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United States v. International Longshoremen's Association

November 1, 2007

UNITED STATES OF AMERICA PLAINTIFF,
v.
INTERNATIONAL LONGSHOREMEN'S ASSOCIATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Glasser, United States Senior District Judge

MEMORANDUM AND ORDER

In this civil Racketeer Influenced and Corrupt Organizations Act of 1970 ("RICO") action, the defendants identified in the margin*fn1 have moved to dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) ("Rule 12(b)(6)") for failure to state a claim on which relief can be granted.*fn2 The ILA also moves, pursuant to Federal Rule of Civil Procedure 12(f) ("Rule 12(f)"), to strike certain allegedly immaterial historical allegations from the Amended Complaint, a motion in which some other defendants join. The defendants raise a number of challenges to the sufficiency of the Amended Complaint, arguing primarily that the Government has failed to adequately plead the necessary elements of a civil RICO conspiracy in several ways, including failure to allege a cognizable association-in-fact RICO enterprise and failure to adequately allege the predicate acts of extortion, mail fraud, and wire fraud. For the reasons stated below, the ILA's motion to dismiss the Amended Complaint pursuant to Rule 12(b)(6) is granted. All other pending motions are denied as moot.

BACKGROUND

I. Allegations in the Amended Complaint

This action is the latest episode in a decades-long effort by the United States to curtail the influence of the La Cosa Nostra organized crime families over the vehicles of interstate commerce operating along the waterfront areas in the Port of New York and New Jersey and the Port of Miami.*fn3 The Government's prolix, 85-page Amended Complaint, with its hundreds of pages of attached exhibits, alleges in essence that from 1995 onward, the Genovese and Gambino crime families conspired with their associates occupying high-ranking positions in legitimate Waterfront operations, particularly the ILA and several associated labor organizations, to extend and maintain the influence of organized crime through a pattern of racketeering activity including extortion, money laundering, and mail and wire fraud. The Amended Complaint is burdened with lengthy discussions of the history and operations of La Cosa Nostra generally, as well as discussions of Government investigations and prosecutions of organized crime activity on the Waterfront going back several decades. While the Government argues that all of this historical material is necessary to place the allegations regarding the charged conspiracies in their proper context, the Court shall ignore much of this material and focus its discussion of the relevant facts on the allegations comprising the charged offenses as well as the relatively recent related civil and criminal litigation that directly preceded this action.*fn4

A. The Defendants

The Amended Complaint separates the numerous defendants into three classifications: the Nominal Defendants, who are not charged with wrongdoing but are named as defendants, presumably pursuant to Federal Rule of Civil Procedure 19(a) ("Rule 19"),*fn5 "for purposes of effecting the full relief sought in this action," Gov. Mem. at 4, the ILA Officer Defendants, and the La Cosa Nostra ("LCN") Defendants. The ILA Officer Defendants and the LCN Defendants, who are alleged to have conspired together to conduct the pattern of racketeering activity set forth in the Amended Complaint, are sometimes referred to collectively as the "Racketeering Defendants." Before proceeding to recount the factual allegations underlying the Government's claims, it shall be useful to provide an overview of the numerous defendants identified in this action.

1. The Nominal Defendants

The International Longshoremen's Association is a labor union that represents approximately 59,000 longshoremen and other laborers working in ports around the United States.*fn6 Am. Compl. ¶ 15. The ILA is divided into two regions, the Atlantic Coast District and the South Atlantic & Gulf Coast District, each of which is comprised of an unspecified number of local unions. Id. Each ILA local and district organization is governed by a group of officers, and the entire organization is governed by the ILA Executive Council, which is comprised of the President, Secretary-Treasurer, Executive Vice-President, General Vice-President, General Organizer, Assistant General Organizer, and twenty-six Vice-Presidents. Id. ¶¶ 15-16. Executive Council Members are elected at the ILA's Conventions, which occur every four years; if a vacancy occurs on the Executive Council during a non-Convention year, the remaining Executive Council members elect an individual to occupy the vacant position until the next Convention, either from the general ILA member population, if the vacant position is not the Presidency, or from the remaining Executive Council members, if the President is being replaced. Id. ¶¶ 95-96.*fn7 The duties of these positions are generally self-evident, so the Court shall not dwell on their descriptions except to note that the Executive Vice-President "shall act on behalf of the President whenever the International President shall be ill, absent, incapacitated, or unable to serve," and that the General Organizer, Assistant General Organizer, and the Vice-Presidents "shall. . . assist [the International President] during the session of the Convention and in other such manner and form as the International President may. . . request or direct. . . ." Am. Compl. ¶ 16 (quoting ILA Constitution Article IX, §§ 2, 4). The Executive Council possesses the ultimate authority to impose disciplinary measures, ranging from fines to the suspension or cancellation of individual membership or an organizational charter, upon all ILA members and subordinate labor organizations. Id. ¶ 16 (citing ILA Constitution Art. XVIII).*fn8 The top six Executive Council officers-- i.e., the President, Secretary-Treasurer, Executive Vice-President, General Vice President, General Organizer, and Assistant General Organizer-- are well-compensated: in 2004, the annual salaries associated with those positions ranged from $257,120 for the General Vice-President to $413,556 for the President. Am. Compl. ¶ 17.*fn9 In addition, Executive Council members typically hold office at the local or district level and receive a salary associated with that office as well. Id.

The Management-International Longshoremen's Association Managed Health Care Trust Fund ("MILA") is a benefit fund that provides health insurance nationally for ILA members. MILA was established by the ILA and companies employing ILA labor ("Management") in 1996, pursuant to a Master Contract between the ILA and Management providing for health benefits for longshoremen on the Atlantic and Gulf Coasts. Id. ¶¶ 115-116. MILA provides health care benefits, including prescription drug coverage and mental health benefits, to the majority of ILA Members. Id. ¶ 120. MILA is governed by its Board of Trustees ("MILA Board"), id. ¶¶ 27-28, which is comprised of 18 ILA representatives and 18 Management representatives, and has two Co-Chairmen. Id. ¶¶ 117-118.

The Metropolitan Marine Maintenance Contractors' Association ("METRO") is an association of employers engaged in interstate commerce on the Waterfront, who directly or indirectly employ ILA members. Id. ¶ 33. METRO and ILA Locals 1804-1 and 1814 have established three funds for the benefit of the members of those locals-- the METRO-ILA Fringe Benefit Fund, the METRO-ILA Pension Fund, and the METRO-ILA Individual Account Retirement Fund (collectively, the "METRO-ILA Funds"),*fn10 each of which are governed by a Board of Trustees. METRO, the METRO-ILA Funds, and the Board of Trustees of each METRO-ILA Fund are named as nominal defendants in this action; Locals 1804-1 and 1814 are not named. Id. ¶¶ 34-38.

Finally, the Amended Complaint names ILA Executive Vice-President Richard Hughes, General Vice-President Benny Holland, General Organizer Gerald Owens, and twenty-four Vice-Presidents*fn11 as nominal defendants. Id. ¶¶ 21, 24-26. Hughes, Holland, and Owens are also nominal defendants in their capacities as members of nominal defendant MILA Board. Id. ¶¶ 21, 24-25. The Amended Complaint alleges that the Vice-Presidents "'follow the lead' of the 'Big Six' ILA Executive Officers in all union matters of importance." Id. ¶ 26.

2. The LCN Defendants

The Amended Complaint identifies four individuals alleged to be members or associates of organized crime who were active participants in the alleged RICO conspiracies. Peter Gotti is alleged to be the boss of the Gambino organized crime family. Id. ¶ 29. Gotti has entered into a consent decree with the Government resolving the claims against him in this action, and is therefore no longer an active defendant. See Consent Degree and Judgment, dated April 11, 2006 (docket no. 79). Pursuant to that decree, Mr. Gotti is permanently enjoined from, inter alia, participating in the affairs of the ILA or the Waterfront Enterprise in any way. Id. ¶¶ 3-4. Anthony Ciccone is alleged to be a captain in the Gambino family, and Jerome Brancato is alleged to be a soldier in the same family. Am. Compl. ¶¶ 30-31, 104-105. James Cashin is a former ILA official and an alleged associate of the Genovese organized crime family. Id. ¶ 32.

3. The ILA Officer Defendants

The Amended Complaint charges several ILA Executive Council members with active participation in the alleged RICO conspiracies. Foremost among these is John Bowers, Sr., whom the Amended Complaint alleges has been President of the ILA since 1987 and was Executive Vice-President for twenty-four years before ascending to the Presidency.*fn12 Am. Compl. ¶ 18. The Amended Complaint further alleges that Bowers presently holds or has held a number of other high-ranking offices in various ILA district and local union organizations, id., and that he was a Co-Chairman of nominal defendant MILA Board at all times relevant to this action. Id. ¶ 118. Finally, the Amended Complaint alleges that Bowers is an associate of the Genovese family, and that he was an unindicted co-conspirator in United States v. Coonan, No. 87-CR-249 (S.D.N.Y.) (WK), which involved allegations of extortion and murder of ILA Local 1909 and 1809 officials by associates of the Gambino family. Id.

The second ILA Officer Defendant identified in the Amended Complaint is Robert E. Gleason, the Secretary-Treasurer of the ILA, whom the Government alleges is a Genovese family associate and "son of former ILA President and Genovese family associate 'Teddy' Gleason." Id. ¶ 19. The Government further alleges that Gleason is a member of nominal defendant MILA Board, and has held other positions of trust within the ILA and related organizations. Id. ¶¶ 19, 118.

Harold J. Daggett is the Assistant General Organizer of the ILA,*fn13 as well as President of ILA Local 1804-1 and, until recently, a member of nominal defendant MILA Board. Id. ¶¶ 22, 118. Daggett is alleged to be an associate of the Genovese family. Id. ¶ 22. In 2004, Daggett was indicted on charges of extortion conspiracy and mail and wire fraud conspiracy in United States v. Coffey, No. 04-CR-651 (E.D.N.Y.) (ILG). Mr. Daggett was tried before a jury in this Court, where he was ultimately acquitted on November 8, 2005. See Am. Compl. ¶ 22; Ex. 1-2 (Superseding Indictment and Complaint in Coffey). The details of the Coffey case are discussed in Background Part II(D), infra.

Arthur Coffey is a Vice-President of the ILA Executive Council and holds various positions in several ILA district and local organizations, including as a member of nominal defendant MILA Board.*fn14 Am. Compl. ¶¶ 23, 118. Coffey was indicted on charges of extortion conspiracy and mail and wire fraud conspiracy in United States v. Coffey. Id.; see also id. Ex. 1, 2 (Superseding Indictment and Complaint in Coffey). He was tried jointly with Harold Daggett before a jury in this Court, and was likewise acquitted on November 8, 2005. Am. Compl. ¶ 23; see Background Part II(D), infra.

ILA Officer Defendant Albert Cernadas executed a consent decree resolving the claims against him in this action prior to the filing of the Amended Complaint. Id. ¶ 20. Prior to executing the consent decree, Cernadas was the Executive Vice-President of the ILA and, inter alia, a member of nominal defendant MILA Board. Id. ¶¶ 20, 118. Pursuant to the terms of the consent decree, Cernadas resigned from all of his ILA-related positions and is permanently enjoined from holding any position in the ILA or the Waterfront Enterprise. Id.; see also Am. Compl. Ex. 13 (Cernadas consent decree). Cernadas was indicted in Coffey for mail and wire fraud conspiracy in violation of 18 U.S.C. § 371, charges arising in connection with acts undertaken in his capacity as an officer of the ILA. See Am. Compl. ¶ 20, Ex. 1 (Coffey Superseding Indictment). On September 12, 2005, Cernadas pleaded guilty before this Court to the charges against him in that case. Am. Compl. ¶ 20; see Background Part II(D), infra.

B. The Alleged RICO Conspiracies

The Amended Complaint alleges two counts of RICO conspiracy-- conspiracy to violate 18 U.S.C. § 1962(c)*fn15 ("§ 1962") in violation of § 1962(d)*fn16 (Count 1), seeAm. Compl. ¶¶ 70-83, and conspiracy to violate § 1962(b) in violation of § 1962(d) (Count 2).*fn17 See Am. Compl. ¶¶ 252-56. Both counts are alleged against all of the Racketeering Defendants "together with others, known and unknown," id. ¶¶ 71, 253, and rely on the same alleged predicate acts to establish the requisite patterns of racketeering. Both counts also rely on the same allegations regarding the composition and purpose of the Waterfront Enterprise. Indeed, the section of the Amended Complaint captioned "Second Claim for Relief" does little more than incorporate by reference the allegations made in earlier sections of the Amended Complaint, including the lengthy recitations of alleged predicate acts in the section captioned "First Claim for Relief," and assert that the same acts also constitute a conspiracy to violate § 1962(b). See id. ¶¶ 252-258. The Court may therefore discuss the factual allegations underlying the Government's claims without distinguishing between the two RICO conspiracy counts.

1. The Waterfront Enterprise

At the heart of the Government's theory of this case is the "Waterfront Enterprise," an alleged association-in-fact RICO enterprise that is comprised of the members of the Gambino and Genovese families operating on the Waterfront and their associates and co-conspirators in the ILA and other legitimate Waterfront organizations. The Amended Complaint defines the Waterfront Enterprise as an aggregation of the ILA and certain of its subordinate components, namely, the Atlantic Coast District, the South Atlantic & Gulf Coast District, Locals 1, 824, 1235, 1588, 1804-1, 1814, 1922, 1922-1, and 2062; certain current and former ILA officials; certain welfare benefit and pension benefit funds managed for the benefit of ILA members, namely, MILA, the METRO-ILA Funds, the ILA Local 1922 Health and Welfare Fund, the ILA-Employers Southeast Florida Ports Welfare Fund; certain businesses operating on or about the Waterfront; an "employer association" operating on or about the Waterfront, namely METRO; certain members and associates of the Genovese and Gambino crime families; and certain businesses operating in the Port of Miami. . . .

Am. Compl. ¶ 67. The Government alleges that each of the Racketeering Defendants "were leaders of the Enterprise who directed other members of the Enterprise in carrying out unlawful and other activities in furtherance of the conduct of the Enterprise's affairs." Id. ¶ 69. In a section captioned "Purpose of the Enterprise," the Government alleges that

[t]he Defendants' common purpose was to exercise corrupt control and influence over labor unions and businesses operating on the Waterfront, the Port of Miami and elsewhere in order to enrich themselves and their associates. In order to achieve this objective, the Defendants have established and maintained control and influence over labor unions and businesses. To ensure the continued effectiveness of this corrupt system and as part of the overall plan and pattern of control, the Gambino and Genovese families have generally maintained and recognized their respective areas of control and domination on the Waterfront, the Port of Miami and elsewhere.

Id. ¶ 68. At oral argument, counsel for the Government clarified that, notwithstanding the caption's suggestion that paragraph 68 alleges the common purpose of the enterprise, the purpose identified in paragraph 68 is alleged to be shared only by the Racketeering Defendants, and not by the nominal defendants or, presumably, any member of the Waterfront Enterprise not named as a defendant in this action. See Tr. at 101-02.

2. The Alleged Pattern of Racketeering Acts

The Government alleges fifteen acts of racketeering undertaken by some or all of the Racketeering Defendants between 1995 and 2002, which it argues establish the "pattern of racketeering" necessary for RICO liability. The Court shall briefly summarize each of the alleged acts, taking the allegations in the Amended Complaint as true.

a. Rigged Election of Harold J. Daggett and Others to High-Ranking ILA Offices*fn18

The Government alleges that in June 1999, George Barone, "a Genovese family member, former ILA official, and convicted racketeer," met with ILA President John Bowers at a restaurant in Miami to discuss who would replace Bowers as ILA President upon Bowers's retirement. Am. Compl. ¶ 87. Barone had learned that Bowers favored Benny Holland as his replacement, and wanted to make it clear to Bowers that the Genovese family preferred Harold Daggett, whom Barone had placed into other ILA district and local positions and believed could be relied upon to advance Genovese family interests as ILA President. Barone arranged the meeting with Bowers through defendant Arthur Coffey, who at the time was President of ILA Locals 1922, 1922-1, and 2061, all based in Miami. During the meeting, Bowers agreed to support Daggett as his successor in exchange for a promise from Barone that Bowers's son, John Bowers, Jr., would be "taken care of" by the ILA and the Genovese family following Bowers's retirement. Id. ¶ 90.

The conspiracy to place Daggett in a position to replace Bowers took a step forward in 2000, when ILA General Organizer Frank Lonardo decided to resign from his position. Because 2000 was a non-Convention year, the Genovese family and its co-conspirators planned to place Daggett into the vacant General Organizer position by means of an Executive Council election held in Lake Tahoe in July 2000. Placing Daggett on the Executive Council would enable him to be elevated to the position of ILA President by the Executive Council should Bowers retire in a non-Convention year. Having arranged a meeting through Arthur Coffey, Genovese family soldier Pasquale Falcetti asked George Barone to instruct Bowers to support Daggett for the vacant General Organizer position. Bowers, however, using James Cashin as an intermediary, informed Barone that he could not support Daggett for that position because he was under pressure from the ILA's black caucus to support Assistant General Organizer Gerald Owens, who is an African-American, for the General Organizer position. Barone replied through Cashin that he would support Owens for the position of General Organizer and Daggett for the position of Assistant General Organizer.*fn19 Ciccone then instructed ILA Vice-President Frank Scollo, with whom he had a longstanding acquaintance, to ensure that Daggett was placed in the Assistant General Organizer position.*fn20

On July 19, 2000, the ILA Executive Council held its non-Convention election in Lake Tahoe, at which Daggett was elected to the position of Assistant General Organizer. Immediately after the election, Scollo called Ciccone to report the result of the election, but spoke with Cassarino because Ciccone was unavailable.

The Amended Complaint states that Ciccone and Jerome Brancato were convicted in United States v. Gotti, 02-CR-606 (E.D.N.Y.), of conspiracy to extort, extortion, and wire fraud in connection with the scheme to rig the election of Harold Daggett to the ILA Executive Council, thereby presumably alleging that the allegations in the Amended Complaint regarding that scheme state the same predicate acts. See Background Part II(A), infra.

b. Scheme to Rig the MILA PBM Contract*fn21

On or about May 7, 1997, MILA sent a Request for Proposal to approximately 21 vendors, seeking bids on a contract for a Pharmacy Benefit Manager ("PBM") to administer its prescription drug plan. Sixteen vendors responded, and MILA eventually narrowed the field to two finalists-- Express Scripts, Inc. ("Express Scripts"), and GPP/VIP, Inc. ("GPP/VIP"). Express Scripts was "a large, full-service company serving millions of individuals and managing billions in annual drug expenditures." Id. ¶ 125. GPP/VIP, on the other hand, was a start-up owned by Joel Grodman, the president of General Prescription Programs, Inc. ("GPP"), and Dr. Vincent Nasso, an account executive employee of GPP who ran his own mail order facility called Value Integrated Pharmacy Services, Inc. ("VIP"). Grodman and Nasso created GPP/VIP specifically for the purpose of providing PBM service to MILA using GPP's retail network as a subcontractor.

Despite its smaller size and relative lack of experience, GPP/VIP had one substantial advantage over Express Scripts in the competition for the MILA PBM contract: Vincent Nasso was an associate of Anthony Ciccone, and had agreed to pay Ciccone $400,000 for the selection of GPP/VIP as the MILA PBM. In his efforts to rig the PBM contract bidding in favor of GPP/VIP, Ciccone once again conspired with the Genovese family, which had made plans through its own network of members and associates to influence the contract award. Genovese family member Larry Ricci had asked George Barone to persuade Harold Daggett, in his capacity as a MILA Trustee, to vote for whichever PBM candidate Albert Cernadas supported; Ricci planned to use his own influence over Cernadas to award the contract to a company favorable to the Genovese family's interests. Barone agreed and instructed both Daggett and Arthur Coffey to support whichever PBM candidate that Cernadas supported. Ciccone then paid $75,000 to the Genovese family, and Cernadas "was the most vocal proponent of GPP/VIP" at the MILA deliberations, swaying the ILA Trustees in GPP/VIP's favor notwithstanding the fact that the Management Trustees and their actuarial consultants preferred Express Scripts. The ILA Trustees and the Management Trustees ultimately reached a compromise, appointing GPP/VIP as the MILA PBM for the North Atlantic ports from Boston to Hampton Roads, Virginia, and Express Scripts as PBM for the South Atlantic ports from North Carolina to the Mexican border. After obtaining the MILA PBM contract for the northern ports, GPP/VIP continued to conspire with organized crime and its associates on the MILA Board to expand the scope of its lucrative arrangement with MILA. Its opportunity to do so arose when, despite Express Scripts's having received better service reviews from MILA plan members than GPP/VIP, MILA terminated Express Scripts's contract, effective January 1, 2000, and placed GPP/VIP as PBM for the entire range of ports, because Express Scripts resisted a full-scale audit by MILA.

In June 2001, GPP/VIP sent a letter to MILA's Pharmacy Resource Committee in which it requested premium increases amounting to an additional 65 cents per member per month, stating that it had "severely underestimated and did not anticipate the cost of handling all the unique aspects of the MILA program. . . ." Id. ¶ 136. Shortly thereafter, in August 2001, MILA sent out a new Request for Proposals, in anticipation of the expiration of GPP/VIP's contract on December 31, 2001. Ciccone favored renewing GPP/VIP's contract, and communicated with MILA Trustee Frank Scollo, both directly and through Primo Cassarino, and with MILA Executive Director Louis Valentino for the purpose of influencing the decision. Scollo advised Ciccone that GPP/VIP would need to submit a new proposal in response to MILA's request. Ultimately seven vendors, including GPP/VIP and Advance PCS, the largest private PBM in the United States, submitted proposals for the MILA contract. Because Advance PCS's proposal would save MILA approximately $4 million over 3 years in comparison to GPP/VIP, the MILA Board initially voted unanimously to award the PBM contract to Advance PCS. However, during subsequent negotiations with Advance PCS, the ILA Trustees, particularly Albert Cernadas, raised objections to some of Advance PCS's demands, particularly its desire for brand-to-brand switches*fn22 and the exclusive right to select its auditor. Although Advance PCS eventually withdrew the demands to which the ILA Trustees objected, the ILA Trustees withdrew their support of Advance PCS and supported a renewal of GPP/VIP's contract. Due to the impasse between the Management Trustees and the ILA Trustees over which vendor to select, GPP/VIP's PBM contract was extended from December 31, 2001, through June 2002. Ultimately the matter was submitted for arbitration, which resulted in the award of the MILA PBM contract to Advance PCS.

The Amended Complaint states that Ciccone was convicted in United States v. Gotti, 02-CR-606 (E.D.N.Y.), of conspiracy to extort, extortion, and wire fraud in connection with the scheme to rig the award of the MILA PBM contract in favor of GPP/VIP, thereby presumably alleging that the allegations in the Amended Complaint regarding that scheme state the same predicate acts. See Background Part II(A), infra.

c. Scheme to Rig the MILA Mental Health Benefits Contract*fn23

The Amended Complaint also alleges that organized crime conspired with the MILA Trustees to influence the award of the MILA mental health and substance abuse plan contract. In late 1998, MILA solicited bids for the contract from seven companies, including Health Management Center, Inc. ("HMS"), which paid James Cashin as a consultant. Cashin had obtained permission from George Barone to obtain the MILA mental health benefits contract and to inform the MILA Trustees that Barone had given him such permission, though the Amended Complaint does not allege that Cashin actually informed any of the MILA Trustees of that fact.

Before the MILA mental health contract was awarded, however, a dispute developed between Cashin and HMS regarding Cashin's compensation. Cashin's relationship with HMS was therefore terminated, and in early 1999, Cashin entered into a consulting relationship with another mental health services company called Compsych, which paid Cashin $5,000 per month for his services. Compsych then submitted a bid for the MILA mental health contract, which Robert Gleason asked the MILA Board to consider at a January 29, 1999 meeting. One of the MILA Board's actuarial consultants, Actuarial Sciences Associates, rated Compsych's bid non-competitive. The other consultant, The Segal Company, indicated that it had not been aware that the Compsych bid would be discussed at the meeting, but nevertheless rated the bid competitive. Compsych re-submitted its bid in April 1999, and the MILA Board deemed it competitive. MILA awarded the mental health benefits contract to Compsych in August 1999.*fn24

The Amended Complaint further alleges that when Compsych's contract was due for renewal in 2001, the ILA Trustees, especially Bowers, Cernadas, and Daggett, were "particularly vocal" in their support for renewing Compsych's contract, despite the fact that it had requested a 5 percent increase in fees. Id. at 161. MILA ultimately renewed the contract.

The Amended Complaint does not state, expressly or implicitly, which type of racketeering act the Government believes its allegations regarding the rigging of the MILA mental health benefit plan constitute. However, in its memorandum of law in opposition to the defendants' motions, the Government identifies several mailings that it alleges were made pursuant to the MILA mental health care scheme, thereby apparently suggesting that these allegations constitute mail fraud. See Gov. Mem. at 99- 100.

d. Fund Investment Advisor Kickback Scheme*fn25

The Amended Complaint alleges three schemes by organized crime to interfere with the service contract selection process of the METRO-ILA Funds, and to defraud the beneficiaries of those funds, by awarding lucrative service contracts to associates of organized crime. The first of these involves a conspiracy among Peter Tarangelo and Thomas Cafaro, both associates of the Genovese Family, Liborio Bellomo, acting boss of the Genovese family, and Harold Daggett to influence the METRO-ILA Funds' selection of an investment advisor. In October or November of 1995, Cafaro and Bellomo advised Tarangelo that if he could identify someone who could act as an investment advisor to the METRO-ILA Funds, they would use their influence over the METRO-ILA Trustees to ensure that Tarangelo's hand-picked advisor would receive the fund advisement contract. In return, Bellomo, Cafaro, and Tarangelo would receive a kickback from the advisor's fee. In order to assist Tarangelo in his efforts, Cafaro and Bellomo gave him a list of ILA locals over which the Genovese family had influence, which included Local 1804-1, and told him to send solicitations to the unions.

Tarangelo eventually identified Wall Street Capital Management as his investment advisor of choice, and between November 1995 and approximately February 1996, proposals on Wall Street Capital Management's letterhead were sent to the contacts on the list that Bellomo and Cafaro provided to Tarangelo. Cafaro and Bellomo arranged for Tarangelo to meet with Harold Daggett, then the Secretary-Treasurer of Local 1804-1, on May 23, 1996, in a Newark hotel where Local 1804-1 was having a meeting.*fn26 During the meeting, Tarangelo provided Daggett with a copy of the Wall Street Capital Management Proposal, and Daggett asked Tarangelo to say "hello" to Daggett's "friend," which the Government alleges was a reference to Bellomo. The same day, Tarangelo met with METRO President Joseph Barbera at METRO's offices in New Jersey; shortly thereafter, in May or June 1996, Tarangelo attended another meeting with Barbera, Genovese soldier Pasquale Falcetti, and a representative of Centurion Capital Management, which was an affiliate of Wall Street Capital Management.

Until Bellomo was arrested in June 1996, Tarangelo understood that the METRO-ILA Funds would award the investment advisement contract to Wall Street Capital Management. Several months after Bellomo's arrest, however, Tarangelo was informed that Wall Street Capital Management would not receive the contract.

The Amended Complaint does not state, expressly or implicitly, which type of racketeering act the Government believes its allegations regarding the conspiracy to rig the METRO-ILA Funds investor advisement scheme constitute. However, in its memorandum of law in opposition to the defendants' motions, the Government identifies several mailings that it alleges were made pursuant to that scheme, thereby apparently suggesting that these allegations constitute mail fraud. See Gov. Mem. at 97-98.

e. Rigged METRO-ILA Welfare Fund PBM Contract*fn27

On or about June 30, 1998, the Board of Trustees of the METRO-ILA Welfare Fund awarded its PBM contract to GPP/VIP-- the same company that was awarded the MILA PBM contract at about the same time. Despite the fact that the METRO-ILA Welfare Fund had previously used Diversified Pharmaceutical Services as its PBM, the change was made with little, if any, evaluation of the merits of awarding the contract to GPP/VIP, and was supported by Harold Daggett in his capacity as a Trustee of the METRO-ILA Welfare Fund. Daggett allegedly knew that GPP/VIP was associated with organized crime, but did not disclose that fact to the METRO-ILA Welfare Fund Board of Trustees, and did not disclose the fact that he supported the award of the contract to GPP/VIP because of its association with organized crime.

The Amended Complaint does not state, expressly or implicitly, which type of racketeering act the Government believes its allegations regarding the conspiracy to rig the METRO-ILA Welfare Fund PBM contract constitute. However, in its memorandum of law in opposition to the defendants' motions, the Government identifies a mailing that it alleges was made in furtherance of that scheme, ...


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