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Schwamborn v. United States

September 5, 2007


The opinion of the court was delivered by: I. Leo Glasser United States District Judge


Petitioner Frank Schwamborn seeks reconsideration of this Court's order, dated June 20, 2007, denying his petition pursuant to 28 U.S.C. § 2255 ("Section 2255") to vacate his criminal conviction and sentence in the underlying criminal action, United States v. Aparo et al., 01-CR-416 (E.D.N.Y.). See Schwamborn v. United States, 492 F. Supp. 2d 155 (E.D.N.Y. 2007) ("June 20 Order"), and in the alternative for a certificate of appealability of that order. Mr. Schwamborn argues that the June 20 Order failed to consider an argument raised in his petition-- that he is actually innocent of the racketeering offenses of which he was convicted because one of the crimes involving check fraud (the "Delince check scheme") alleged in the Sixth Superseding Indictment ("Superseding Indictment" or "Sup. Ind.")*fn1 is not properly cognizable as a predicate act under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962 et seq., because it was undertaken by Mr. Schwamborn for his own personal benefit and was not related to the racketeering enterprise identified in the Superseding Indictment. Because Mr. Schwamborn is correct that this Court's June 20 Order inadvertently neglected to address that argument, his motion for reconsideration is granted to the extent necessary to address it now. However, to the extent that Mr. Schwamborn's motion for reconsideration attempts to re-cast the argument put forth in his initial § 2255 petition, which simply challenged the sufficiency of the Government's evidence regarding the Delince check scheme's relation to the RICO enterprise with which Mr. Schwamborn was associated, as a claim of ineffective assistance of counsel-- specifically, that Mr. Schwamborn's former counsel, Michael Washor, ineffectively assisted Mr. Schwamborn by advising him to plead guilty to the racketeering offenses with which he was charged when Mr. Washor knew or should have known that the Delince check scheme was not a valid predicate act for purposes of RICO-- that argument was not presented in his initial petition and is therefore barred as an unauthorized second or successive motion.

On reconsideration, the Court rejects Mr. Schwamborn's argument regarding the Delince check scheme and reaffirms its denial of the other claims for relief presented in his § 2255 petition. Mr. Schwamborn has procedurally defaulted on his argument that the Delince check scheme is not a cognizable predicate act by failing to raise that argument on direct appeal, and in any case, he waived his right to challenge the sufficiency of the Government's evidence by pleading guilty to the Superseding Indictment. His petition to vacate his conviction in the underlying criminal action is therefore denied.


Familiarity with the facts of the case as stated in the June 20 Order and in the Court's written opinions in the underlying criminal action is herein presumed.

However, some additional detail regarding the nature of the offenses to which Mr. Schwamborn pleaded guilty and the procedural history of the underlying criminal action is necessary to place this motion in context.*fn2

1. Factual Allegations Underlying the Charges

Frank Schwamborn was named along with 39 other associates of organized crime in an indictment that was unsealed on April 25, 2001.*fn3 The Sixth Superseding Indictment, which was filed on September 10, 2001, and to which Mr. Schwamborn ultimately pleaded guilty, alleged seven counts against Mr. Schwamborn, all of which related to his participation in a money laundering scheme with co-defendants David Grossman and Robert Santoro. This scheme involved obtaining stolen checks which would then be laundered through City Check Cashing in Jersey City, New Jersey, a check cashing business operated by Santoro. The proceeds from the stolen checks would then be transferred to various accounts, some of which were under the control of the defendants, and each co-conspirator would receive a share of the gains. Counts 1 and 2 of the Superseding Indictment are of particular importance to this motion. Count 1 alleged racketeering in violation of the Racketeering Influenced Corrupt Organizations Act of 1970 ("RICO"), 18 U.S.C. § 1962(c), against all of the defendants, and identified a total of twenty-one predicate racketeering acts, only two of which involved Mr. Schwamborn.*fn4 Sup. Ind. ¶¶ 21-56. Count 2 alleged racketeering conspiracy in violation of RICO, 18 U.S.C. § 1962(d), and incorporated by reference the predicate acts identified in Count 1. Sup. Ind. ¶¶ 57-59. The remaining counts asserted in the Superseding Indictment against Mr. Schwamborn were essentially coextensive with the acts alleged as RICO predicates: conspiracy to commit mail and wire fraud (Count 24),*fn5 substantive wire fraud (Count 25),*fn6 substantive mail fraud (Count 26),*fn7 money laundering (Count 27),*fn8 and interstate transportation of stolen property (Count 36).*fn9 The first of the two predicate acts charged against Mr. Schwamborn is identified in Count 1 of the Superseding Indictment as Racketeering Act 13 (hereinafter the "Cascade Capital scheme"), and, as alleged in the Superseding Indictment, involved elements of wire fraud, mail fraud, and money laundering. Id. ¶¶ 40-44. The Cascade Capital scheme involved a conspiracy among Schwamborn, Salvatore and Vincent Aparo, Peter DiChiara, and Robert Santoro to launder the proceeds of a $125,000 check purportedly stolen from Cascade Capital International, which the defendants believed to be an insurance company but which was in fact the front for an F.B.I. sting operation.*fn10

Genovese family associate Michael Durso, who at the time was working as a cooperating witness for the government, informed Santoro, Grossman, and Schwamborn that he had a contact inside Cascade Capital who could acquire a stolen check and, after being assured by the conspirators that they were capable of laundering the proceeds from such a check, arranged for a "stolen" check in the amount of $125,000 to be sent to Grossman, who deposited it into his bank account. When the check cleared, Grossman wired the proceeds to Santoro at City Check Cashing, who created false documents ascribing the funds to a transaction with a fictitious individual named "James Zimbler," and distributed the ill-gotten gains to the various co-conspirators, including $20,000 to Mr. Schwamborn.

The second predicate act alleged in Count 1-- the Delince check scheme, identified as Racketeering Act 19 in the Superseding Indictment-- lies at the heart of the portion of Mr. Schwamborn's § 2255 petition at issue here. See Sup. Ind. ¶ 53. In November 2000, a blank check was stolen-- whether by Mr. Schwamborn or another person is not entirely clear from the Government's submissions-- from the home of Brooklyn resident Maria Delince.*fn11 The check was subsequently written in the amount of $58,000 to "New York Energy Savers," which was Schwamborn's money laundering account, and cashed by Mr. Schwamborn at City Check Cashing, where Santoro again created fraudulent documents ascribing the transaction to the fictitious James Zimbler. In February 2001, Mrs. Delince discovered the theft and contacted the police, as a result of which Mr. Santoro, through City Check Cashing, was forced to repay the $58,000 to Mrs. Delince. This event caused a rift in the relationship between Santoro and Schwamborn when Santoro demanded to be reimbursed by Schwamborn for the loss he incurred as a result of Schwamborn's actions. After Vincent Aparo and Alan Longo, a captain in the Genovese family, became involved in the situation, Schwamborn eventually paid Santoro $58,600 to resolve the dispute.

2. Post-Indictment Procedural History

Shortly after Mr. Schwamborn was arrested, attorney Michael Washor entered a notice of appearance on his behalf, and continued to represent him throughout most of the proceedings in the underlying criminal action. The charges against Schwamborn, Santoro, and Grossman were eventually severed from the rest of the defendants, and their case was scheduled for trial in November 2002. During the pretrial phase of the proceedings, Mr. Washor engaged in plea negotiations with the Government which, as discussed more extensively in the June 20 Order, ultimately failed to come to fruition because the Government conditioned any agreement on a global plea that would include all three defendants, and Santoro refused to plead guilty to the charges. As Mr. Schwamborn acknowledged in his § 2255 petition,*fn12 one of the defenses that Schwamborn and Washor discussed from an early point in the proceedings was the argument that the Delince check scheme, having been undertaken by Mr. Schwamborn without the authorization of his Genovese family compatriots, and which ultimately caused a rift between him and his co-conspirators, was not "related" to the racketeering enterprise alleged in the Superseding Indictment-- i.e., the Genovese crime family-- and therefore was not cognizable as one of the two predicate acts necessary to establish that Mr. Schwamborn had participated in a "pattern of racketeering activity" as defined by 18 U.S.C. § 1961(4).*fn13 See Schwamborn § 2255 Pet. ¶¶ 8-9.

On October 11, 2002, Grossman pleaded guilty and began cooperating with the Government. Approximately two weeks later, Santoro moved to sever his trial from Schwamborn's, a motion which, for reasons discussed in the June 20 Order, was granted. See June 20 Order, 492 F. Supp. 2d at 158-59. Santoro's trial began on November 4, 2002, and Grossman testified extensively at that trial about Schwamborn's role as a leader or organizer in the money laundering conspiracy. Santoro was ultimately convicted by a jury on several counts on November 18. On November 15, the last business day before Schwamborn's trial was scheduled to commence, Mr. Washor met with AUSA Paul Weinstein, who informed Mr. Washor that although the Government would not offer Mr. Schwamborn a plea agreement, it would not oppose a motion for a two-level reduction of Schwamborn's base offense level under the United States Sentencing Guidelines for acceptance of responsibility, pursuant to U.S.S.G. § 3E1.1, if he pleaded guilty to the Superseding Indictment that day. When Mr. Schwamborn arrived at the courthouse for a pretrial hearing, Mr. Washor met with him to convey the Government's offer. The § 2255 petition states that during that meeting, Mr. Schwamborn continued to question the validity of the Delince check scheme as a predicate act to the RICO counts, but Mr. Washor apparently did not believe that that defense would prevail at trial, and urged Mr. Schwamborn to accept the Government's offer. See Schwamborn § 2255 Pet. ¶ 19. Ultimately, Mr. Schwamborn accepted Mr. Washor's advice and pleaded guilty before this Court to the Superseding Indictment.

At Mr. Schwamborn's plea hearing, the Court engaged in an extended colloquy with Mr. Schwamborn for the purpose of discharging its duty pursuant to Federal Rule of Criminal Procedure 11(b)(3) to determine, prior to accepting a guilty plea, that a factual basis for that plea exists. Mr. Schwamborn's allocution established such a factual basis by acknowledging every element of the charged offenses, including the relatedness of the Delince check scheme to the racketeering enterprise alleged in the Superseding Indictment:

[THE COURT:] If you went to trial on the racketeering count, the first count, what the government would have to prove is, first, the existence of an enterprise. There are five elements that the government would have to prove, if a jury would be justified in finding you guilty of a charge of racketeering. They would have to find the existence of an enterprise. An "enterprise," roughly defined, is a group of people associated in fact for the purpose of accomplishing some common goal-- in this case, for the purpose of making money for the persons who were associated with that enterprise-- by a whole variety of criminal activity.

The enterprise also has to have some ongoing structure, whether it's formal or informal, boss, underboss, other persons who are in a chain of command or organization, and it also has to have personnel to function as a continuing unit.

Given all of that, Mr. Schwamborn, was there an enterprise, as I defined that term to you, [a] group of people who were associated with, who in fact had a common goal of making money for its members by ...

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