment

It appears that the Government's five requests to seal the indictment were made to five different magistrate judges.*fn1

Moreover, it appears that the Government did not inform any of the magistrate judges of the basis for its request for sealing, and there is nothing in the record to suggest that any magistrate judge was advised that the Government wanted the indictments sealed to toll the statute of limitations. (See 5/9/06 Gov't Letter at 4 n.4 ("[W]e believe that on each occasion the magistrate judge did not request -- and the Government did not provide -- a basis for sealing the indictment.")). Nor does it appear that any record was made of any of these proceedings.*fn2

In response to Gigante's motion, the Government has put forth several reasons for sealing the indictments. First, the Government maintains that the sealing of the first three indictments was justified because putting Gigante on notice of the fraudulent concealment and false statement charges would have "compromis[ed] the broader, ongoing tax evasion investigation." (Gov't Br. at 10; see also 5/9/06 Gov't Letter at 2 ("The Government did so to preserve the ability to prosecute Gigante for each of the charged crimes without having to prematurely conclude and ...


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