The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.
When the Government indicted John A. Gotti in 2004, Gotti moved to dismiss the new charges, asserting that they were barred by the terms of his April 5, 1999 plea agreement with the Government.*fn1 I denied the motion, finding that the plea meant what it said and said what it meant.*fn2 The plea agreement permitted the Government to bring new charges that encompassed events occurring prior to the date of that agreement, so long as such charges were based on "additional evidence or information" that had come to the Government's attention.*fn3
After two failed attempts to convict Gotti on these new charges,*fn4 the Government superseded the indictment on May 22, 2006, adding several new charges, including witness tampering, money laundering, and two new racketeering charges alleging that Gotti used the income derived from racketeering to operate two holding companies.*fn5 Not surprisingly, the Government alleges that all of these newly added crimes occurred or continued after July 1999, which would establish that Gotti's participation as a member of the alleged enterprise, the Gambino Organized Crime Family ("Gambino Family"), falls within the statute of limitations.*fn6 Gotti now moves to dismiss the new money laundering and racketeering charges on the grounds that they are barred by the 1999 plea agreement as well as time-barred.
Once again the Court must carefully examine the 1998 Indictment and the 1999 plea agreement.*fn7 In interpreting indictments and plea agreements, both of which are invariably drafted by the Government, fundamental fairness requires that the Government be held to the highest standards of "both promise and performance."*fn8 The critical documents - the 1998 Indictment, the 1999 plea agreement, and the 2006 Indictment - speak for themselves.*fn9 But if there is any ambiguity, the terms of a plea agreement, like the terms of a contract, must be construed against the drafter.*fn10 In interpreting plea agreements drafted by federal prosecutors, "the courts' concerns run even wider than protection of the defendant's individual constitutional rights - to concerns for the honor of the government, public confidence in the fair administration of justice, and the effective administration of justice in a federal scheme of government.*fn11
The Government has two theories to support these charges. The first theory, boiled down to its essence, is that Gotti continues to receive income from properties purchased in the 1990s with funds he obtained through his criminal activities. The problem with this theory is that the Government already brought these charges (albeit not in haec verba) and dismissed them after Gotti satisfied the terms of his plea agreement.
The plea agreement cannot be both a sword and a shield. When the Government sought to proceed on the 2004 charges, I reviewed the 1999 plea agreement and the plea itself and found that the new charges were not barred. As the Government told the judge in 1999, in response to Gotti's statement that he was seeking closure from the plea agreement, "these are the two sentences that have been agreed upon, and they say what they say."*fn12 The same is true now. As a well-known maxim commands, "what is sauce for the goose is sauce for the gander."
The second theory is that within the limitations period, Gotti used monies obtained from his racketeering activities - specifically loansharking and construction industry extortion - to operate two corporations he formed in the early 1990s. The problem with this second theory is that it is based on nothing but surmise, speculation, and conjecture.
This case is sui generis both because of the prior plea agreement and because there have already been two trials at which the Government presented its evidence.*fn13 As a result of this combination of unique circumstances, the charges against Gotti for racketeering activities in violation of section 1962(a) of Title 18 of the United States Code (Counts Three and Four), and money laundering in violation of section 1956(a)(1)(B)(i) of Title 18 of the United States Code (Count Seven) must be dismissed.*fn14
Unless otherwise noted, the following facts are drawn from the Government's submissions.*fn15 The Government alleges that for at least two decades, Gotti occupied a leadership position in the Gambino Family, and that as a result of his rank, Gotti received portions of all proceeds that were generated by the Gambino Family's racketeering activities. Gotti devised a scheme to conceal the illicit origins of these funds through holding companies and real estate investments. In the late 1980s and early 1990s, Gotti used the proceeds of racketeering activities, specifically, construction industry extortion,*fn16 to purchase real estate in his own name, including: a property on Liberty Avenue in Queens ("Liberty Avenue Property") on August 28, 1987,*fn17 three parcels of land in Milford Township, Pennsylvania ("Milford Township Property") on May 24, 1988,*fn18 a property in Massapequa, New York ("Massapequa Property") on May 1, 1990,*fn19 and a property on 101st Avenue in Jamaica, New York ("101st Avenue Property") on August 10, 1993.*fn20 On December 5, 1995, Gotti used the proceeds of the sale of the Massapequa Property to purchase a property on 1018 Westshore Drive, Oyster Bay, New York, in his own name ("Mill Neck Residence").*fn21
Gotti created two holding companies, JAG Brokerage ("JAG"),*fn22 established on or about August 21, 1991, and 216-02 Hempstead Avenue Corporation ("Hempstead"),*fn23 established on or about October 26, 1993.*fn24 Gotti, using his own name, was the sole shareholder of both corporations from their formation through 2005.*fn25 On or about July 22, 1994, Gotti used JAG to purchase commercial real estate located at 216-02 Hempstead Avenue, Jamaica, New York ("Hempstead Avenue Property") with the proceeds of racketeering, and on or about June 13, 1995, Hempstead purchased that property from JAG.*fn26 The Hempstead Avenue Property has generated rental income for Gotti or his holding companies since the time of its purchase in 1994.
On December 8, 1998, a grand jury in the Southern District of New York returned the 1998 Indictment charging Gotti with several crimes, including violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), for his role in the Gambino Family. The 1998 Indictment named certain properties as the proceeds of racketeering activities subject to forfeiture under sections 1963(a)(1) and (a)(3) of Title 18 of the United States Code.*fn27 The forfeiture allegations included the Milford Township Property and all of the assets of Hempstead, including, but not limited to, a bank account in Hempstead's name, the Hempstead Avenue Property, and rental income from that property.*fn28 The 1998 Indictment also named "substitute assets," including the Massapequa Property, the Liberty Avenue Property, and the 101st Avenue Property, as subject to forfeiture in the event that the assets listed in the forfeiture allegations became unavailable due to Gotti's acts or omissions.*fn29 On June 5, 1998, those properties subject to forfeiture were restrained pursuant to a court order.*fn30
On April 5, 1999, Gotti and the Offices of the United States Attorneys for the Eastern and Southern Districts of New York entered into an agreement pursuant to which Gotti pled guilty to charges of racketeering activity including bribery, conspiracy to commit extortion, mail fraud, and supervision of gambling operations, as well as charges of conspiracy to make extortionate extensions of credit (i.e., loansharking) and filing a false tax return*fn31 Gotti admitted the allegation in the 1998 Indictment that he had acquired "property constituting, and derived from proceeds which [he] obtained, directly and indirectly, from racketeering activity in violation of Title 18, United States Code, Section 1962, thereby making such interests and property forfeitable to the United States of America."*fn32 Gotti agreed to forfeit two properties named in the 1998 Indictment.*fn33 Gotti did not agree to forfeit the other properties listed by that Indictment, but rather, paid a "liquidated RICO forfeiture judgment in the amount of $1,000,000."*fn34 The agreement provided that the United States would have the right to forfeit the Milford Township Property and Hempstead's assets in the event that Gotti failed to pay the judgment.*fn35 The plea agreement also provided that the restraining order would remain in effect until payment of the liquidated amount in full.*fn36
Subsequent to his plea, Gotti was sentenced to seventy-seven months in custody. On September 9, 1999, while incarcerated, Gotti sold the Mill Neck Residence and used the proceeds to make the payment to the Government required by his plea agreement, to pay off an existing mortgage, and to purchase a family residence in Oyster Bay, New York (the "Oyster Bay Residence") in his and his wife's names.*fn37 Pursuant to the plea, the Government dismissed all remaining counts in the 1998 Indictment,*fn38 and the restraining order was lifted.*fn39
Commercially available databases containing information from the New York Secretary of State indicate that Hempstead was "dissolved by proclamation" on or about December 29, 1999, although Hempstead continued to maintain a bank account and receive rental payments at that time.*fn40 JAG remains listed as "active."*fn41 Gotti filed income tax returns for JAG, Hempstead's parent company, for the tax years 2001 and 2002. The Government proffers that the total amount of money deposited in the corporate bank account is less than the amount of rental income declared by JAG and Hempstead in their corporate tax returns (although the Government reports that the tax return figure is based on estimated rather than actual receipt of income).
Between March 2000 and August 2005, tenants at the Hempstead Avenue Property made cash payments totalling $144,000.*fn42 During that same time period, $95,000 in cash was deposited into Hempstead's bank account, and at least $113,000 in cash was deposited into Gotti's personal bank account.*fn43 The Government argues that the unexplained $64,000 discrepancy between total rent income and total cash deposits is circumstantial evidence that Gotti received the proceeds of racketeering activity and used those proceeds to operate JAG and Hempstead (the "enterprises") within the limitations period.
The Government alleges that Gotti used Hempstead's bank account to make thirty-five mortgage payments totaling over $250,000 on the Oyster Bay Residence between 2002 and 2005, to pay real-estate taxes on the Oyster Bay Residence totaling over $25,000, to pay legal fees of over $60,000, to make cash withdrawals exceeding $57,000, and to invest $3,800 in his brother Peter Gotti's business, Uncle Crumm's Bakery, in March and May 2001. On his personal income tax returns in 2002, Gotti claimed a writeoff in the amount of $96,000 for investments in Uncle Crumm's Bakery.
On July 21, 2004, less than two months before Gotti was to be released from custody, a grand jury in the Southern District of New York returned another indictment bringing new RICO charges against Gotti and three codefendants ("2004 Indictment"). The 2004 Indictment contained a racketeering count alleging that the means and methods of the Gambino Family included money laundering.*fn44 That indictment did not contain a separate money laundering count or forfeiture allegations.
On July 27, 2004, Gotti executed a deed purporting to transfer the 101st Avenue Property to Pedro Martinez and Santiago Arias for $150,000, which deed was not recorded with the Queens County Clerk until July 20, 2005. On February 20, 2005, Gotti executed a deed transferring the Milford Township Property to his mother and sister. On April 27, 2005, Gotti proclaimed in a corporate resolution that his wife was authorized to act on behalf of Hempstead to borrow $100,000 from Madison Home Equities secured by the Hempstead Avenue Property. Gotti obtained the $100,000 loan on May 3, 2005, and Hempstead made payments on the loan in 2005.
On May 13, 2005, this Court denied Gotti's motion to dismiss the 2004 Indictment, rejecting Gotti's argument that his 1999 plea agreement barred further charges for conduct occurring before the date of the plea.*fn45 On June 6, 2005, the grand jury returned a superseding indictment against Gotti seeking forfeiture of assets including $25,000,000, the Hempstead Avenue Property, the Milford Township Property, the 101st Avenue Property, the Oyster Bay Residence, and the Liberty Avenue Property.*fn46 On August 10, 2005, after his first trial started, Gotti executed a deed transferring the Oyster Bay Residence to his wife for no consideration, and she encumbered that property with an $800,000 mortgage. On February 13, 2006, the day before the commencement of Gotti's second trial, Gotti executed a deed transferring the Liberty Avenue Property to Vincent Spirito for $400,000. Gotti retained an interest in that property in the form of a $190,000 mortgage by Spirito.
After Gotti's second trial, the Government filed liens against the Oyster Bay, Liberty Avenue, and Hempstead Avenue properties.*fn47 On April 14, 2006, this Court entered a Stipulation and Order under which Gotti agreed not to engage in further transfers pending the resolution of this case ("Freeze Order"). Gotti reserved his right to seek modification of the Freeze Order in order to pay legal fees pursuant to United States v. Monsanto.*fn48 The Government reserved its rights to pursue its forfeiture claims and other arguments regarding the allegedly improper transfers of the properties at issue.*fn49
On May 22, 2006, a grand jury in the Southern District of New York returned the superseding 2006 Indictment against Gotti. Counts Three and Four of this indictment charge Gotti with using and investing income from racketeering activities to acquire, establish, and operate two enterprises, JAG and Hempstead, in violation of section 1962(a) of Title 18 of the United States Code. Count Seven of the 2006 Indictment charges Gotti with money laundering based on his collection of income from real estate purchased by holding companies created and operated with proceeds derived from racketeering activity. On June 29, 2006, upon submission by Gotti of financial disclosures to the Government, this Court entered a Stipulation and Order allowing Gotti to obtain a mortgage on ...