8646 1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK 2 - - - - - - - - - - - - - - X 3 UNITED STATES OF AMERICA, : CR 96 1016(S-1) 4 v. : U.S. Courthouse 5 Uniondale, New York BRUCE W. GORDON, WHO'S WHO 6 WORLD WIDE REGISTRY, INC., : STERLING WHO'S WHO, INC., 7 TARA GARBOSKI, ORAL FRANK OSMAN, LAURA WEITZ, ANNETTE 8 HALEY, SCOTT MICHAELSON, : STEVE RUBIN, and MARTIN 9 REFFSIN, : TRANSCRIPT OF TRIAL 10 Defendants. :November 28, 1997 (YES - THAT'S WHAT THE OFFICIAL TRANSCRIPT DECLARES IS THE DATE!!) 11 - - - - - - - - - - - - - - X 9:00 o'clock a.m.
12 BEFORE:
13 HONORABLE ARTHUR D. SPATT, U.S.D.J.
14 APPEARANCES: 15 For the Government: ZACHARY W. CARTER 16 United States Attorney One Pierrepont Plaza 17 Brooklyn, New York 11201 By: RONALD G. WHITE, ESQ. 18 CECIL SCOTT, ESQ. Assistant U.S. Attorneys 19 For the Defendants: NORMAN TRABULU
S, ESQ. 20 For Bruce W. Gordon 170 Old Country Road, Suite 600 21 Mineola, New York 11501
22 EDWARD P. JENKS, ESQ. For Who's Who Worldwide 23 Registry, Inc. and Sterling Who's, Who, Inc. 24 332 Willis Avenue Mineola, New York 11501 25 (cont'd)
8647
1 APPEARANCES (cont'd):
2 GARY SCHOER, ESQ. For Tara Garboski 3 6800 Jericho Turnpike Syosset, New York 11791 4 ALAN M. NELSON, ESQ. 5 For Oral Frank Osman 3000 Marcus Avenue 6 Lake Success, New York 11042
7 WINSTON LEE, ESQ. For Laura Weitz 8 319 Broadway New York, New York 10007 9 MARTIN GEDULDIG, ESQ. 10 For Annette Haley 400 South Oyster Bay Road 11 Hicksville, New York 11801
12 JAMES C. NEVILLE, ESQ. For Scott Michaelson 13 225 Broadway New York, New York 10007 14 THOMAS F.X. DUNN, ESQ. 15 For Steve Rubin 150 Nassau Street 16 New York, New York 10
038
17 JOHN S. WALLENSTEIN, ESQ. For Martin Reffsin 18 215 Hilton Avenue Hempstead, New York 11551 19
20 Court Reporters: HARRY RAPAPORT OWEN M. WICKER 21 United States District Court Two Uniondale Avenue 22 Uniondale, New York 11553 (516) 485-6558 23 24 Proceedings recorded by mechanical stenography, transcript produced by Computer-Assisted Transcription 25
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8648
1 (Case called.)
2 THE COURT: Please be seated.
3 MR. DUNN: Your Honor, I have a single request,
4 if I may hand it up to you.
5 MR. TRABULUS: Your Honor, I also have some
6 further questions, relating to the tax count and the
7 lesser included.
8 Thank you. I've given copies to all counsel.
9 THE COURT: Is everybody here?
10 MR. GEDULDIG: Sorry, Judge?
11 THE COURT: Is everybody here?
12
MR. GEDULDIG: Ms. Haley appears to be among the
13 missing. I think I might have indicated before. She is
14 perfectly agreeable to proceeding without her. I don't
15 know the reason for the delay. We don't have a jury today
16 and I don't think that would be any kind of prejudice to
17 her for not appearing here during the course of the
18 conversations we'll have and she told me she would waive
19 her appearance. So I would ask the Court to proceed
20 without her. I'm sure she'll arrive shortly.
21 THE COURT: What difference -- why is this new
22 request to charge made, Mr. Trabulus, in addition to your
23 other requests? 24 MR. TRABULUS: Your Honor, one, part of it is in 25 response to or suggested by Mr. Reffsin's request to
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8649
1 charge on good faith reliance. He turned around the good
2
faith reliance on the accountant's advice to the good
3 faith reliance on the client's advice and I have here that
4 relates to good faith reliance on the accountant's advice.
5 In addition, I requested a lesser included charge
6 originally.
7 THE COURT: So it clarifies the lesser included?
8 MR. TRABULUS: Yes, it does, Your Honor.
9 THE COURT: We'll get to that.
10 MR. TRABULUS: Sure.
11 THE COURT: And I just wanted to know what the
12 additional request was for.
13 All right. Let's proceed.
14 First with regard to the boilerplate portions in
15 which I said the defendants are being charged only with
16 the crimes set forth in the indictment and no others. In
17 the event that I charge lesser included crimes, and I'm
18 considering seriously doing that, I would add crimes set
19 forth in the indictment or lesser included crimes. We'll
20 see when w
e get to that.
21 Also open was the expert testimony. Was the
22 defendant Martin Reffsin an expert? Did we resolve that?
23 I think you were to tell me. 24 MR. WALLENSTEIN: I don't know if we resolved 25 that but I would withdraw that request.
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8650
1 THE COURT: Okay.
2 With regard to accomplices who pled guilty, I'm
3 not quite sure what we meant by that. Let me just see
4 here. I gave a charge on witnesses who pled guilty. I
5 added to that "government witnesses and so-called
6 accomplices" to that who pled guilty. So that covers
7 that.
8 Now, as far as the character evidence, this is
9 what I'm going to say.
10 You have heard testimony that the defendant
11 Martin Reffsin has a good reputation for honesty and
12 truthfulness in the community where he lives and works.
13 Along with all the other evidence you have heard, you may
14 take into consideration what you believe about the
15 defendant Martin Reffsin's reputation for truthfulness and
16 honesty when you determine whether or not the government
17 has proven beyond a reasonable doubt that the defendant
18 Martin Reffsin committed the crimes charged against him.
19 You will note that I omitted some portion of your
20 request to charge because looking at the cases I don't
21 find that that -- I find that that is not only not
22 required but very confusing to the jury and I don't
23 believe it is the law either. So that's what I'm going to 24 charge. 25 With respect to the request, we started on
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8651
1 conspiracy and we talked about the first count, the first
2 element of the first conspiracy to commit mail fr
aud and
3 the government asked me to add some portion with regard to
4 conspiracy involving secrecy, direct. "Direct proof may
5 not be available, etcetera," and I'm going to add that
6 after looking at the law as follows.
7 "In this regard you may infer its existence from
8 the circumstances in the case and the conduct of the
9 parties involved. However, since a conspiracy may be by
10 its very nature, made by its very nature be characterized
11 by secrecy, direct proof may not be available. In the
12 context of conspiracy cases actions may speak louder than
13 words." That's my amendment of what the government has
14 requested me to do.
15 All right. Now, let's get to the second element
16 in the conspiracy. That's where we left off.
17 "Membership of the conspiracy." And this of
18 course is the first Count 1, the first conspiracy to
19 commit mail fraud.
20 "In connection with the second element in the
21 conspiracy count the government must prove beyond a
22 reasonable doubt that the defendant you are considering
23 knowingly and willfully became a member of the 24 conspiracy. If you find that the government established 25 beyond a reasonable doubt that the conspiracy charged in
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER 8652
1 the indictment existed, you must next determine whether
2 the government proved that the defendant you are
3 considering was a member of the conspiracy. In deciding
4 whether the defendant you are considering was a member of
5 the conspiracy, you should consider whether the defendant
6 knowingly and willfully joined the conspiracy. To act
7 knowingly means to do something voluntarily and
8 deliberately and not because of mistake, negligence,
9 inadvertence or so
me other innocent reason." And you will
10 see that I define knowingly a number of times in this
11 charge.
12 An act is done willfully if done voluntarily and
13 intentionally and with the intent to do something that the
14 law forbids, that is to say with a bad purpose either to
15 disobey or disregard the law.
16 Intent may be inferred from conduct, the
17 surrounding circumstances and from all the evidence in the
18 case.
19 As I said, in deciding whether the defendant you
20 are considering was in fact a member of the conspiracy,
21 you should consider whether the defendant knowingly and
22 willfully joined the conspiracy.
23 Did he or she participate in it with knowledge of 24 its lawful -- unlawful -- with its knowledge of unlawful 25 purpose and with the specific intention of furthering its
OWEN M. WICKER, RPR OFFICIAL COURT REPORTER
8653
1 business or objectives. While proof of a financial
2 interest in the outcome of the scheme is not essential, if
3 you find that the defendant had such an interest, that is
4 a factor which you may properly consider in determining
5 whether or not the defendant was a member of the
6 conspiracy charged in the indictment.
7 As I mentioned a moment ago before the defendant
8 you are considering can be found to have been a
9 conspirator, you must first find that he or she knowingly
10 and willfully joined in the unlawful agreement or plan.
11 The key question therefore is whether the
12 defendant joined the conspiracy with an awareness of at
13 least some of the basic aims and purposes of the unlawful
14 agreement.
15 It is for you to note that the defendant's
16 participation in the conspiracy must be established by
17 independent evidence of
his or her own acts or statements
18 as well as those of the other alleged co-conspirators and
19 the reasonable inferences which may be drawn from them.
20 A defendant's knowledge may be a matter of
21 inference from the facts proved. In that connection I
22 instruct you that to become a member of the conspiracy the
23 defendant need not have known the identity of all the 24 members, nor need he or she have been fully informed as to 25 all of the details, or the scope of the conspiracy in
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8654
1 order to justify an inference of knowledge on his or her
2 part.
3 Furthermore, the defendant need not have joined
4 in all of the conspiracy's unlawful objectives and
5 activities. The extent of a defendant's participation has
6 no bearing on the issue of a defendant's guilt. A
7 conspirator'
s guilt is not measured by the extent or
8 duration of his or her participation. Indeed, each member
9 may perform separate and distinct acts and may perform
10 them at different times. Some conspirators play major
11 roles, while others play minor parts in the scheme. The
12 law does not require an equal role. Even a single act may
13 be sufficient to draw the defendant within the ambit of
14 the conspiracy.
15 A person need not have been a member of the
16 conspiracy from its very start to be a co-conspirator.
17 The defendant may have joined at any point during its
18 progress.
19 I want to caution you, however, that a
20 defendant's mere presence at the scene of the alleged
21 criminal activity does not by itself make him or her a
22 member of the conspiracy. Similarly, mere association
23 with one or more members of the conspiracy does not 24 automatical
ly make a defendant a member. A person may 25 know, be related to, or befriending with, or work with a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8655
1 criminal without being a criminal himself or herself. The
2 fact that they may have been together and discussed common
3 aims and interests does not necessarily establish proof of
4 the existence of a conspiracy or knowing membership in the
5 conspiracy.
6 I also want to caution you that mere knowledge or
7 acquiescence -- what is happening now?
8 MS. SCOTT: Your Honor, I just handed out an
9 additional instruction we will request. We will get to
10 it.
11 THE COURT: Why don't you put it down for the
12 time being. I want your undivided attention on this.
13 This is very important and I don't want it interrupted by
14 anything.
15 I want to caution you that mere knowled
ge or
16 acquiescence without participation in the unlawful plans
17 is not sufficient. Moreover, the acts of a defendant
18 without knowledge merely happen to further the purposes or
19 objectives of the conspiracy does not make the defendant a
20 member. More is required under the law.
21 What is necessary is that the defendant must have
22 participated with knowledge of at least some of the
23 purposes or objectives of the conspiracy, and with the 24 intention of aiding in the accomplishment of those lawful 25 objectives.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8656
1 In sum, a defendant with an understanding -- let
2 the record indicate that Ms. Haley has advised at 9:17
3 a.m.
4 Do you want to ask Ms. Haley if it is all right
5 to have proceeded in her absence?
6 MR. GEDULDIG: You want me to ask her?
7
THE COURT: Yes.
8 MR. GEDULDIG: I told the Court that you
9 previously had told me you had no objection to proceeding
10 in court with respect to the charge conference.
11 THE DEFENDANT HALEY: Yes, it is all right.
12 MR. NELSON: Your Honor could you possibly read
13 back to the last three lines, you indicate the lawful
14 purpose, and I believe you may have misspoke.
15 THE COURT: What is necessary is that the
16 defendant may have anticipated with knowledge of at least
17 some of the purposes or objectives of the conspiracy and
18 with the intention of aiding with respect to the
19 accomplishment of those unlawful objectives.
20 MR. NELSON: Thank you.
21 THE COURT: In sum, a defendant with the
22 understanding of the unlawful character of the conspiracy
23 must have occasionally engaged, advised, or assisted in it 24 for the purpose of furthering the illega
l undertaking. He 25 or she thereby becomes a knowing participant in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8657
1 unlawful agreement. That is to say, a conspirator.
2 The third element that the government must prove
3 beyond a reasonable doubt to establish the crime of
4 conspiracy is that at least one of the overt acts charged
5 in the indictment was knowingly committed by at least one
6 of the conspirators -- at least one of the conspirators
7 at or about the time and place alleged.
8 Count 1 of the indictment charges that the
9 following overt acts were committed in the Eastern
10 District of New York and elsewhere. And then I will read
11 that paragraph with the overt acts.
12 Have you got the amended indictment?
13 MS. SCOTT: I am doing it, your Honor.
14 THE COURT: I would like to have it today
15 sometim
e.
16 MS. SCOTT: You will, your Honor.
17 THE COURT: In order for the government to
18 satisfy this element, it is not required that all of the
19 overt acts alleged in the indictment be proven. Rather,
20 the government is only required to prove the commission of
21 at least one overt act as alleged in count one of the
22 indictment in furtherance of the conspiracy.
23 Similarly, you need not find that the defendant 24 you are considering committed the overt act. It is 25 sufficient for the government to prove that one of the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8658
1 conspirators knowingly committed a single overt act in
2 furtherance of the conspiracy, since such an act becomes
3 in the eyes of the law the act of all the members of the
4 conspiracy.
5 You are further instructed that the overt act
6 need not ha
ve been committed at precisely the date alleged
7 in the indictment. It is sufficient if you are convinced
8 beyond a reasonable doubt that it occurred at or about the
9 date and place stated. You must also find that the overt
10 act occurred during the course of the conspiracy.
11 Finally, you must find that at least one of the
12 overt acts was committed in the Eastern District of New
13 York, which includes, Staten Island, Brooklyn, Queens,
14 Nassau and Suffolk Counties.
15 The fourth and final element which the government
16 must prove beyond a reasonable doubt with regard to the
17 conspiracy charged in Count 1 is that the overt act was
18 committed for the purpose of carrying out the unlawful
19 agreement alleged in Count 1 of the indictment.
20 In order for the government to satisfy this
21 element, it must prove beyond a reasonable doubt that at
22 least one
overt act was knowingly and willfully done by at
23 least one conspirator in furtherance of at least one of 24 the objects or purposes of the conspiracy as charged in 25 the indictment.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8659
1 In this regard you should bear in mind that the
2 overt act standing alone may be an innocent lawful act.
3 Frequently, however, an apparently innocent act sheds its
4 harmless character if it is a step in carrying out,
5 promoting, aiding, or assisting the conspiratorial
6 scheme.
7 You are, therefore, instructed that the overt act
8 does not have to be an act which in and of itself is
9 criminal, or constitutes an objective of the conspiracy.
10 However, it must be an act which follows and tends toward
11 accomplishment of the plan or scheme and must be knowingly
12 done in furtherance of some o
bject or purpose of the
13 conspiracy charged.
14 Now, there is a request for me to charge on
15 multiple conspiracies, and I am going to charge that as
16 follows:
17 I will now address the issue of whether the
18 government has proved a single conspiracy in Count 1, or
19 two or more separate and independent conspiracies.
20 Whether there existed a single conspiracy or two or more
21 separate and independent conspiracies is a question of
22 fact for you, the jury, to determine in accordance with
23 the instructions I am about to give you. 24 The defendants contend that the evidence 25 establishes two separate conspiracies.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8660
1 Instead of "establishes" let's say that the
2 evidence -- that's what I was requested to charge,
3 establishes.
4 The defendants contend th
at the evidence
5 demonstrates --
6 MR. TRABULUS: May I suggest that the defendants
7 contend that if the evidence demonstrates a conspiracy at
8 all, it demonstrates the existence of two or more
9 conspiracies, something along those lines. Not that we
10 concede there is a conspiracy.
11 THE COURT: I am following the charge given to me
12 by the defendant Reffsin, I believe.
13 MR. WALLENSTEIN: That must be Norman's.
14 MR. NELSON: I asked for that in the second page
15 of the charge where I actually state that the defendants
16 contend if the evidence is accredited, credited, such
17 evidence establishes two separate conspiracies.
18 THE COURT: Then I took it from somewhere else.
19 Let me see where you say it?
20 MR. NELSON: The next to the last paragraph in
21 request 4 on the second page of that request, Judge.
22 See if this is all right.
23 The defendants contend if the -- I don't like 24 that other. 25 What do you say, Mr. Trabulus?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8661
1 MR. TRABULUS: I was saying off the top of my
2 head --
3 THE COURT: But it sounded good.
4 MR. TRABULUS: I am not so sure as I think about
5 it.
6 THE COURT: How about this: The defendants
7 contend that if the government establishes beyond a
8 reasonable doubt that a conspiracy existed.
9 MR. TRABULUS: It was two or more conspiracies
10 rather than a single conspiracy.
11 THE COURT: Right.
12 How about -- are you saying it is two or more?
13 MR. TRABULUS: The multitude conspiracy is
14 applicable without the defendants contention. And I would
15 like to rather have it without our contentions.
16 THE COURT: I think you are right.
17 Let's take
that out.
18 I am just going to say that if the government
19 establishes beyond a reasonable doubt that a conspiracy
20 existed --
21 MR. TRABULUS: Your Honor, may I suggest that
22 perhaps --
23 THE COURT: Just one minute now. 24 MR. TRABULUS: I am sorry. 25 (Whereupon, at this time there was a pause in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8662
1 proceedings.)
2 THE COURT: How about this: If the government
3 establishes beyond a reasonable doubt -- think about this
4 and then I have to take a call.
5 If the government establishes beyond a reasonable
6 doubt that a conspiracy existed, that the government must
7 prove that it was the single conspiracy alleged in the
8 indictment, rather than two separate conspiracies. How
9 about that?
10 MR. TRABULUS: Sounds good to me.
11 THE COURT
: I like it.
12 MR. NELSON: Sounds good to me.
13 THE COURT: I will be right back.
14
15 (Whereupon, a recess is taken.)
16
17 THE COURT: That was the American Bar Association
18 judiciary chairman, to talk about a judicial candidate. I
19 didn't know they were putting through judicial
20 candidates. I thought they stopped doing that about two
21 years ago.
22 If the government establishes beyond a reasonable
23 doubt that a conspiracy existed, the government must prove 24 that it is the single conspiracy alleged in the indictment 25 rather than two separate conspiracies.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8663
1 Now, what I intend to say, namely, Who's Who
2 Worldwide and Sterling Who's Who, because I think those
3 are the two separate conspiracies that are possible.
4 Proof of two or more sep
arate and independent
5 conspiracies is not proof of the single overall conspiracy
6 charged in the indictment. Unless, of course, one of the
7 conspiracies proved happens to be the single conspiracy
8 described in the indictment, where persons joined together
9 to further one common unlawful design or purpose, a single
10 conspiracy existed. By way of contrast, multiple
11 conspiracies exist when there are separate unlawful
12 agreements to achieve distinct purposes.
13 As to count one, the government must prove to you
14 beyond a reasonable doubt that in the period of time
15 between approximately 1990 through March 1995, there was
16 an agreement between the defendant you are considering and
17 one or more other defendants or other persons to commit
18 one of the charged objectives of the conspiracy as I have
19 just described.
20 In deciding whether such single co
nspiracy has
21 been proved, you should be aware that a single conspiracy
22 can experience a change in personnel. Certain individuals
23 can withdraw from a conspiracy after having participated 24 in it for some time. Others may join a conspiracy after 25 it has been in existence for a period of time. The fact
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8664
1 that the parties to a criminal conspiracy are not always
2 the same does not necessarily imply that separate
3 conspiracies existed. You must, however, be persuaded
4 beyond a reasonable doubt that there were in fact two or
5 more persons in agreement to engage in the criminal
6 conduct that was at the heart of the conspiracy charged in
7 count one.
8 On the other hand, if you find that the
9 conspiracy charged in the indictment did not exist at any
10 time within the date
specified, then you must find all of
11 the defendants not guilty of the conspiracy charged. This
12 is so, even if you find that some other conspiracy
13 existed, or that some agreement to violate if law had been
14 reached other than the one charged in the indictment.
15 Thus, even if you find that the defendant you are
16 considering was the member of a conspiracy, but not the
17 one charged in the indictment, you must find the defendant
18 not guilty of the conspiracy charged in count one.
19 The government charges the defendants under count
20 one of the indictment with participating in the one
21 conspiracy charged in that count. Therefore, the
22 government is required to prove the one conspiracy charged
23 in the indictment, and the defendant you are considering 24 was a member of that conspiracy. 25 If you find that the government has proven two
HA
RRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8665
1 separate conspiracies, and the defendant you are
2 considering was not a member of the conspiracy charged in
3 the indictment, the government has not sustained its
4 burden of proof and you must acquit the defendant on the
5 conspiracy count.
6 In sum, if the government failed to prove the
7 conspiracy charged in the indictment, you must acquit all
8 the defendants.
9 If you find that the defendant you are
10 considering was a member of another conspiracy, not the
11 one charged in the indictment, then you must acquit that
12 defendant.
13 In other words, to find a defendant guilty you
14 must find that he or she was a member of the conspiracy
15 charged in the indictment and not some other conspiracy.
16 In your consideration of the evidence in the case
17 you should first determin
e whether the government proved
18 beyond a reasonable doubt that the conspiracy existed as
19 alleged in the indictment.
20 If you conclude that the conspiracy did exist,
21 you should next separately determine whether the
22 government proved that the defendant you are considering
23 knowingly and willfully became a member of that 24 conspiracy. 25 If you determine that the government has proved
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8666
1 beyond a reasonable doubt from the evidence in the case
2 that the conspiracy alleged in the indictment was
3 willfully formed, and that the defendant you are
4 considering knowingly and willfully became a member of
5 that conspiracy, and that thereafter one or more of the
6 conspirators knowingly committed one or more of the overt
7 acts charged in furtherance of some object or purpose
of
8 that conspiracy, then there may be a conviction even
9 though the conspirators may not have succeeded in
10 accomplishing their common object or purpose, and in fact,
11 may have failed to accomplish such objects or purpose.
12 However, if you determine that the government
13 failed to prove any of these elements beyond a reasonable
14 doubt, you must acquit the defendant you are considering
15 as to count one.
16 MR. WHITE: Your Honor, can we go back to the
17 multiple conspiracy for just one moment?
18 THE COURT: Yes.
19 MR. WHITE: The third paragraph, at least of
20 Mr. Nelson's requests. And I guess it corresponds to the
21 charge --
22 THE COURT: Not entirely.
23 MR. WHITE: I mean in terms of the paragraph. 24 THE COURT: Yes. 25 MR. WHITE: At one point it restates basically
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPO
RTER 8667
1 that the personnel can change in a conspiracy.
2 It seems to me that it is not so much that the
3 personnel are changing, but there are two separate
4 companies, so I think it would clarify it more if we
5 repeated the sentence or two that you previously said you
6 would give with respect to membership, namely, that a
7 defendant need not have known the identities of every
8 other member or have been told about all their
9 activities. That's the main point of the germane theory
10 as to conspiracy.
11 THE COURT: No. I think it would complicate or
12 confuse it. You have an exception.
13 Anything else?
14 MR. TRABULUS: Before we move to the second or
15 following counts, I think there were certain overt acts
16 set forth in the indictment for count one which the
17 government did not prove and, therefore, it should not be
18 submitted to the jury. Does your Honor want to consider
19 that at this point?
20 THE COURT: Yes. What are those?
21 MR. TRABULUS: I am on the indictment, page 10,
22 overt act C.
23 THE COURT: Mr. White, do you want to respond to 24 each one of these things? I would not rely on my memory 25 at that time all.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8668
1 MR. TRABULUS: It is in fact C, D, E and F on
2 that page.
3 Shall I proceed to the next page?
4 THE COURT: No. Let them take a look at that.
5 (Whereupon, at this time there was a pause in the
6 proceedings.)
7 MR. WHITE: Your Honor, Mr. Trabulus is correct.
8 THE COURT: We are deleting, C, D, E and F on
9 page 10. Ms. Scott, you will amend the indictment
10 accordingly, correct?
11 MR. WHITE: Yes.
12 THE COURT: Correct, Ms. Scott?
13 MS. SCOTT: Yes, your Honor.
14 MR. TRABULUS: Page 11, K, M, as in Michael, N as
15 in Nathan, O as in Oscar.
16 MR. JENKS: O was dismissed.
17 MR. TRABULUS: Yes, so they are not in here.
18 THE COURT: So O is out; is that right?
19 MR. JENKS: Yes, that was dismissed.
20 MR. TRABULUS: K, L and M also.
21 THE COURT: I am waiting to hear from the
22 government on that.
23 MR. WHITE: I need to look at the exhibits, your 24 Honor. 25 (Whereupon, at this time there was a pause in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8669
1 proceedings.)
2 MR. WHITE: Your Honor, here Mr. Trabulus is
3 incorrect.
4 THE COURT: Which one?
5 MR. WHITE: All of them, your Honor.
6 THE COURT: You say O is in?
7 MR. WHITE: I believe so. Let me explain.
8 With respect to K, Government's Exhibit
21-C is
9 an order form that bears that date. And Annette Haley's
10 name and the name of the customer, William Sadler. The
11 testimony at the trial is that that order form was
12 prepared by the salesperson who spoke on the phone with
13 the customer.
14 THE COURT: Did somebody testify that Annette
15 Haley had a telephone conversation with William Sadler?
16 MR. WHITE: No. It is reflected on an order
17 form, a document, which is Exhibit 21-C.
18 THE COURT: What does the order form say?
19 MR. WHITE: The order form has Annette Haley
20 listed as the salesperson. It bears that date. It bears
21 Mr. Sadler and his address in St. Louis.
22 THE COURT: You say that that is circumstantial
23 evidence that she made the telephone call? 24 MR. WHITE: Yes, your Honor. The description of 25 how those forms were prepared was that the salesperson
HAR
RY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8670
1 would speak on the telephone with the customer, and either
2 at that time or shortly thereafter prepare the order form.
3 THE COURT: All right.
4 And what about M for Mike?
5 MR. GEDULDIG: I would like to be heard on that,
6 your Honor.
7 There is contrary testimony also from government
8 witnesses that it was not necessarily so that the order
9 form reflected the person who spoke on the telephone with
10 the prospective listee, that there could be
11 circumstances -- I think in Mr. Saffer's case, he talked
12 about borrowing, where one salesperson would make the call
13 and give the call to another salesperson to fill out the
14 form although they never made the call, and they would
15 borrow sales, one to the other.
16 There was no testimony that Annette Haley had a
17 conversation
with Mr. Sadler. The only evidence before
18 the jury with regard to that paragraph is that Ms. Haley
19 is getting a percentage or commission on that sale. There
20 was no evidence, circumstantial or otherwise, in my view,
21 that would show that Ms. Haley actually had the
22 conversation with Mr. Sadler.
23 THE COURT: Then the jury will not find beyond a 24 reasonable doubt that the overt act existed, this overt 25 act existed. But there is circumstantial evidence that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8671
1 the person's name on the order form was the person who
2 made the call. There is also evidence that that didn't
3 occur. Let the jury determine that. I will overrule you
4 on K.
5 What is the next one?
6 MR. WHITE: Next is overt act M like in Mary,
7 that invoice referred to in that overt act is Exhibit
8 28-C, like in Charley. It bears the same date. It bears
9 the name of Mr. Sainte, S A I N T E. And, again, the
10 testimony was that, and we have been over this before,
11 that these invoices would be sent out through the U.S.
12 mails as a regular course of business.
13 THE COURT: There is such an invoice in
14 evidence?
15 MR. WHITE: Yes, 28-C.
16 THE COURT: That's overruled.
17 What about N for Negative? Is that the same as
18 K?
19 MR. WHITE: I didn't copy down N as one they
20 mentioned.
21 MR. TRABULUS: I did. I assume the arguments
22 there is the same with respect to K. If there is an
23 invoice or order form comparable to the one in K I will 24 withdraw the objection. 25 MR. WHITE: I skipped that one, and I will have
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8672
1 to look it up.
2 (Whereupon, at this time there was a pause in the
3 proceedings.)
4 MR. WHITE: That's the same situation.
5 THE COURT: The exception is denied as to N for
6 Negative.
7 What about O?
8 MR. WHITE: With respect to O, it indicates that
9 a solicitation letter was sent on or about that date. If
10 that solicitation letter is not in evidence -- well, if
11 you look at 40-D, like in Dog, there is a lead card that
12 was returned by Mr. Puller.
13 The evidence was that the lead card was included
14 with the solicitation letter, your Honor. And
15 Mr. Puller's card, in turn, from Hicksville to Who's Who
16 Worldwide, so there is certainly enough evidence to
17 conclude that they sent the solicitation letter and the
18 card.
19 THE COURT: I agree. And we will leave overt act
20 O for Oboe in.
21 Anything else with respect to that?
22 MR. T
RABULUS: Yes, page 12.
23 I assume with regard to S there is an order form 24 to support that. Because Mr. Searle, S E A R L E, didn't 25 testify.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8673
1 THE COURT: Let's find out.
2 MR. WHITE: I will have to look that one up.
3 THE COURT: Go ahead.
4 MR. WHITE: It looks like there are no documents
5 from Mr. Searle. So that one is out.
6 THE COURT: We will delete S.
7 MR. TRABULUS: Your Honor, with regard to T,
8 there is a tape recording in evidence. It doesn't support
9 what is in T. In the tape recording, the person speaking
10 doesn't say to the person who is listening that he
11 shouldn't use his real name in telephone conversations
12 with potential customers. What he says is don't sign your
13 real name on some kind of form which is not really
14 specified. We
don't know what the form is. So he does
15 say, so you can't be identified in a court of law. So, it
16 is different than that. And on that basis it is not
17 supported.
18 MR. WHITE: Your Honor, the recording I
19 believe -- I believe the testimony was that the reference
20 was to the order form, or some other document, and the
21 question that was put to the supervisor was, do I put the
22 name, the phone name you gave me, or do I put my real
23 name. There was no dispute that he was given that phony 24 name to use on the phone with customers. So this is 25 substantially correct, even if the meaning is slightly
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8674
1 different.
2 THE COURT: Is there proof that the conversation
3 that was recorded in that conversation, a sales manager
4 advised a salesperson not to use his real name i
n
5 telephone conversations with potential customers? Does it
6 say that? Did he say that? If he didn't say it I will
7 strike it out.
8 MR. WHITE: Not the tape, your Honor. But there
9 is testimony that the witness was told that. Then the
10 tape says, don't put your name -- put that phony name, not
11 your real name on this document.
12 THE COURT: Well, if the tape said it, the
13 testimony would not be accurate. It is the tape that
14 would govern.
15 MR. WHITE: I am talking about two separate
16 conversations.
17 THE COURT: You are saying there is other
18 evidence in that a sales manager advised a Sterling Who's
19 Who salesperson not to use his real name in telephone
20 conversations in order to avoid later being identified in
21 a court of law? Did he say that in this other
22 conversation?
23 MR. TRABULUS: No. 24 MR. WHITE:
No. Let me be clear. 25 Mr. Ihlenfeldt testified when he worked at
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8675
1 Sterling, a supervisor instructed him to use a different
2 name, not his real name on the phone.
3 THE COURT: But never to avoid later being
4 identified in a court of law?
5 MR. WHITE: The second part is that
6 Mr. Ihlenfeldt later asked the supervisor about some form,
7 do I put my real name on it or the phony name you gave
8 me? With respect to that he is told don't put the real
9 name.
10 THE COURT: I am striking it. There is no
11 testimony that says exactly that. You are putting
12 together several conversations. I am striking it.
13 What else?
14 MR. TRABULUS: On page 13, both W and X pertain
15 to members who did not testify. And I guess the question
16 is: Is there documentary evidence t
o establish those
17 things circumstantially. I frankly don't know the
18 exhibits, if there are any.
19 MR. WHITE: The same as before with respect to
20 these. With respect to W, there is a lead card returned
21 by Mr. Olsen in evidence, which is 54-D, like in Dog.
22 With respect to overt act X, there is an order
23 form indicating that Mr. Rubin was the salesman with that 24 date and that customer, and that's Rule 55-C, like in 25 Charley.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8676
1 THE COURT: I am denying the request. You have
2 an exception.
3 Counts two through --
4 MS. SCOTT: Your Honor, before we move on, I have
5 an additional submission, which is the request that your
6 Honor provide a Pinkerton charge. And I am handing up a
7 copy to your Honor right now.
8 Basically, your Honor, what the Pinke
rton charge
9 allows is to tell the jury if a defendant was found to be
10 a member of the mail fraud conspiracy, the jury can, but
11 they are not required to, find the defendant guilty of the
12 substantive crimes charged against that defendant, in
13 whatever counts they are. We have a lot of counts here.
14 And provided that the person who actually committed the
15 fraud, who was a member of the conspiracy, the crime is
16 committed in furtherance of the conspiracy, and that this
17 mail fraud count could be foreseen as a consequence of the
18 conspiracy.
19 I have support here from the Second Circuit for
20 such a charge.
21 THE COURT: What is the support?
22 MS. SCOTT: United States against Blackmon,
23 B L A C K M O N, the cite is 839 F.2d 900. The page cite 24 is 909. 25 In that case the Court does discuss the charge as
HARRY RAPAPO
RT, CSR, CP, CM OFFICIAL COURT REPORTER 8677
1 I just described it to you and emphasized that it was
2 important that the judge inform the jury that they could
3 but did not have to find the defendant guilty of the
4 subsequent counts that resulted in the conspiracy.
5 THE COURT: I will have to take a look at that.
6 MS. SCOTT: Okay.
7 I have another cite to support that, United
8 States against Gallerani, G A L L E R A N I. The cite is
9 68 F.3d 611. And the page cite is 620.
10 THE COURT: This is with regard to the mail
11 fraud?
12 MS. SCOTT: Yes.
13 THE COURT: Substantive mail fraud?
14 MS. SCOTT: Yes.
15 THE COURT: I will take a look at it and let you
16 know.
17 Now, counts 2 through 52, mail fraud. If I get
18 the numbers wrong, let me know.
19 These counts charge the defendant Bruce Gordon,
20 Who's Who
Worldwide, Sterling Who's Who, Tara Garboski,
21 Oral Frank Osman, Laura Weitz, Annette Haley, Scott
22 Michaelson and Steve Rubin with knowingly and willfully
23 engaging in a scheme to defraud and to obtain money 24 property from potential customers of Who's Who and 25 Sterling Who's Who by means of false and fraudulent
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8678
1 pretenses, representations and promises.
2 By the way, is Sterling involved in this?
3 MR. JENKS: Mail fraud counts?
4 THE COURT: Yes.
5 MR. JENKS: Yes, your Honor.
6 THE COURT: Do these -- here the defendants are
7 charged with placing and causing to be placed in
8 authorized depositories for mail, matter to be delivered
9 by the United States Postal Service as more particularly
10 identified in the indictment.
11 I will now read counts two through 52.
12 If relevant statute on this subject is Title 18,
13 United States Code, Section 1341. That statute provides
14 in pertinent part that, quote, whoever having devised or
15 intending to devise any scheme or artifice to defraud, or
16 for obtaining money or property by means of false or
17 fraudulent pretenses, representations or promises . . .
18 and for the purpose of executing such scheme or artifice,
19 or attempting so to do, places in any post office or
20 authorize depository for mail matter, any matter or thing
21 whatever, and for purposes of executing such scheme or
22 artifice or attempting so to do, places in any post office
23 or authorize depository for mail, any matter or thing, 24 whatever, to be sent or delivered by the Postal Service 25 . . . or knowingly causes to be delivered by mail
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8679
1 according to the directions thereof . . . any such matter
2 or thing, shall be guilty of a crime.
3 MR. WHITE: Your Honor, I don't think we included
4 it in our charge, but I think in quoting the statute and
5 describing it, we should include the part about taking or
6 receiving from the mail certain items, since a number of
7 the mailings were mailings sent by customers to Who's Who.
8 THE COURT: Do you have a copy of the statute
9 with you?
10 MR. WHITE: I do.
11 THE COURT: Can I see it?
12 (Handed to the Court.)
13 THE COURT: Mean or takes or receives therefrom?
14 MR. WHITE: Yes. And that language is in the
15 charging language in the count, too.
16 THE COURT: You have it there?
17 MR. WHITE: Yes.
18 THE COURT: I didn't see it there.
19 Now I want to caution you that this is not a
20 civil proceeding. The defend
ants cannot be convicted of a
21 crime as to mail fraud merely because their conduct was
22 sales puffery. The government must prove that the
23 defendants knowingly, intentionally and willfully 24 committed the crimes involving mail fraud, the elements of 25 which crimes I am now going to instruct you.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8680
1 In order to sustain this mail fraud charge, the
2 government must prove each of the following elements
3 beyond a reasonable doubt:
4 First, that there was a scheme or artifice to
5 defraud and to obtain money or property by false and
6 fraudulent pretenses, representations or promises as
7 alleges in the indictment.
8 Second, that the defendant you are considering
9 knowingly or willfully devised or participated in the
10 scheme or artifice to defraud with knowledge of its
11 fraudulent nature and with specific intent to defraud.
12 Third, in execution of that scheme the defendant
13 used or caused the use of the mails as specified in the
14 indictment.
15 First element, existence of scheme or artifice.
16 The first element that the government must prove
17 beyond a reasonable doubt is that there was a scheme or
18 artifice to defraud potential customers of Who's Who and
19 Sterling Who's Who, by means of false or fraudulent
20 pretenses, representations and promises.
21 A scheme or artifice is merely a plan for the
22 accomplishment of an objective.
23 A scheme to defraud is any plan, device, or 24 course of action to obtain money or property by means of 25 false or fraudulent pretenses, representations or promises
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8681
1 reasonably calculated to dece
ive persons of average
2 prudence.
3 Fraud is a general term which embraces all the
4 various means in which human ingenuity can devise and
5 which is reported to by an individual to again advantage
6 over another by false representations, suggestions or
7 suppression of the truth, or by a deliberate disregard of
8 the truth.
9 Thus, a scheme to defraud is a plan to obtain
10 something of value, or to assist someone else to obtain
11 something of value by trick, deceit, deception or swindle.
12 A statement or representation is false if it is
13 untrue when made, and was then known to be untrue by the
14 person making it, or causing it to be made.
15 A representation or statement is fraudulent if it
16 was falsely made with the intent to deceive. Deceitful
17 statements, half truths, or the concealment of material
18 facts may also constitute fraud under this
statute.
19 The deception need not be premised upon
20 verbalized words alone. The arrangement of the words, or
21 the circumstances in which they are used may convey the
22 false and deceptive appearance.
23 If there is deception, the manner in which it is 24 accomplished is immaterial. The fraudulent representation 25 or statement must relate to a material fact or matter. A
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8682
1 material fact is one which is reasonably expected to be of
2 concern to a reasonable or prudent potential Who's Who or
3 Sterling, in relying on the misrepresentation or statement
4 in making the decisions.
5 This means that if you find a particular
6 statement of fact to have been false, you must determine
7 whether that statement was one that a reasonable potential
8 customer would have considered importan
t in making
9 decisions.
10 The same principle applies to fraudulent half
11 truths, or omissions of material facts.
12 Further, it is not necessary that the defendant
13 you are considering actually realized any gain from the
14 scheme, or the intended victim actually suffered any
15 loss.
16 In this case it so happens that the government
17 does contend that the proof establish, that the potential
18 customers were defrauded and did lose money. Although
19 whether or not the scheme actually succeeded is really not
20 the question. You may consider whether it did succeed in
21 determining whether a scheme existed.
22 A scheme to defraud need not be shown by direct
23 evidence, but may be established by all the circumstances 24 and facts in the case. 25 The representations which the government charges
HARRY RAPAPORT, CSR, CP, CM OFFICIAL CO
URT REPORTER 8683
1 were made as part of the scheme to defraud are set forth
2 in the indictment.
3 In this regard I instruct you that the
4 prosecution must prove beyond a reasonable doubt that one
5 or more false, material misrepresentations, fraudulent
6 half truths, or fraudulent omissions of material fact were
7 made by each defendant you are considering and that they
8 were made in furtherance of the alleged scheme to defraud.
9 Also, in this regard I instruct you that if the
10 government fails to prove beyond a reasonable doubt that
11 each defendant you are considering made one or more
12 material misrepresentations to a potential customer, you
13 must acquit that defendant.
14 In order to find a defendant guilty of mail
15 fraud, you must find beyond a reasonable doubt that the
16 defendant intended to defraud the potential customer.
17 In addition, to be guilty of participating in a
18 fraudulent scheme, the defendant you are considering must
19 have contemplated that the potential customer would lose
20 money. It is not enough that the defendant intended to
21 receive a financial gain or advantage from the alleged
22 scheme, or even that he or she succeeded in obtaining such
23 a benefit unless he or she intended that the potential 24 customer sustain a corresponding loss. There must be a 25 direct relationship between the defendant's
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8684
1 misrepresentations and the intended deprivation of money.
2 In order to be guilty of fraud, the
3 representations made by the defendant to potential
4 customers must be of such a nature that if they were
5 successful, it is reasonably probable that the victim,
6 namely, the poten
tial customer, would have suffered a
7 financial loss.
8 If you find that the government failed to sustain
9 its burden of proof that a scheme to defraud existed as
10 alleged in counts 2 through 52, then you must acquit all
11 the defendants as to those counts, if you find that the
12 government has sustained its purpose, and a scheme to
13 defraud existed as charged, you should next consider the
14 second element, participation in the scheme with intent to
15 defraud.
16 The second element that the government must prove
17 beyond a reasonable doubt is that the defendant you are
18 considering participated in the scheme to defraud
19 knowingly, willfully and with the specific intent to
20 defraud.
21 Knowingly means to act voluntarily and
22 deliberately; rather than mistakenly or inadvertently.
23 Willfully means to act knowingly and purposely, with an
24 intent to do something the law forbids. That is to say 25 with a bad purpose or to disobey or to disregard the law.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8685
1 Intent to defraud means to act knowingly and with
2 the specific intent to deceive for the purpose of causing
3 some financial loss to another.
4 The question of whether a person acted knowingly,
5 willfully and with intent to defraud is a question of fact
6 for you to determine like any other fact question. The
7 question involves one's state of mind. Essential to a
8 conviction for a scheme to defraud under Section 1341, is
9 proof beyond a reasonable doubt of the defendant's
10 fraudulent intent. Namely, the defendant's intent to
11 deceive causing an actual financial loss. The significant
12 fact is the defendant's intent and purpose. Although the
13 government n
eed not prove that the scheme to defraud was
14 successful or complete, the government must prove beyond a
15 reasonable doubt that the defendant contemplated some
16 actual financial loss to the purported victim, namely, the
17 potential customers. Misrepresentations amounting only to
18 a deceit is insufficient to convict under Section 1331.
19 The deceit must be contemplated with a financial loss to
20 the victim.
21 Direct proof of knowledge and fraudulent intent
22 is almost never available. It would be a rare case where
23 it could be shown that a person wrote or stated that as of 24 a given time in the past he or she committed an act with 25 fraudulent intent. Such direct proof is not required.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8686
1 The ultimate facts of knowledge and criminal
2 intent, though subjective may be establis
hed by
3 circumstantial evidence based upon a person's outward
4 manifestations, his or her words, conduct, acts, and all
5 the surrounding circumstances disclosed by the evidence
6 and the rational and logical inferences that may be drawn
7 from them.
8 As I advised you, circumstantial evidence, if
9 believed, is of no less value than direct evidence. In
10 either case the essential elements of the crime charged
11 must be established beyond a reasonable doubt.
12 Since an essential element of the crime charged
13 is intent to defraud, it follows that good faith on the
14 part of a defendant is a complete defense to a charge of
15 mail fraud.
16 I instruct you, however, that a defendant has no
17 burden to establish a defense of good faith. The burden
18 is on the government to prove fraudulent intent and
19 consequent lack of good faith beyond a reasonable
doubt.
20 Under the mail fraud statute even false
21 representations, or statements, or omissions of material
22 facts, do not amount to a fraud unless done with
23 fraudulent intent. However misleading or deceptive a plan 24 may be, it is not fraudulent if it was devised or carried 25 out in good faith. An honest belief in the truth of the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8687
1 representations made by a defendant is a good defense,
2 however inaccurate the statements may turn out to be.
3 Moreover, not every untrue statement designed to
4 gain the sympathetic ear of a potential customer is
5 forbidden by the mail fraud statute.
6 This I am adding what you asked, Mr. Trabulus.
7 In fact, I find that your requests to charge were very
8 helpful. So were the government's, of course, but yours
9 was very helpful in that t
hey were fair. Which I paid
10 more attention than usual. I do pay attention of course,
11 but I thought they were very fair.
12 I don't accept everything you gave me, so don't
13 get excited or carried away now.
14 Moreover, not every untrue statement designed to
15 gain the sympathetic ear of a potential customer is
16 forbidden by the mail fraud statute.
17 To constitute either a scheme to defraud, or the
18 making of false or fraudulent pretenses, representations
19 or promises under the mail fraud statute, the false
20 representations must be directed to the quality, adequacy
21 or price of what is to be sold.
22 Furthermore, if a defendant makes what he or she
23 knows to be false representations with the intent that 24 those false representations induce a purchaser to make a 25 purchase, but the defendant believes in good faith that
HARRY RAP
APORT, CSR, CP, CM OFFICIAL COURT REPORTER 8688
1 those false representations are not directed to the
2 quality, adequacy of what is to be sold, that defendant
3 then lacks specific intent to defraud and cannot be guilty
4 of mail fraud through such false representations. This is
5 so even if to a buyer's mind those false representations
6 actually do concern the quality, adequacy or price of what
7 is to be sold, or the nature of the agreement between
8 buyer and seller.
9 What is determinative is the defendant's own
10 personal belief as to whether they do.
11 Accordingly, I instruct you that even if you find
12 that a defendant made or was responsible for the making of
13 false representations to customers, and even if you find
14 that those false representations did in fact concern the
15 quality, adequacy or price of what was to be sold, or to
16 the nature of the agreement between buyer and seller, you
17 must find the defendant not guilty, unless you find beyond
18 a reasonable doubt that the defendant believed that they
19 did concern the quality, adequacy or price of what was to
20 be sold.
21 As a practical matter then, in order to sustain
22 this mail fraud charge against the defendant you are
23 considering, the government must establish beyond a 24 reasonable doubt that he or she knew that his or her 25 conduct as a participant in the scheme was calculated to
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8689
1 deceive the potential customers, and nevertheless he or
2 she join the defendant's fraudulent scheme for the purpose
3 of causing some financial loss to another.
4 To conclude on this element, if you find that the
5 government failed to establish beyond a reasona
ble doubt
6 that the defendant you are considering was a participant
7 in the scheme to defraud, and had the specific intent to
8 deceive, you must acquit the defendant. On the other
9 hand, if you find that the government has established
10 beyond a reasonable doubt not only the first element,
11 namely, the existence of a scheme to defraud, but also
12 this second element, that the defendant you are
13 considering was a knowing participant and acted with
14 specific intent to defraud, and if the government also
15 establishes the third element which I am about to instruct
16 you of, then you have a sufficient basis upon which to
17 convict the defendant.
18 Third element, use of the United States mail.
19 The third and final element that the government
20 must establish is that the United States mail service was
21 used in furtherance of the scheme to defraud.
22 It is not necessary for the defendant you are
23 considering to be directly or personally involved in 24 sending the mailings, as long as the sending of the 25 mailings was reasonably -- in the execution of the fraud
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8690
1 in which the defendant is accused to have been
2 participating.
3 In this regard it is sufficient to establish this
4 element of the crime, if the evidence justifies a finding
5 that the defendant caused the Postal Service to be used by
6 someone else. And this does not mean that the defendant
7 himself or herself must have the specifically authorized
8 others to send the mailings. When one does an act with
9 knowledge that the use of the mails will follow in the
10 ordinary course of business, or where such use of the
11 mails can reasonably be foreseen, although not
actually
12 intended, then he or she causes the Postal Service to be
13 used as intended by the statute.
14 Further, the mail matter need not disclose on its
15 face a fraudulent representation or purpose or request for
16 money, but need only be intended to further or assist in
17 carrying out the scheme to defraud.
18 With respect to the use of the mails, the
19 government must establish beyond a reasonable doubt that
20 the particular mailings charged in the indictment, namely,
21 the lead cards, invoices and solicitation letters were in
22 furtherance of the scheme to defraud.
23 Aiding and abetting. 24 With regard to Count 2, the government has 25 charged the defendants with aiding and abetting the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8691
1 commission of the crime of mail fraud.
2 The aiding and abetting sta
tute, Title 18 of the
3 United States Code, Section 2 provides that, quote,
4 whoever commits an offense against the United States, or
5 aids, abets, or counsels, commands, induces or procures
6 its commission is punishable as a principal.
7 Whoever willfully causes an act to be done, which
8 if directly performed by him or another would be an
9 offense against the United States, is punishable as a
10 principal.
11 Under the federal aiding and abetting statute it
12 is not necessary for the government to show that the
13 defendant himself or herself physically committed the
14 crime with which he or she is charged in order for you to
15 find the defendant guilty of the crime charged in counts 2
16 through 52.
17 A person who aids and abets another to commit an
18 offense is just as guilty of that offense as if he or she
19 committed it himself or herself.
20 Accordingly, you may find the defendant guilty of
21 the offense charged in counts 2 through 52, if you find
22 that the government proved beyond a reasonable doubt that
23 another person actually committed the offense with which 24 the defendant is charged, and that the defendant aided or 25 abetted that person in the commission of the offense. As
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8692
1 you can see, the first requirement is that you find that
2 another person has committed the crime charge in counts 2
3 through 52.
4 Obviously no one can be convicted of aiding or
5 abetting the criminal acts of another if no crime was
6 committed by the other person in the first place. But if
7 you do find that a crime was committed, then you must
8 consider whether the defendant you are considering aided
9 or abetted the commission o
f the crime.
10 In order to aid or abet another to commit a
11 crime, it is necessary that the defendant willfully and
12 knowingly associate himself or herself in some way with
13 the crime, and that he or she willfully or knowingly seeks
14 by some act to help make the crime succeed.
15 Participation in a crime is willful if action is
16 taken voluntarily and intentionally, or in a case of a
17 failure to act, with the specific intent to fail to do
18 something the law requires to be done, that is to say with
19 a bad purpose either to disobey or to disregard the law.
20 The mere presence of a defendant where a crime is
21 being committed, even coupled with knowledge by the
22 defendant that a crime is being committed, or the mere
23 acquiescence by a defendant in the criminal conduct of 24 others, even with guilty knowledge is not sufficient to 25 establish aiding
and abetting.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8693
1 An aider or abettor must have some interest in
2 the criminal venture.
3 To determine whether the defendant aided or abets
4 the commission of the crime with which he or she is
5 charged in counts 2 through 52, ask yourselves these
6 questions: Did the defendant participate in the crime
7 charged as something he or she wished to bring about? Did
8 the defendant associate himself or herself with the
9 criminal venture, knowingly and willfully? Did the
10 defendant seek by his or her actions to make the criminal
11 venture succeed?
12 If the government proves beyond a reasonable
13 doubt that the defendant did all these things, then the
14 defendant is an aider and abettor, and, therefore, guilty
15 of the offense.
16 If on the other hand, your answers to thi
s series
17 of questions are no, then the defendant is not an aider
18 and abettor and you must find him or her not guilty as to
19 counts 2 through 52.
20 In sum, if you find that the defendant you are
21 considering committed the crimes charged in counts 2
22 through 52, or aided and abetted in the commission of
23 those crimes, then you should find that defendant guilty 24 of the crime charged -- the crimes charged in those 25 counts.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8694
1 On the other hand, if the government has not
2 satisfied you beyond a reasonable doubt that the defendant
3 either knowingly and willfully committed the crimes
4 charged in Counts 2 through 52, or aided and abetted in
5 the commission of those crimes, then you must find him or
6 her not guilty of the crimes charged in those counts.
7 Cou
nt 53 --
8 MR. TRABULUS: Your Honor, can we take a break at
9 this point?
10 THE COURT: We will take a ten-minute recess.
11 Did you want to say something before?
12 MR. WHITE: I will do it during -- after the
13 break.
14 THE COURT: Do it now so I can look it up and
15 appear to know what I am doing.
16 MR. WHITE: Your Honor, I wanted to make two
17 comments about the first element of the mail fraud scheme.
18 First, I think your Honor said that they must
19 find that each defendant made a statement to a customer
20 containing one of the misrepresentations. I think that
21 should be amended to say made or caused to be made,
22 because Mr. Gordon and some others were not actually on
23 the phone with customers. 24 THE COURT: Count 1, you say? 25 MR. WHITE: Element 1, your Honor.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8695
1 THE COURT: I am sorry, element one, yes.
2 MR. WHITE: I may have misheard it.
3 THE COURT: You are right, were made and caused
4 to be made is correct.
5 MR. WHITE: The other comments, your Honor, the
6 government requested you also instruct the jury in line
7 with United States against Schwartz, that it is not
8 necessary that the harm contemplated be monetary in
9 nature. It is sufficient if it goes to some essential
10 element of the bargain, and that you can find the
11 defendants -- that that requirement is satisfied if the
12 defendants intended by fraud to obtain from customers
13 money that they would not have given to the defendants
14 were it not for the fraudulent misrepresentation. That
15 instruction was specifically approved by the Second
16 Circuit. I believe it is relevant here.
17 THE COURT: I don't get it. What did
I not do?
18 MR. WHITE: In other words, the jury should be
19 instructed that the contemplated harm need not necessarily
20 be monetary.
21 THE COURT: In this case it is though.
22 MR. WHITE: Correct. Then it should be explained
23 in this fashion: That it could constitute a fraud if they 24 would not have engaged in the transaction, but for the 25 fraudulent misrepresentations, namely, that the fraud is
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8696
1 obtaining their purchase by false representations,
2 regardless of what they got, as opposed to what they got
3 was worth less than what they were promised.
4 THE COURT: No. I decline to charge it. I think
5 it is confusing. I know what you are talking about. They
6 were deprived of their money, which the statute says is
7 because of this. The reason they were deprived of their
8 money is because they didn't get to be the elitist or ego
9 person they were supposed to be.
10 I mentioned the quality and the price, that is in
11 there. But I decline to confuse the jury.
12 Anything else, Mr. White?
13 MR. WHITE: Your Honor, I am not sure how this
14 would confuse them. One sentence that says, you can find
15 the defendants inflicted such harm if you believe in
16 substance that the customers would not have engaged in
17 this transaction but for the fraudulent statement.
18 THE COURT: I decline to charge that.
19 Anything else?
20 MR. WHITE: No.
21 THE COURT: We will take a ten-minute recess.
22
23 (Whereupon, a recess is taken.) 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8697
1 THE COURT: Count 53, perjury.
2 The indictment charges the defendant Bruce Gor
don
3 with making false declarations before a federal court at
4 the trial of the lawsuit that Reed Elsevir brought against
5 Who's Who Worldwide.
6 The indictment reads as follows.
7 The indictment charges the defendant Bruce Gordon
8 with violating Section 1623 of Title 18 of the United
9 States code which provides in part, quote, whoever under
10 oath . . . in any proceeding before . . . any court
11 . . . of the United States knowingly makes any false
12 material declaration is guilty of a crime.
13 Stated simply perjury is the willful giving of
14 false testimony before a competent tribunal while under
15 oath knowing the testimony is false as to a material
16 matter.
17 The indictment charges that the defendant made
18 such false declarations as set forth in the indictment in
19 his testimony in a civil trial in the federal court of the
20 East
ern District of New York.
21 In order to prove the perjury charge against the
22 defendant Bruce Gordon as charged in Count 53, the
23 government must establish each of the following four 24 elements beyond a reasonable doubt: 25 First, that the testimony was given before a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8698
1 federal court while the defendant Bruce Gordon was under
2 oath;
3 Second, that such testimony was false as set
4 forth in the indictment;
5 Third, that such false testimony was willfully
6 and knowingly given in that the defendant Bruce Gordon
7 knew that the testimony was false; and
8 Fourth, as to the matters as to which it is
9 charged that the defendant Bruce Gordon gave false
10 testimony were material to the issues under inquiry in the
11 civil case then being tried.
12 There is no iss
ue as to the first element. With
13 respect to the first element, that the defendant Bruce
14 Gordon took an oath to testify truly, the evidence shows,
15 and there appears to be no dispute that the defendant
16 appeared before the federal court on or about February
17 12th, 1994 and February 22nd, 1994 and took an oath to
18 testify truthfully.
19 The second element, falsity --
20 MR. WHITE: Your Honor, the dates are the 17th
21 and the 22nd.
22 THE COURT: February 17th and 22nd?
23 MR. WHITE: Yes. 24 THE COURT: Okay. 25 Your concern are with the second, third and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8699
1 fourth elements of perjury. The second element is
2 falsity. You must determine whether any part of the
3 testimony given by the defendant Bruce Gordon as set forth
4 in the indictment was false.
5 An answer to a question is false when it is
6 contrary to the fact, that is when it is not true.
7 The truth or falsity of an answer must be
8 determined by the facts existing at the time the answer
9 was made.
10 In reviewing testimony which is alleged to have
11 been false, you should consider such testimony in the
12 context of the sequence of questions asked and answers
13 given.
14 The words used should be given their common and
15 ordinary meaning, unless the context clearly shows that a
16 different meaning was understood by both the questioner
17 and the witness.
18 The burden is upon the government to establish
19 beyond a reasonable doubt that the answers made by the
20 defendant Bruce Gordon in the federal civil trial were in
21 fact false.
22 Count 53 contains answers given by the defendant
23 Bruce Gordon reciting more than one fa
ct. It is not 24 necessary that the government prove that each of these 25 factual statements is false. The government satisfies its
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8700
1 burden of proving falsity if it proves beyond a reasonable
2 doubt that any of the factual statements recited in Count
3 53 is false. However, and this is important, you may not
4 find the defendant guilty unless you all agree unanimously
5 that one particular answer is false. It is not enough
6 that you all believe that some answer given by the
7 defendant is false. That is, you cannot find the
8 defendant guilty if some of you think that only answer A
9 is false, and the rest of you think that answer B is
10 false. There must be one specific answer that all of you
11 believe is false in order to convict the defendant on this
12 count. If you should find th
at a particular question was
13 ambiguous, that is, subject to more than one
14 interpretation, and that the defendant Bruce Gordon
15 truthfully answered one reasonable interpretation of the
16 question under the circumstances presented, then such
17 answer would not be false.
18 Similarly, if you should find that the question
19 is clear, but the answer was ambiguous, and one reasonable
20 interpretation of such answer would be truthful, then such
21 answer would not be false.
22 In deciding whether the defendant's answers are
23 false, the answers must be given the natural meaning in 24 the context in which the words were used. If you find an 25 answer given by the defendant was literally true but
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8701
1 unresponsive to the question asked, you may not find that
2 answer false or conv
ict the defendant because of it. As
3 long as a statement or a reasonable interpretation of a
4 statement is narrowly or literally true, there can be no
5 conviction for perjury. This is so even if you find that
6 the answer was intentionally misleading.
7 Third element, willfully and knowingly given.
8 If you decide that any of the answers the
9 defendant Bruce Gordon gave were false, then you must
10 decide whether the defendant gave those answers knowingly
11 and willfully. That is, at the time the answers were
12 given did the defendant know and believe that the answers
13 were false. And if so, did the defendant give the answers
14 consciously and in the exercise of his free will. Unless
15 the government proves beyond a reasonable doubt that the
16 defendant both knew his answers were false and that he
17 purposely or intentionally gave the false answers, you may
18 not find the defendant guilty.
19 The requirement that you find the defendant Bruce
20 Gordon acted knowingly and willfully means that you may
21 not find the defendant guilty of perjury simply because
22 the defendant gave testimony which is factually
23 incorrect. The defendant may have given incorrect 24 testimony because of an honest mistake of facts, 25 confusion, haste, oversight or carelessness.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8702
1 If the defendant Bruce Gordon made an erroneous
2 incorrect statement due to a slip of the tongue or bad
3 memory, or through misunderstanding, the defendant would
4 not be guilty of making the false statement knowingly and
5 willfully. Your decision whether the defendant acted
6 knowingly and willfully in making any statements you find
7 to be false involves a decision about the defen
dant's
8 state of mind at the time the statements were made.
9 It is obviously impossible to ascertain or prove
10 directly what the operation of the defendant's mind was.
11 You cannot look into a person's mind to see what the state
12 of mind is or was. But a wise or intelligent
13 consideration of all the facts and circumstances shown by
14 the evidence and the exhibits in the case may enable you
15 to infer with a reasonable degree of accuracy what the
16 defendant's state of mind was.
17 In our every day affairs we are continuously
18 called upon to decide from the actions of others what
19 their state of mind is. Experience has taught us that
20 frequently actions speak louder, more clearly than spoken
21 or written words. Therefore, you may well rely in part on
22 circumstantial evidence in determining the defendant's
23 state of mind. 24 Proof of the
circumstances surrounding the 25 defendant's actions can supply an adequate basis for a
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8703
1 finding that the defendant acted knowingly and willfully.
2 The actions of an individual must be set in their time and
3 place. The meaning of a particular act may depend on the
4 circumstances surrounding it. Thus, you may consider
5 evidence which you recall and believe about the
6 defendant's actual knowledge of certain facts and
7 occurrences, as compared to the testimony he gave about
8 these facts and circumstances the extent to which
9 statements were made to conceal facts or events, if any,
10 and in general the manner in which certain actions were
11 undertaken by the defendant and by others with his
12 knowledge. You may consider whether the defendant had a
13 motive to lie and conceal the fa
cts.
14 The government is not required to prove the
15 existence of such a motive, let alone exactly what the
16 motive was. The government's failure to prove a motive
17 does not establish lack of guilt. But if you do find
18 evidence of a motive, that may help you decide what the
19 defendant's state of mind was.
20 Therefore, you should ask yourself whether the
21 defendant stood to gain any personal benefit from
22 concealing the truth, or whether he stood to avoid any
23 personal liability. 24 The fourth element that the government must prove 25 beyond a reasonable doubt is that the matter or matters as
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8704
1 to which it is charged that the defendant Gordon gave
2 false testimony were material to the issues under inquiry
3 in the civil case being tried in the federal court.
4 I instruct you that a statement is, quote,
5 material, end quote, if it has a natural tendency to
6 influence or be capable of influencing the decision of the
7 decision making body to which it was addressed -- in this
8 case, to the federal judge trying the civil case. That
9 is, it must relate to an important fact that would have a
10 natural tendency to influence his decisions as
11 distinguished from some unimportant or trivial detail. It
12 must establish this element by evidence that is clear,
13 unequivocal and convincing.
14 Count 54, obstruction of justice.
15 The defendants Gordon and Reffsin have been
16 charged in count 54 of the indictment with endeavoring to
17 obstruct the due administration of justice with regard to
18 proceedings in the bankruptcy court.
19 The indictment reads: The relevant statute is 18
20 United States Code Section 1503. It pr
ovides in part:
21 Whoever corruptly . . . endeavors to influence . . . or
22 impede . . . any court of the United States . . . or
23 corruptly . . . influences, obstructs, indeed, or 24 endeavors to influence, obstruct or impede the due 25 administration of justice shall be guilty of a crime.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8705
1 This law is designed to prevent a miscarriage of justice
2 resulting from corrupt methods. It is aimed at a variety
3 of means by which the orderly and due process of the
4 administration of justice may be impeded, thwarted, or
5 corrupted.
6 The due administration of justice refers to the
7 fair, impartial, uncorrupted and unimpeded investigation,
8 disposition or trial of any matter, civil or criminal, in
9 the courts of the United States. It includes every step
10 in a matter or proceedi
ng in the federal courts to ensure
11 the just consideration and determination of the rights of
12 the parties, whether government or individual. Thus, due
13 administration of justice includes, but is not limited to
14 a federal civil or bankruptcy proceeding.
15 The sweep of the statute extends to any corrupt
16 endeavor or effort to interfere with a federal judge's
17 function in the discharge of his or her duties.
18 The key word in the statute is "endeavor." As
19 used in this statute "endeavor" means to knowingly and
20 deliberately make any effort or any act, however contrived
21 to obstruct, impede or interfere with the Court
22 proceeding. It is the endeavor which is the gist of the
23 crime. Success of the endeavor is not an element of the 24 crime. Any effort, whether successful or not, that is 25 made for the purpose of corrupting, obstructing or
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8706
1 impeding the proceeding is condemned. To act "corruptly"
2 as that word is used in these instructions, means to act
3 voluntarily and deliberately, and for the purpose of
4 improperly influencing or obstructing or interfering with
5 the administration of justice.
6 In order to sustain its burden of proof for the
7 crime of corruptly endeavoring to obstruct or impede the
8 due administration of justice as charged in count 54, the
9 government must prove the following three essential
10 elements beyond a reasonable doubt.
11 First, the judicial proceeding in the federal
12 bankruptcy court identified in the indictment was pending
13 at the time alleged in the indictment;
14 Second, the defendant you are considering knew
15 that this bankruptcy proceeding was pending;
16 And, third, the defe
ndant you are considering
17 then corruptly endeavored to influence, obstruct or impede
18 the due administration of justice in the proceeding as
19 detailed in the indictment, namely by advising, directing,
20 participating in and assisting in the creation,
21 preparation and submission of false usage logs relating to
22 the Manhasset condominium and the Manhattan penthouse and
23 giving false, evasive and misleading testimony under oath 24 with regard to the intended and actual use of the 25 Manhasset condominium and the Manhattan penthouse for
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8707
1 corporate or business purposes.
2 First element, pending judicial proceeding.
3 The first element the government must prove
4 beyond a reasonable doubt is that a judicial proceeding in
5 the federal bankruptcy court was pending at the time
6 alleged in the indictment, namely between March 1994 and
7 September 23rd, 1994.
8 In this case it is agreed by all parties that the
9 federal bankruptcy proceeding was pending at the time set
10 forth in the indictment.
11 It is no less a violation of this proceeding
12 because the proceeding involved a civil bankruptcy
13 proceeding between two private litigants to which the
14 United States was not a party. In order to satisfy this
15 element it is sufficient if you find that the civil
16 bankruptcy proceeding was pending in a federal court.
17 Second element, knowledge.
18 The second element the government must prove
19 beyond a reasonable doubt is that the defendant you are
20 considering knew that this bankruptcy proceeding was in
21 progress. In order to satisfy this element you need only
22 to determine that the defendant knew on or about the dates
23 charged that the bankruptcy proceeding was in progress. 24 In this regard there is evidence that the defendants Bruce 25 Gordon and Martin Reffsin appeared at hearings before the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8708
1 bankruptcy court -- and this I am not sure about -- were
2 duly sworn and also testified at depositions in this
3 proceeding. Is there proof of that?
4 MR. WHITE: Yes, your Honor. Those transcripts
5 are both with respect to Mr. Gordon and Mr. Reffsin, and
6 in evidence.
7 MR. TRABULUS: Your Honor, with regard to this
8 particular element, I think Mr. Gordon would not object to
9 an instruction that it is not disputed that he knew the
10 proceeding was pending.
11 THE COURT: Okay.
12 MR. WALLENSTEIN: Mr. Reffsin would not object to
13 that either. He did testify here that he knew about it.
14 THE COURT: All right.
15 MR. WALLENSTEIN: I have another problem with
16 this charge though.
17 THE COURT: Just one minute now.
18 Both defendants concede that they knew the
19 bankruptcy proceeding was in progress?
20 MR. TRABULUS: Yes.
21 MR. WALLENSTEIN: Yes.
22 THE COURT: Yes.
23 MR. WALLENSTEIN: I don't know if you wish to 24 wait to finish -- 25 THE COURT: Having to do with the second element,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8709
1 knowledge?
2 MR. WALLENSTEIN: No. Actually in the second
3 count of the instructions here.
4 THE COURT: I am not -- you mean the second
5 obstruction counts?
6 MR. WALLENSTEIN: Right.
7 THE COURT: I am on the first obstruction count.
8 MR. WALLENSTEIN: I know that. But there was
9 some indication in the charge you just gave that one of
10 the elements for the first obstruction count was giving
11 false and evasive testimony with respect to the usage of
12 the premises. And I don't believe that's what Mr. Reffsin 13 is charged with, unless I am reading something wrong.
14 THE COURT: Okay.
15 This is the first obstruction charge, having to
16 do with the false usage logs?
17 MR. WALLENSTEIN: Yes. Mr. Reffsin is charged
18 with using a log, submitting a log, but not with respect
19 to giving testimony with respect to it, Mr. Gordon is
20 charged with that.
21 THE COURT: Is that so?
22 MR. WHITE: No, your Honor, if you look at page
23 23 and 22 of the indictment, the charge is that they both 24 obstructed justice by, A, submitting the logs, and, B, 25 giving false testimony regarding the two apartments. The
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8710
1 second obstruction charge charges Mr. Gordon with giving
2 false testimony about the ownership of the company.
3 THE COURT: Mr. Wallenstein, I say further on
4 that there has to be unanimity with regard to a particular
5 charge. I think that may cover it.
6 MR. WALLENSTEIN: It may.
7 THE COURT: Wait until you hear it. But they
8 allege that he did do this.
9 MR. WALLENSTEIN: I don't think there was any
10 evidence as to that, but, okay.
11 THE COURT: That's another matter.
12 Getting into the third element, corruptly
13 endeavoring to impede.
14 The final element the government must prove
15 beyond a reasonable doubt is that the defendant you are
16 considering did corruptly obstruct or impede or did
17 endeavor to obstruct or impede the bankruptcy proceeding.
18 As I explained previously the word "corruptly"
19 means to have the improper
motive or purpose of
20 obstructing justice. As I also told you success of the
21 endeavor is not an element of the crime. The term
22 "endeavor" is designed to reach all conduct which is
23 aimed at influencing, intimidating and impeding a 24 bankruptcy court. Thus, it is sufficient to satisfy this 25 element if you find that the defendant acted in a way
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8711
1 which produced or was capable of producing an effect that
2 prevented justice from duly -- from being duly
3 administered or obstructed or impeded the proceeding.
4 The defendants are accused of two acts which
5 allegedly obstructed or impeded the administration of
6 justice in the bankruptcy proceeding. A, advising
7 directly -- advising, directing and participating in the
8 creation of and submitting of false usage logs; and, B,
9 giving false, evasive and misleading testimony under oath
10 with regard to the intended and actual use of the
11 Manhasset condominium and Manhattan penthouse for
12 corporate or business purposes.
13 However, and this is important, you may not find
14 a defendant guilty unless you all agree unanimously that
15 one particular act obstructs justice. It is not enough
16 that you all believe that one of the two acts was
17 obstructive. That is, you cannot find a defendant guilty
18 if some of you think that only act A is obstructive, and
19 the rest of you think that only act B is obstructive.
20 There must be one of the acts that all of you believed is
21 an obstruction of justice in order to convict a defendant
22 on this count.
23 I then go into aiding and abetting which is 24 charged also. You don't want to hear this over again, do 25 you?
HA
RRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8712
1 MR. WALLENSTEIN: You are not going to make any
2 changes, are you?
3 THE COURT: It will have the same look,
4 Mr. Wallenstein.
5 MR. WALLENSTEIN: Okay.
6 THE COURT: Counts 55, obstruction of justice, I
7 believe the defendant Bruce Gordon was the only one
8 charged.
9 The defendant Bruce Gordon is charged in Count 55
10 of the indictment with endeavoring to obstruct the due
11 administration of justice with regard to proceedings in
12 the bankruptcy court.
13 Counts 55 reads as follows: The same statute is
14 involved, I don't have to repeat it. Section 1503.
15 The same prelude, explanation of "endeavor" and
16 "corrupt."
17 In order to sustain its burden of proof for the
18 crime of corruptly endeavoring to influence, obstruct or
19 impede the due administration
of justice as charged in
20 count 55 of the indictment, the government must prove the
21 following three essential elements beyond a reasonable
22 doubt.
23 First, the judicial proceeding in the federal 24 bankruptcy court identified in the indictment was pending 25 at the time alleged in the indictment;
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8713
1 Second, the defendant Bruce Gordon knew that this
2 bankruptcy proceeding was pending; and;
3 Third, the defendant Bruce Gordon then corruptly
4 endeavored to influence, obstruct or impede the due
5 administration of justice in the proceeding as detailed in
6 the indictment, namely, by submitting a bankruptcy
7 petition containing false information and giving false,
8 evasive and misleading testimony under oath with regard to
9 the ownership of Who's Who Worldwide and other
10 corporations controlled by the defendant Bruce Gordon.
11 First element, there you concede?
12 MR. TRABULUS: Same with the second.
13 THE COURT: First and second.
14 Third element, corruptly endeavored to obstruct
15 or impede.
16 The final element the government must prove
17 beyond a reasonable doubt is that the defendant Bruce
18 Gordon did corruptly obstruct, impede, or endeavor to
19 obstruct and to impede the bankruptcy proceeding.
20 As I explained earlier, the word "corruptly"
21 means to have the improper motive or purpose of
22 obstructing justice.
23 As I also told you, success of the endeavor is 24 not an element of the crime. The term "endeavor" is 25 designed to reach all conduct which is aimed at
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8714
1 influencing, intimidating or impeding a bankruptcy co
urt.
2 Thus, it is sufficient to satisfy this element if
3 you find that the defendant acted in a way which produced
4 or was capable of producing an effect that prevented
5 justice from being duly administered or obstructed or
6 impeded the proceeding.
7 Under this element it is essential that the
8 government prove beyond a reasonable doubt that the
9 defendant Bruce Gordon -- pardon me, willfully and
10 knowingly submitted a bankruptcy petition containing false
11 information under oath with regard to the ownership of
12 Who's Who Worldwide and other corporations controlled by
13 the defendant Bruce Gordon, and/or gave false, evasive and
14 misleading answers in his testimony under oath in the
15 bankruptcy court proceeding with regard to the ownership
16 of Who's Who Worldwide and other corporations controlled
17 by the defendant Bruce Gordon, and that he did so i
n a
18 corrupt endeavor to obstruct the bankruptcy court
19 proceeding by giving such false information and/or
20 testimony.
21 The defendant Bruce Gordon is accused of two acts
22 which allegedly obstructed or impeded the administration
23 of justice in the bankruptcy proceeding. 24 A, submitting a bankruptcy petition containing 25 false information with regard to the ownership of Who's
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8715
1 Who Worldwide; and, B, giving false, evasive and
2 misleading testimony under oath with regard to the
3 ownership of Who's Who Worldwide and other corporations
4 controlled by the defendant Bruce Gordon.
5 However, and this is important, you may not find
6 the defendant guilty unless you all agree unanimously that
7 one particular act has obstructed justice. It is not
8 enough that you a
ll believe that one of the two acts was
9 obstructive. That is, you cannot find the defendant Bruce
10 Gordon guilty if some of you think that only one act is
11 obstructive and the rest of you think that only the other
12 act is obstructive. The government must prove that one
13 specific -- withdrawn. The government must prove one
14 specific act that all of you believe is obstructive of
15 justice in order to convict the defendant on this count.
16 Now to get into the tax counts.
17 With respect to all -- withdrawn.
18 With respect to the tax counts I instruct you as
19 follows -- this is where I picked up some of the things
20 again that you had given me, Mr. Trabulus, I believe it is
21 page 15, 16 and 17 of your request to charge.
22 The government contends that the payments made by
23 various corporations on American Express charges and other 24 expenses incurre
d by Bruce Gordon were not loans to him, 25 but was income to him.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8716
1 I instruct you that a payment to a person or to
2 benefit a person by paying his obligation to a third party
3 is a loan, and that income, if at the time that the
4 payment is made, the person to whom it is made, or for
5 whose benefit it is made, intends to repay it. It is the
6 government's burden to prove beyond a reasonable doubt
7 that Bruce Gordon did not intend to repay them at the time
8 a corporation made any of the payments to or for him.
9 Unless the government has so proven, you may not consider
10 any of his tax returns or collection information
11 statements to have been false or not true and correct on
12 the basis that they failed to declare those payments as
13 income.
14 By the same token, unless
the government has
15 proven beyond a reasonable doubt that Bruce Gordon did not
16 intend to repay, you may not find that he evaded the
17 payment of any tax simply on the basis that he caused a
18 corporation to make a loan to him, rather than to pay him
19 wages.
20 Instead of "wages" I will put "a salary."
21 Any attempt to avoid, minimize or alleviate taxes
22 due by legitimate means is permissible. So is any
23 legitimate attempt to avoid, reduce, minimize or alleviate 24 the amount of payment to be made under a collateral 25 agreement which sets the amount of past years taxes to be
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8717
1 paid by reference to the size of present income.
2 Such legitimate means may include choosing to
3 borrow money rather than to receive salary, so long as
4 there is a true borrowing. That is to
say, so long as the
5 borrower truly intends at the time the borrowing occurs to
6 repay it later. For this reason you may not find that a
7 choice that Bruce Gordon borrow money rather than receive
8 salary was part of an attempt to evade the payment of past
9 taxes due, unless the government has established beyond a
10 reasonable doubt that Bruce Gordon did not intend to repay
11 the monies.
12 With regard to Martin Reffsin, however, that
13 would not be sufficient. The government bears the
14 additional burden of establishing beyond a reasonable
15 doubt that Martin Reffsin knew that Bruce Gordon did not
16 intend to repay the money later.
17 Count 56, conspiracy to impair, impede and
18 obstruct the Internal Revenue Service.
19 Count 56 charges the defendants Gordon and
20 Reffsin with conspiracy to defraud the United States by
21 impeding, impairing, ob
structing and defeating the lawful
22 functions of the United States Department of the Treasury,
23 Internal Revenue Service, in the ascertainment, 24 computation, assessment and collection of revenue; namely, 25 the federal income taxes of the defendant Bruce Gordon.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8718
1 Count 56 reads, the relevant statute, namely
2 conspiracy, 18 United States Code, Section 371 provides,
3 quote, if two or more persons conspire to defraud the
4 United States or any agency thereof in any manner or for
5 any purpose, and one or more of such persons do any act to
6 affect the object of the conspiracy, each is guilty of an
7 offense against the United States.
8 Then I go into a similar statement on
9 conspiracy. Do you want to hear it again? It is a
10 separate crime, the elements are the same, elements we
11 went into before, which is that there is a -- I better
12 give you this:
13 The government must prove each of the following
14 four elements beyond a reasonable doubt:
15 First, that the defendants Bruce Gordon and
16 Martin Reffsin entered into an agreement to defraud the
17 United States by impeding, impairing, obstructing and
18 defeating the lawful governmental functions of the
19 Internal Revenue Service in the ascertainment,
20 computation, assessment and collection of revenues, to
21 wit, the federal income taxes due by Bruce Gordon at or
22 about the time alleged in the indictment, by deceit or
23 trickery, or by means that are dishonest; 24 Second, that the defendant you are considering, 25 knowingly and willfully became a member of the conspiracy;
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8719
1 Third, that o
ne of the members of the conspiracy,
2 not necessarily the defendant whose case you are
3 considering, knowingly and willfully committed at least
4 one of the overt acts charged in the indictment; and,
5 fourth, that the overt act or acts which you find to have
6 been committed were knowingly committed to further some
7 object or purpose of the conspiracy.
8 Now I will give you some definitions and discuss
9 each of these elements. I will now give you the
10 definitions of the term -- the terms, impede, impair,
11 obstruct and defeat.
12 The word "impede" means stopping progress or
13 hindering.
14 To "impair" means to lessen, diminish or
15 otherwise affect in an injurious manner.
16 To "obstruct" means to hinder or progress from,
17 check, stop or place obstacles in the way, to retard the
18 progress of or make accomplishment of the due
19 administ
ration of the Internal Revenue Service laws
20 difficult and slow.
21 To "defeat" means to prevent.
22 The first element that the government must prove
23 beyond a reasonable doubt to establish the offense of 24 conspiracy is that the defendants Gordon and Reffsin25 entered into the unlawful agreement charged in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8720
1 indictment.
2 As I stated before, the unlawful agreement
3 charged by the government in this count is a conspiracy to
4 defraud the United States. Specifically, the government
5 charges that the two defendants, Gordon and Reffsin,
6 conspired to defraud the United States by impeding,
7 impairing, obstructing and defeating the lawful
8 governmental functions of the IRS in the ascertainment,
9 computation, assessment and collection of Bruce Gordon's
10 federal
income taxes by deceit or trickery or by means
11 that were dishonest.
12 It is not necessary that the government lose
13 money from the fraud, but only that its legitimate,
14 official action and purpose, be defeated by the trickery
15 or deceit.
16 Since by its nature a conspiracy must have a
17 minimum of two participants, if you find that the
18 government failed to prove beyond a reasonable doubt that
19 there was this unlawful agreement between Gordon and
20 Reffsin, there is no conspiracy, and you must acquit both
21 defendants on this count. An agreement between Bruce
22 Gordon and someone other than Martin Reffsin will not
23 suffice. 24 Then I go into, you need not have direct proof. 25 You need circumstantial evidence -- I better give you
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8721
1 this.
2 It
is not necessary that such an understanding be
3 established by direct proof of oral or written
4 agreements. It may be proven by inferences drawn from
5 circumstantial evidence, including the acts and conducts
6 of the alleged conspirators.
7 However, a mere showing of close relations, such
8 as the fact that the defendants are accountant and client,
9 or frequent contact between the alleged conspirators, will
10 not satisfy the government's burden absent evidence which
11 would permit the inference that an illegal agreement was
12 made.
13 I go into the same part there, like you need not
14 have a formal or express agreement, etcetera.
15 Do you want to hear the rest of that part of it?
16 MR. TRABULUS: No.
17 MR. WALLENSTEIN: No.
18 THE COURT: Okay.
19 Let me give you this, however, which is unique to
20 this conspiracy.
21 In this regard
I instruct you that not every
22 action undertaken by private parties to make the
23 government's job harder is criminal, and not every 24 agreement to obstruct the governmental function 25 constitutes an unlawful conspiracy to defraud.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8722
1 Individuals are not required to conduct their affairs in a
2 manner that will make it easy for the IRS to collect
3 taxes. Thus the defendants cannot be found guilty for
4 having participated in a conspiracy to impede, impair, or
5 obstruct the IRS in the ascertainment of taxes due and
6 owing by Bruce Gordon, unless the government has proven
7 beyond a reasonable doubt that they agreed to use
8 deceitful or dishonest means to accomplish this goal.
9 If the government proves beyond a reasonable
10 doubt that the defendants Gordon and Reffsin were involved
11 in a criminal conspiracy, then you must further find that
12 the conspiracy is the one charged in the indictment and
13 not some other.
14 The second element is knowing membership in the
15 conspiracy. That is essentially the same as the first
16 knowing membership, second element.
17 Do you want me to repeat that?
18 MR. TRABULUS: No.
19 MR. WALLENSTEIN: No.
20 THE COURT: I go into mere association is not
21 enough, etcetera.
22 Also, I say in this one, not only is mere
23 association not enough, but, further, the 24 accountant/client relationship between the defendants 25 alone does not give rise to a conspiracy. That fact that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8723
1 they may have been together and discussed common aims and
2 interests does not necessarily establish proof of the
3 exist
ence of a conspiracy, or knowing membership in the
4 conspiracy.
5 The third element is with respect to the
6 commission of overt acts. Are we set on these overt
7 acts?
8 MR. TRABULUS: No, your Honor. I believe there
9 is an issue as to whether some of the overt acts were
10 really made out. And in one instance as to whether it was
11 made out with respect to the conspiracy alleged.
12 THE COURT: Which ones are you talking about?
13 MR. TRABULUS: I know Mr. Wallenstein also has
14 some thoughts on this.
15 MR. WALLENSTEIN: My concern here, Judge, is with
16 respect to the overt acts which relate to the submission
17 of the log there is the bankruptcy proceeding, that they
18 don't belong in this conspiracy. That if in fact those
19 acts are proven they establish perhaps the obstruction of
20 justice count, which is 54, now, I believe, but they have
21 no relation to the conspiracy to impede the Internal
22 Revenue Service. Specifically, I am talking about the
23 overt acts designated Q, R, V and W; and that's on page 31 24 and 32 of the indictment. 25 THE COURT: Just a minute now.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8724
1 MR. TRABULUS: I join in that.
2 THE COURT: You are talking about page 29?
3 MR. WALLENSTEIN: The overt acts begin on page
4 29.
5 THE COURT: Which overt acts are you talking
6 about?
7 MR. WALLENSTEIN: Page 31 beginning, Q and R, and
8 V and W on page 32. Those four overt acts relate to the
9 submission of the logs in the bankruptcy proceeding,
10 which, while the subject of the obstruction count, have
11 nothing at all to do with the conspiracy counts to impede
12 the IRS. I don't see how the bankruptcy is at all related
13 to t
he alleged conspiracy of preventing the IRS from
14 collecting money.
15 THE COURT: However, it is alleged in the
16 indictment in that count, isn't it?
17 MR. TRABULUS: It is in paragraph 54, your
18 Honor. But the proof at the trial failed to support the
19 allegation in the indictment.
20 In other words, there has been proof at the trial
21 concerning the false usage logs, and I guess Gaspar
22 testified, but there was nothing to link it to the tax
23 aspects of the case. There was nothing to suggest it was 24 intended to or was submitted to the IRS or for purposes of 25 affecting the IRS' actions or collection or ascertainment
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8725
1 of taxes. The evidence is there perhaps but not expressly
2 linked to the tax aspects.
3 MR. WALLENSTEIN: None of the tax experts,
4 Peters, o
r Gagliardi, testified with respect to the usage
5 of the condominiums, or specifically, the log with respect
6 to the usage of the condo or the penthouse having any
7 bearing whatsoever on the issue of Mr. Gordon's tax
8 liability. If there is evidence at all in the case with
9 respect to that, it would tend to obstruct -- support the
10 obstruction count and nothing at all to do with the tax
11 conspiracy. I believe it would be confusing to the jury
12 to have those allegations or overt acts as part of the
13 conspiracy.
14 THE COURT: Mr. White.
15 Do you agree?
16 MR. WHITE: No. I disagree.
17 We touched on this when we had the Rule 29
18 argument. There are a number of ways that the logs and
19 the bankruptcy petition are related to the tax conspiracy.
20 The evidence is that Mr. Gordon and Mr. Reffsin 21 structured Mr. Gordon's financial affairs in such
a way
22 that his companies paid for everything. They furnished
23 him with a car, these apartments, paid his personal 24 expenses. The reason that the bankruptcy proceedings are 25 relevant is because at the time the bankruptcy comes along
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8726
1 it threatens to throw this in chaos, upsets the apple
2 cart. Reed wants a trustee appointed replacing
3 Mr. Gordon. If that happens the gravy train is over,
4 Mr. Gordon can't continue to have the company furnish his
5 personal expenses and furnish the condo and penthouse.
6 It is with regard to Reed's appointment as a
7 trustee that the phony logs are submitted. It is
8 constructed, the phony set up for that purpose.
9 Number two, they have to be consistent with what
10 they are telling the IRS. They didn't disclose to the IRS
11 that Mr. Go
rdon had the use of this condominium and that
12 other companies were providing to him, or the penthouse or
13 these other things.
14 Now that they have to file a phony document and
15 make disclosures to the bankruptcy court, they have to be
16 consistent. If they are hiding it from the IRS they can't
17 go over all over town saying that's where he lived.
18 In addition, the use of the condominium and the
19 penthouse should have been on Mr. Gordon's tax returns.
20 Among Agent Rosenblatt's calculation is that that was
21 income he failed to declare.
22 Conceding -- concealing that fact when asked even
23 about it from third parties is relevant to the tax 24 conspiracy. 25 As your Honor pointed out, all of this is part of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8727
1 the conspiracy alleged in this indictment. So, they can
2 argue whatever they want to the jury. But it is not as a
3 matter of law unconnected to the tax conspiracy.
4 THE COURT: I agree with the government and I
5 deny the request. You have an exception, both of you.
6 With regard to the commission of overt acts, I
7 will read what the overt acts are, do you want to hear
8 that again, the overt act portion?
9 MR. WALLENSTEIN: No, not necessary.
10 MR. TRABULUS: No.
11 THE COURT: Do you want to hear the commission of
12 the overt act in furtherance of the conspiracy which is
13 almost exactly the same as it was before?
14 MR. TRABULUS: No.
15 MR. WALLENSTEIN: Not necessary.
16 THE COURT: Okay.
17 Then I say finally with regard to the conspiracy
18 charge, which is an alleged agreement between two people,
19 namely, Bruce Gordon and Martin Reffsin, I instruct you
20 that if the government fails to
establish the guilt of
21 either defendant beyond a reasonable doubt, you must
22 acquit both defendants on the conspiracy charge.
23 Count 57, tax evasion. 24 Count 57 of the indictment charges the defendant 25 Gordon and Reffsin with attempting to evade the payment of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8728
1 federal income taxes owed by the defendant Gordon for the
2 calendar years, 1981 through 1990. I will read count 57.
3 The indictment alleges in count 57 that the
4 defendants violated Section 7201 which provides, quote,
5 any person who willfully attempts in any manner to evade
6 or defeat any tax imposed by this title, or the payment
7 thereof, shall be guilty of the offense of tax evasion.
8 In order for the crime of attempting to evade the
9 payment of income tax -- in order to prove the crime of
10 attempting
to evade income tax, the government must
11 establish the following three elements beyond a reasonable
12 doubt:
13 First, that the defendant Gordon owed federal
14 income taxes for the calendar years 1981 through 1990;
15 Second, that the defendant you are considering
16 knew that the defendant Gordon owed such federal income
17 taxes for the year 1981 through 1990;
18 Third, that the defendant you are considering
19 willfully concealed and attempted to conceal from the
20 Internal Revenue Service the nature and extent of the
21 income and assets of the defendant Bruce Gordon, with the
22 intent to evade the payment of the taxes owed.
23 First element, tax due. 24 The first element that the government must prove 25 beyond a reasonable doubt is that the defendant Gordon
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8729
1
owed federal income taxes for the calendar years 1981
2 through 19.
3 Is it 1990?
4 MR. WHITE: Yes.
5 THE COURT: However the government doesn't have
6 to prove the exact amount that the defendant Bruce Gordon
7 owed. Nor does the government have to prove that the
8 payment of all the tax charged in count 57 was evaded.
9 The prosecution must prove beyond a reasonable
10 doubt that there is a substantial amount of taxes due and
11 owing from the defendant Gordon for the calendar years,
12 1981 through 1990.
13 A relatively small or insignificant deficiency in
14 taxes is not enough to make a defendant guilty of the
15 crime of tax evasion.
16 There is no mathematical formula for determining
17 what is a substantial amount of tax deficiency. It is not
18 measured in relation to the defendant's income, nor by any
19 particular percentage of tax proven
to be due. The amount
20 varies from case to case, and is for you, the jury to
21 determine.
22 MR. WALLENSTEIN: Judge, I think we can concede
23 the first two elements. 24 THE COURT: All right. 25 MR. TRABULUS: Right, the language your Honor
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8730
1 read is more appropriate to not an evasion of payment, or
2 an evasion of the computation of the amount of tax.
3 THE COURT: You will concede the first two
4 elements?
5 MR. TRABULUS: That it was substantial, yes.
6 THE COURT: Wait a minute now.
7 MR. WALLENSTEIN: Yes.
8 My client testified to that. It can't easily be
9 contested.
10 THE COURT: Both defendants concede the first two
11 elements, namely that the defendant Gordon owed the taxes,
12 and they knew that he owed the taxes?
13 MR. TRABULUS: Yes.
14 MR. WALLENSTEIN: Yes.
15 THE COURT: All right.
16 Third element, willful evasion of payment.
17 The third element which the government must prove
18 beyond a reasonable doubt is that the defendant you are
19 considering willfully evaded or attempted to evade the
20 payment of the income taxes payable by the defendant
21 Gordon with the intention of defrauding the government of
22 such taxes owed.
23 The Internal Revenue Code makes it a crime to 24 willfully attempt in any manner to evade or defeat the 25 payment of any income tax imposed by law. There are many
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8731
1 different ways in which a tax may be evaded or an attempt
2 may be made to evade payment of such tax.
3 In this case the indictment alleges that the
4 defendant concealed and attempted to conceal from the IRS
5 the nature and extent of the income and assets of the
6 defendant Bruce Gordon in order to avoid the payment of
7 Gordon's federal income tax liability for the years 1981
8 through 1990.
9 MR. TRABULUS: Your Honor, in that sentence at
10 one point your Honor said there are many ways in which a
11 tax may be evaded. Can it be changed to say that there
12 are many ways in which a payment of a tax may be evaded?
13 THE COURT: Yes.
14 However, the attempt to evade or defeat the
15 payment of a tax must be a willful attempt. In other
16 words, in order for the government to prove the crime
17 charged, it must establish beyond a reasonable doubt that
18 the defendant you are considering acted voluntarily and
19 intentionally, and with the specific intent to keep from
20 the government information concerning Gordon's income and
21 assets which it was the legal duty o
f the defendant to set
22 forth and declare, and which the defendant you are
23 considering knew that it was Gordon's legal duty to 24 disclose. 25 I will say this again.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8732
1 In other words, in order for the government to
2 prove the crime charged, it must establish beyond a
3 reasonable doubt that the defendant you are considering
4 acted voluntarily and intentionally, and with the specific
5 intent to keep from the government information concerning
6 Gordon's income and assets which it was the legal duty of
7 the defendant Gordon to set forth and declare, and which
8 the defendants you are considering knew that it was
9 Gordon's legal duty to disclose.
10 The defendants raise the defense of good faith.
11 I will now instruct you on the defense of good faith.
12 Good faith
is an absolute defense to the charge
13 in Count 57. The grounds on which the defendants Gordon
14 and Reffsin base their claims of good faith in a belief
15 that their conduct was lawful, may be considered in
16 deciding whether they in fact acted in good faith, and
17 whether they intended and willfully attempted to evade the
18 payment of Gordon's income tax.
19 The issue of intent as to whether the defendant
20 you are considering willfully attempted to evade the
21 payment of Gordon's income tax is one that you must
22 determine from a consideration of all the evidence in the
23 case, bearing on the defendant's state of mind. In 24 deciding whether the government has proved that the 25 defendant you are considering attempted to evade the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8733
1 payment of Gordon's income tax, that is to say
whether he
2 acted willfully, voluntarily and intentionally, you may
3 consider all of his knowledge and any advice which was
4 given to him.
5 The views of the defendant you are considering
6 need not be legally correct or objectively reasonable.
7 Just as long as he honestly and in good faith believed
8 them to be true.
9 In considering the defendant's claim that he
10 acted in good faith, the question is whether or not he
11 truly held such a belief. The question you should focus
12 on is, quote, what did the defendant actually believe, end
13 quote, regardless of whether the belief was correct or
14 objectively reasonable. Cheek against the United States.
15 I will not tell that to the jury though. They may know
16 what Cheek is. Do you think, Mr. White, they know that?
17 MR. WHITE: Probably not, but I know, your Honor.
18 THE COURT: All right.
19 If you find that the defendant truly believed in
20 good faith that he did not attempt to evade the income
21 taxes due by Gordon, then such defendant did not have the
22 requisite intent to be convicted of the tax offense
23 charged, and you must find the defendant not guilty. 24 The burden of establishing lack of good faith and 25 criminal intent rests upon the prosecution. A defendant
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8734
1 is under no burden to prove his good faith. Rather, the
2 prosecution must prove lack of good faith beyond a
3 reasonable doubt.
4 I am also charging aiding and abetting.
5 MR. WHITE: Before you move to that, your Honor?
6 THE COURT: Yes.
7 MR. WHITE: I may have missed it, I am sorry.
8 But there was a sentence even in Mr. Reffsin's request to
9 charge on that Cheek issue, where he says, howe
ver, you
10 may consider whether the defendant's belief was actually
11 reasonable as a factor in deciding whether he held that
12 belief in good faith.
13 THE COURT: Absolutely not. I don't care if
14 Mr. Reffsin wants me to charge it. It is confusing. The
15 United States Supreme Court said, if you have a dream at
16 night that you don't have to pay taxes, a voice told me, I
17 don't have to pay tax -- by the way, I had three or four
18 cases just like that.
19 MR. WHITE: I know.
20 THE COURT: Just like that.
21 They said they were exempt from tax because they
22 gave money to the church, and the church exempted them
23 from paying any taxes. I never heard of this particular 24 church. But I told the jury that if those defendants 25 really believed that they don't have to pay taxes because
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8735
1 this church, whatever it is, told them not to, acquit
2 them. I don't care how unreasonably it was; Church of
3 St. Matthews.
4 MR. WALLENSTEIN: Do you mind using that tone?
5 MR. TRABULUS: I had the case before Judge
6 Mishler. I represented one of those defendants.
7 THE COURT: All convicted by the jury and all
8 confirmed.
9 MR. TRABULUS: True.
10 MR. WHITE: I don't understand why it is
11 confusing to say to the jury, yes, if you believe he
12 honestly believe that, acquit them. But if you think it
13 is so unreasonable that nobody would really believe it,
14 then you should consider that.
15 THE COURT: No. You have an exception.
16 MR. WHITE: An exception doesn't do me any good.
17 THE COURT: All right, you don't want me to give
18 you an exception, I will withdraw it then.
19 I will charge aiding and abetting, whi
ch I don't
20 have to go through, and I will not go through it again,
21 even with the jury.
22 Now, let's talk about the lesser included
23 offenses. 24 MR. TRABULUS: Your Honor, the request that I 25 handed up this morning has a lead in to the lesser
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8736
1 included, which distinguishes evasion of tax payment from
2 simply failing to pay a tax that is due. And it points
3 out that the tax evasion, evasion of payment requires an
4 affirmative act of evasion, and a failure to pay tax when
5 due does not in and of itself constitute tax evasion, even
6 if the person who doesn't pay the tax has the ability to
7 pay it and deliberately chooses not to pay it.
8 THE COURT: You lost me.
9 MR. TRABULUS: All I am saying is if it is not
10 inconvenient, this may be a good time to conside
r the
11 supplemental request I handed up.
12 THE COURT: I will consider it. Let me take a
13 look now.
14 MS. SCOTT: I would ask for one concession, your
15 Honor. We received this submission from Mr. Trabulus this
16 morning. I have not had a chance to look at the
17 additional cases cited in the submission here. I would
18 need to do that before being able to make an informed
19 argument to your Honor.
20 THE COURT: You have until this afternoon to look
21 at them.
22 MS. SCOTT: Okay.
23 THE COURT: I want to take a look and see here. 24 What page did you start your lesser included in 25 your original request?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8737
1 MR. TRABULUS: Page 15. I didn't lay out any
2 specific language there.
3 THE COURT: Tell me the difference between your
4 original req
uest to charge -- here is what I was going to
5 do so you can get an idea of what I thought was the right
6 way to do this.
7 First of all, I was going to give the jury what a
8 lesser included offense means, that they have to
9 unanimously find the accused not guilty of the crime
10 charged in count 57 --
11 MR. TRABULUS: I would request some alternative
12 language. In the request that I gave today there is case
13 in support for it, that they should proceed to the
14 lesser -- they don't need to find a unanimous not guilty
15 to go to the lesser, although Sand sets it forth. There
16 is a case also cited in the Sand book that upon defense
17 request the Court should instruct the jury that it may
18 proceed to consider the lesser offense if after all
19 reasonable efforts to reach a unanimous verdict on the
20 greater offense they have agreed to do so.
21 T
HE COURT: That's Judge Friendly's case?
22 MR. TRABULUS: Yes.
23 THE COURT: I don't agree with his case. When I 24 was in the Appellate Division in the state I had an 25 occasion criticizing -- write a decision criticizing Judge
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8738
1 Friendly, with all due respect to the legend, great
2 Friendly.
3 The prosecution has a right to get a decision on
4 the charge they allege in the indictment, up or down. In
5 my opinion your request gives the jury a chance to
6 compromise which we know is something they shouldn't have
7 a right to do.
8 What was the name of Judge Friendly's case?
9 MR. TRABULUS: Tsanas, T S A N A S, I believe.
10 THE COURT: Yes.
11 Are you familiar with this point, Ms. Scott?
12 MS. SCOTT: Unfortunately I have not read that
13 case, and that's one of th
e cases I would like to take a
14 chance to look at.
15 THE COURT: Read it and weep. I don't agree with
16 it at all.
17 I started out as a state judge. We don't have
18 that rule in the state court. You have to find not guilty
19 on the main charge before you can go to the lesser
20 included. There is no doubt about that. But there is
21 this case. It is an anomaly. I don't want to comment on
22 the experience that the writer had in the criminal law
23 before he wrote that case, or lack of it, but it is 24 there. The question is: Is it still being followed? 25 MS. SCOTT: I need to find out if it is
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8739
1 distinguishable, your Honor. That's what I need to do.
2 THE COURT: I don't know about distinguishable.
3 If the law in the federal court is on a lesser
4 included that the j
ury need not acquit, or find not guilty
5 before they go to the lesser included, then Mr. Trabulus
6 is right.
7 MR. TRABULUS: I believe they have to have all
8 reasonable efforts, after they reach a deadlock -- if it
9 doesn't require a not guilty, if there is a hung jury on
10 the greater offense they can go to the lesser included and
11 consider it.
12 THE COURT: I was not going to charge that. I
13 was going to charge that they have to find not guilty on
14 the main charge before they get to the lesser included.
15 Because other way gives them a chance to compromise. They
16 can skip the main charge and say, let's find it this way,
17 which is not so bad. I am not sure if that case is still
18 law. It may be. In which case I would have to follow it,
19 I guess.
20 In any event, you don't know if it is still the
21 law?
22 MS. SCOTT: I do not, you
r Honor. I need to look
23 at it. 24 THE COURT: Okay. 25 This is what I was going to say: The law permits
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8740
1 the jury to find the accused guilty of any lesser offense
2 which is necessarily included in the crime charged within
3 the indictment.
4 Now, we are talking about 57, evasion -- tax
5 evasion. That's what we are talking about.
6 The law permits the jury to find the accused
7 guilty of any lesser offense which is necessarily included
8 in the crime charged in Count 57 of the indictment
9 whenever such a course is consistent with the facts found
10 by the jury from the evidence in the case and with the law
11 given and with the instructions of the Court.
12 Now, here is what Sand says, which I agree with,
13 but you don't, Mr. Trabulus: If the jury should
14
unanimously find the accused not guilty of the crime
15 charged in Count 57 of the indictment, tax evasion, then
16 you must proceed to determine whether the guilt of the
17 defendant has been proven as to the lesser offenses,
18 plural, which are necessarily included in the crime
19 charged. The crime of willfully attempting to evade or
20 defeat a tax, which is the crime charged in Count 57,
21 necessarily includes the lesser offenses of filing a false
22 tax return, and willful failure to pay tax when due, the
23 elements of which I shall now describe to you. That's 24 what I was going to do. 25 Those are the two lessers; is that correct,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8741
1 Mr. Trabulus?
2 MR. TRABULUS: Right.
3 THE COURT: Or have you changed it?
4 MR. TRABULUS: The one I prepared and handed this
5 morn
ing just sets forth language for failure to pay tax
6 when due which is 7203. So failure to file -- it is not a
7 false return. It is a false document under 7207.
8 THE COURT: Okay, you are right.
9 Do you want me to continue to charge those two
10 lessers?
11 MR. TRABULUS: Yes.
12 THE COURT: Okay.
13 Now, are you following me at this point?
14 MS. SCOTT: Yes, your Honor. I will be
15 responding though, after lunch.
16 THE COURT: Very well.
17 Now, what I am trying to find out is since I got
18 this further request to charge while I was on the bench, I
19 have not had a chance this morning to go over it.
20 Anything that needs to be changed as to anything I said so
21 far?
22 MR. TRABULUS: No, nothing has to change. It is
23 just some language explaining the distinction between tax 24 evasion and failing to pay a tax when due. 25 TH
E COURT: I will take a look at this during the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8742
1 lunch hour.
2 MR. TRABULUS: Then, your Honor, I will think a
3 little more about whether I still want 7207 or a single
4 lesser included. I need to discuss that further with
5 Mr. Gordon.
6 THE COURT: Very well.
7 MR. WHITE: Another issue, with respect to 7203,
8 that's one thing, but it doesn't seem to me that.
9 MR. WHITE: 07 is a lesser included of 7201.
10 THE COURT: I think it is.
11 MR. WHITE: We will look at it over lunch.
12 MR. TRABULUS: The Sansone, S A N S O N E case
13 says it is; the Sansone case.
14 THE COURT: I think it is, Mr. White.
15 MR. WHITE: I will look at it again.
16 THE COURT: If it is, this is what I will
17 charge: Filing of a false tax return, Section 7207
18 provides as follows:
Quote, any person who willfully
19 delivers or discloses to the Secretary of the Treasury any
20 list, return, account, statement or other document known
21 by him to be fraudulent or to be false as to any material
22 matter shall be guilty of an offense against the United
23 States. 24 Then I copied some of your language which I 25 thought was good, Mr. Trabulus. A violation of Section
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8743
1 7207, filing a false tax return, but not evasion, would be
2 made out if the jury found that Gordon had submitted or
3 caused to be submitted a materially false document or
4 documents to the IRS, but had not engaged in evasion.
5 For example, if the jury were to find that the
6 government had not proven that the loans were income, but
7 had proven that Gordon had submitted false documents to
8 t
he IRS, for example, promissory notes indicating that the
9 source of some of the loans was not Who's Who Worldwide,
10 but his sister Joyce Grossman, or his friend, Madeline
11 Middlemark, the jury could find that there was no evasion,
12 but a violation of Section 7207. The theory would be that
13 the documents were materially false, but there had been no
14 evasion since the loans were still loans. Let's make it
15 "valid loans," regardless of the source so that any
16 representation as to the source left the amount of
17 Gordon's income unaffected, and thus left unaffected the
18 amount of his payment obligation under the collateral
19 agreement.
20 I think we will break at this point. But I think
21 that is a very good method of explaining to the jury the
22 facts of this case which I am obligated to do, not a
23 theoretical expression of the law in the abstract, but
24 getting it down to the facts of this case. This jury will 25 have enough trouble of the abstracts principles of law.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8744
1 They need the help of relating it to the facts in this
2 case, and it doesn't favor anybody. It just has to be
3 done. And I think this is a good way to do it.
4 We will take a recess until 1:30. And you have
5 your work cut out for you, Ms. Scott?
6 MS. SCOTT: That's correct, your Honor.
7 THE COURT: Will you be able to eat anything
8 during this time?
9 MS. SCOTT: Absolutely not.
10 (Luncheon Recess.)
11
12
13
14
15
16
17
18
19
20
21
22
23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8745
1 A F T
E R N O O N S E S S I O N
2
3 THE COURT: First of all, I received a letter
4 from the juror that I had excused with the consent of
5 everybody, the government taking no position, Sonja,
6 S O N J A, Kummer, K U M M E R. You will recall it was
7 the lady that had the alleged incident with the car. She
8 wrote to me in a letter dated March 20th, enclosing a bill
9 for $162.38. Maybe she wants me to pay the bill.
10 This letter only confirms the exercise of my
11 discretion in excusing this juror. She says, the
12 Honorable Arthur D. Spatt, sir. I am writing to ask you
13 if I have any recourse as to the damage done to my car by
14 Ms. Annette Haley, H A I L E Y, she spells it. Although I
15 did not witness the incident, her car was parked next to
16 mine the entire day. I believe that when Ms. Haley,
17 H A I L E Y, arrived in the morning and opened my -- her
1
8 car door, she slammed her door into my car and left a
19 dent. Do I have the right to present her with the
20 estimates for repair?
21 I very much appreciate your guidance in this
22 matter.
23 Sincerely. 24 I do not intend to answer this until the case is 25 over, I am telling you now. When I do, I am going to say
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8746
1 that I have nothing to do with what she does. What she
2 does is her own decision. That's how I am going to answer
3 it. I am not her lawyer nor her advisor.
4 Now, what is happening now with any of these
5 matters?
6 I looked at this Pinkerton thing, and it looks
7 like you are right, Ms. Scott.
8 MS. SCOTT: Thank you, your Honor.
9 THE COURT: Okay.
10 Now, what about this lesser included thing.
11 MR. TRABULUS: Your Honor, I had a discuss
ion
12 with Mr. Gordon during the lunch hour.
13 We continue to --
14 THE COURT: One moment. Hold it a second,
15 please.
16 MR. TRABULUS: Surely.
17 (Whereupon, at this time there was a pause in the
18 proceedings.)
19 MR. NELSON: On the Pinkerton issue, your Honor,
20 I am somewhat concerned, because I read United States v.
21 Blackmon cited by the government, and in Blackmon, the
22 case was reversed on appeal. And one of the issues that
23 came up on appeal on Blackmon, one of the people on trial 24 entered the conspiracy subsequent to a number of the 25 substantive charges there. Similar to Mr. Osman's
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8747
1 position. There was some confusion apparently in the
2 instructions provided with respect to that individual and
3 the application of the Pinkerton charge at
the later point
4 in time.
5 I am somewhat concerned as to the use of the
6 Pinkerton charge as relating to Mr. Osman. Because one of
7 the elements there is that the defendant was a member of
8 the conspiracy at the time that the substantive crime was
9 committed. Mr. Osman was not a member of the conspiracy.
10 At this time I believe 48 of the 56 charged substantive
11 counts occurred. In fact, they were dismissed by the
12 Court on the Rule 29 motion. So I am somewhat concerned
13 as to the use of the Pinkerton charge as relating to
14 Mr. Osman. And I believe the same would apply as relating
15 to Mr. Rubin.
16 THE COURT: Yes, I was prepared to state to the
17 jury that both Mr. Osman and Mr. Rubin were not members of
18 the conspiracy as a matter of law during a period. And if
19 you put down when that was and give it to me in writing,
20 and the same t
hing is true with Mr. Dunn, I will do that.
21 MR. NELSON: Yes.
22 MR. JENKS: You have to do it with Sterling as
23 well because it didn't get up and running until March of 24 '94. 25 THE COURT: True. Put it in writing and give it
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8748
1 to me at the end of the day. You can stay for a few
2 moments after the session and do it.
3 MS. SCOTT: I would like to remind in you the new
4 redacted indictment, there is a column entitled
5 defendants, which run alongside all the substantive mail
6 fraud counts, which indicates all the defendants that can
7 be considered for each count. It shows, for instance, for
8 charges 6 -- the numbers are the old numbers, they are
9 wrong, but Counts 6 through 52 Mr. Osman's name is not
10 included. Counties 3 through 41 Mr. Rubin's name is not
11 inc
luded. There is a long list. But it is clear from
12 looking at the substantive counts.
13 THE COURT: That may be, but it will not hurt to
14 say it again, would it?
15 MS. SCOTT: All right.
16 THE COURT: Why would the government be opposed
17 to my making it clearer?
18 MS. SCOTT: I guess I would be concerned in it
19 spilling over to when they were members of the conspiracy,
20 they were members.
21 THE COURT: I will take a look at the dates and
22 try to frame an instruction that would be satisfactory to
23 everybody. 24 MS. SCOTT: Thank you, your Honor. 25 THE COURT: With this Pinkerton, which is -- I
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8749
1 don't want to characterize what it is, but I will give
2 such a charge with respect to that. It is clear that
3 Pinkerton only applies to a substantive crime c
ommitted at
4 the time that the defendant was a member of the
5 conspiracy, during that time. Otherwise it doesn't
6 apply. So I will be very clear about that.
7 MR. NELSON: Your Honor, one other question that
8 co-counsel and I have had with respect to the Pinkerton
9 charge, would be where within the instruction would the
10 Pinkerton charge be provided. Would it be the conclusions
11 with respect to the conspiracy, and the conclusions with
12 respect to mail fraud?
13 THE COURT: Mail fraud.
14 MR. SCHOER: Also your Honor, there is a question
15 with respect to the order you will charge things, is the
16 Court going to charge it the same way that it appears in
17 the indictment, with conspiracy first?
18 THE COURT: Yes.
19 MR. SCHOER: I would like to suggest that the
20 mail fraud is or should be charged before the conspiracy,
21 because in order t
o convict on the conspiracy the jury has
22 to know the elements of mail fraud.
23 THE COURT: They will know it. Sometimes I do it 24 that way when it is a major situation with 20 or 30 25 substantive crimes, like in a RICO case I would do it.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8750
1 But not where there is only one crime. It is not
2 necessary, Mr. Schoer. They will understand it
3 thoroughly.
4 MR. SCHOER: Okay.
5 MR. TRABULUS: Your Honor, with regard to the
6 lesser included, we request they both be charged, 7203 and
7 7207. I request you not charge the language that you read
8 from page 15 of my request to charge, the last single
9 spaced paragraph. That's the one talking about the
10 Grossman and the Middlemark notes.
11 That language was put in there not as a request
12 to the charge, but as a discussion s
o I could highlight to
13 your Honor the state of facts a jury might find which
14 could support a conviction on the lesser rather than the
15 greater offense. I think to take that language and give
16 it to the jury would basically be giving them a roadmap to
17 convicting on the lesser.
18 THE COURT: You want me to charge the lesser
19 without this?
20 MR. TRABULUS: All right.
21 THE COURT: Okay.
22 MS. SCOTT: We will oppose your Honor charging on
23 the lesser and for the following reasons: 24 The case, Sansone against the United States, 25 S A N S O N E, and the cite is 380 U.S. 343, or 85 Supreme
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8751
1 Court 1004. It makes clear that where the greater offense
2 or the lesser offense are identical, were one subsumes the
3 other, the defense does not have a right to a lesse
r
4 offense instruction. The government is entitled to charge
5 the greater offense if it so chooses.
6 Now, in the case of Sansone, the Court analyzed
7 not only 7201 and 7203, but also 7201 and 7207, exactly
8 the two lesser offense counts that Mr. Trabulus has
9 requested your Honor charge the jury.
10 So, I will first address 7201 and 7203.
11 As Sansone pointed out, the only element that
12 7201 has that 7203 does not have is that there be an
13 affirmative act constituting an evasion of the tax law.
14 So, one can violate 7203 by willfully failing to
15 perform certain acts as required by the tax law. But such
16 an activity would not violate 7201 if they were not also
17 an affirmative act which constitutes an evasion.
18 Now, in this case, Sansone, all the defendant did
19 was file false income tax returns. And for that reason
20 the Court found that
there was an affirmative act that the
21 jury had to consider in order to meet the third
22 requirement, the third element of 7201. And for that
23 reason -- I am confused by this. I will straighten out in 24 a minute. 25 THE COURT: No problem. I am confused by many of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8752
1 this as well. But let the record reflect I am not
2 confused or I unconfused myself. Well, so I say.
3 MS. SCOTT: In that case it was undisputed that
4 there was an affirmative commission which consisted of the
5 filing of false tax returns. So that sort of put the
6 third element of 7201 out of the picture. So that the
7 only element that was still in dispute was whether that
8 action was willful, whether it was done with the intention
9 to violate the tax laws.
10 In this case, your Honor, it is undisputed that
11 there were several affirmative actions which we argue
12 constitute tax evasion. There was the filing of the false
13 433's that contained false information. There was a
14 submission of an offer in compromise which also contained
15 what we contend to be false information. There were
16 responses to Officer Gagliardi's request for more
17 information as he considered the merits of the offer in
18 compromise.
19 As in Sansone, the question then is: Were these
20 statements intentionally made with the intent to evade the
21 tax laws?
22 There is no dispute that the statements were
23 actually made. Therefore, the affirmative action or act 24 constituting an evasion is undisputed. The issue for the 25 jury is as to whether these misstatements were willful.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8753
1 I submit that,
therefore, the 7201 offense
2 subsumes the 7203 offense. And for that reason the
3 defense is not entitled to a charge on the lesser included
4 offense, 7203. Is that clear?
5 THE COURT: No.
6 How about 7207?
7 MS. SCOTT: 7207, the same analysis applies to
8 that.
9 The defense is taking the position that the
10 defendant's false statements did not affect his tax
11 deficiency.
12 Sansone says conducts can violate 7207 without
13 violating 7201, where the false statement does not
14 constitute an attempt to evade or defeat taxation because
15 it doesn't have the effect on increasing the tax
16 deficiency.
17 Are you with me so far?
18 THE COURT: Not really.
19 MS. SCOTT: Okay.
20 THE COURT: I will have to take a look at it
21 myself.
22 It appears to me that the elements under the tax
23 evasion count, which is un
der 7201 do cover the elements 24 of those two lesser included. 25 MS. SCOTT: Exactly correct. Because if the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8754
1 greater offense subsumes the lesser offense there is no
2 right to an instruction on the lesser offense.
3 What the Court does is it analyzes whether on the
4 facts of each case the two offenses become the same for
5 purposes of the jury's analysis.
6 In other words, if it is undisputed -- well, say
7 7201 has three elements and 7203 has two elements, and the
8 two elements of 7203 are the same elements as the first
9 two elements of 7201, then 7201 has one element that does
10 not need to be considered when you are trying to make a
11 determination as to whether someone is guilty of 7203.
12 And I think I have again lost your Honor. Have I?
13 THE COURT: I have to take a
nother look at it.
14 What do you say, Mr. Trabulus?
15 MR. TRABULUS: There are two questions as to
16 lesser included. First as to whether or not the elements
17 tests is satisfied, as to whether the elements of the
18 lesser is in the greater. The Sansone case is abstract of
19 both of these, because it holds both of them in the proper
20 case can be closer included of 7201.
21 The next question is: Is there a reasonable view
22 of the evidence in which the jury can convict on the
23 greater, convict on the greater and acquit on the lesser. 24 THE COURT: Can you just hold it a minute? 25 (Whereupon, at this time there was a pause in the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8755
1 proceedings.)
2 THE COURT: According to the United States
3 Supreme Court, citing from United States against
4 Hourihan, H O U R I H A
N. I don't have the citation, but
5 it was decided by the Second Circuit on December 13th,
6 1995. And this is what it says: In determining when a
7 lesser included offense instruction is proper, we are
8 instructed by the Supreme Court to apply the elements
9 test. And then they quote from the Supreme Court. Quote,
10 to determine when a lesser included offense instruction is
11 appropriate under Federal Rule of Criminal Procedure
12 31(c), a court must apply the elements test, citation
13 omitted.
14 Under this test one offense is not included in
15 the other unless the elements of the lesser offense or a
16 subset of the charged offense. Where the lesser offense
17 requires an element not required for the greater offense
18 no instruction is to be given under Rule 31(c). . And
19 that's from United States against Mena, M E N A, 931 Supp.
20 2d 19, page 29, First C
ircuit, 1991. The Supreme Court
21 case is Schmuck, S C H M U C K, against United States, 489
22 U.S.
23 One offense is not necessarily included in 24 another unless the elements of the lesser offense are a 25 subset of the elements of the charged offense.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8756
1 Are the elements of both a subset? ?
2 MR. TRABULUS: Yes, that's what the Sansone case
3 said in the Schmuck offense or Schmuck case you cited
4 quotes a cite to Sansone and approved it. It applied the
5 elements there. So Schmuck didn't in any way change
6 Sansone.
7 Let's talk about the two offenses, lesser
8 separately.
9 The difference as Ms. White herself said --
10 THE COURT: Ms. Scott.
11 MR. TRABULUS: Excuse me, Ms. Scott herself said,
12 between 7201 at 7203 is the evasion one, the greater
13
offense requires an affirmative act of evasion. The
14 lesser offense of willful failure to pay doesn't require
15 that affirmative act. It is just an omission. That's the
16 difference.
17 THE COURT: 7203 is failure to file a tax
18 return?
19 MR. TRABULUS: Or pay tax. There are a whole
20 bunch of alternatives.
21 THE COURT: Yes.
22 MR. TRABULUS: The difference between the two of
23 them is, and the facts on which the jury can find the 24 lesser, but not the greater are this: If the jury were to 25 find that there was no tax evasion, and there was no --
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8757
1 the various filings were made in good faith, the loan
2 treatment was believed in good faith or valid, or
3 whatever, all those things it would still is to deal with
4 the fact that Mr. Gordon, according to the evidenc
e got a
5 lot of money from the companies.
6 Now, whether that was reportable as income or
7 not, the jury may find it was something that should have
8 been paid over to the government by way of paying down his
9 taxes.
10 My concern, and I am making it clear why I am
11 asking for the lesser included, I am concerned unless it
12 is explained to the jury that a willful failure to pay
13 that money over in and of itself does not constitute tax
14 evasion. They may improperly convict him of an evasion
15 based on simply the fact he had a lot of money and didn't
16 pay it to the government. So that's the basis for the
17 7203 lesser included.
18 MR. WALLENSTEIN: The 7203 lesser included, your
19 Honor, doesn't apply to Mr. Reffsin, and can't. He had no
20 control over the corporate funds to cause them to be paid
21 over. Nor were the corporate funds necessarily
an
22 appropriate vehicle for that. It would have been
23 Mr. Gordon's personal liability. And there is no evidence 24 whatsoever that Mr. Reffsin had any control over 25 Mr. Gordon's accounts or his funds. So that first lesser
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8758
1 included would not at all apply to Mr. Reffsin.
2 THE COURT: You request it not be charged?
3 MR. WALLENSTEIN: Right. If you charge it with
4 respect to Mr. Gordon, I think you have to indicate to the
5 jury it doesn't apply to Mr. Reffsin.
6 THE COURT: What about 7207?
7 MR. WALLENSTEIN: A little more problematic.
8 MR. WHITE: Can we talk about that one, 7203
9 first before we move to that then?
10 MR. WALLENSTEIN: Fine with me. Give me a few
11 moments to think about it.
12 MR. WHITE: Your Honor, let's try to clarify what
13 the governm
ent's position is.
14 Lesser included instruction is not appropriate
15 here. There is no set of facts on the evidence at this
16 trial where a jury might convict Mr. Gordon of the lesser
17 included offense and not and not make out the 7201 tax
18 evasion.
19 As Mr. Trabulus pointed out, the difference is an
20 affirmative act is needed for 7201. 7203 is just a
21 failure to pay.
22 In this case there is no dispute that Mr. Gordon
23 took affirmative acts. He filed tax returns and different 24 things. The only question is was it willful or was it 25 done for purposes of evading taxes. And that's exactly
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8759
1 the case in Sansone. There they said a lesser included
2 instruction need not be included here because the only
3 difference -- because there is no difference. In Sansone
4 like here there were affirmative filings. The only
5 question is was it willful. That's the question here.
6 The problem with giving a lesser included
7 instruction under these circumstances is the jury can end
8 up convicting on a misdemeanor when the facts are made out
9 for the felony anyway.
10 THE COURT: Why would they not convict on a
11 felony if the facts are made out beyond a reasonable
12 doubt? I don't understand that thinking, especially when
13 I charge that they have to find not guilty on the --
14 MR. WHITE: Precisely for the reason your Honor
15 said earlier because the jury could just compromise
16 because they felt the punishment should be less. That's
17 the danger that Sansone and the other cases talking about
18 lesser included offenses identify.
19 MS. SCOTT: Sansone says, your Honor, that a
20 lesser offense charge is not proper where on the
evidence
21 presented the factual issues to be resolved by the jury
22 are the same as to both the lesser and greater offenses.
23 MR. TRABULUS: They are not here the same. 24 THE COURT: They are not the same. 25 MR. TRABULUS: The jury can find there was the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8760
1 same willfulness in all the filings, but the failure to
2 pay over the money is willful. And that's to support the
3 lesser and not the greater. That's on 7203.
4 MR. WHITE: Your Honor, it's one thing if
5 Mr. Gordon filed returns and didn't pay over the money
6 only. But here it is inescapable there is an affirmative
7 act if they feel he should have paid it over. It is
8 evasion.
9 MR. TRABULUS: Not at all, your Honor.
10 THE COURT: I will charge it. You have an
11 exception again.
12 Do you want 7203 and
7207?
13 MR. TRABULUS: Yes, your Honor, we do.
14 THE COURT: Okay. I will charge it.
15 MR. WHITE: Your Honor, that is a little
16 different for the same reason.
17 They are saying that the jury may find a false
18 document was submitted, but the false document did not
19 affect how much Mr. Gordon owed, therefore it is not tax
20 evasion, but it might be that lesser offense.
21 I don't think, again, on the facts of this case
22 you could conclude that. There is no document that the
23 jury can conclude was false to have affected his tax 24 liability. Because the contents of all these documents -- 25 well, the returns speak for themselves, if those were
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8761
1 false it obviously affects what he owes. But the context
2 for the rest is this offer in compromise, where
3 Mr. Gagli
ardi is evaluating, am I going to accept this
4 $150,000 you offered me, or am I not.
5 So, if false documents are submitted to him, they
6 were certainly capable of influencing his assessment of
7 whether or not that offer was reasonable and how much
8 Mr. Gordon had to pay. The example that Mr. Trabulus
9 gives is these alleged promissory notes which may or may
10 not be false, which identified the source of loans as
11 Joyce Grossman as opposed to Who's Who Worldwide.
12 Mr. Trabulus tries to portray that as having no
13 effect on tax liability because if they are loans, they
14 are loans, and it doesn't matter where the loans are
15 from. But that's not the case. Because you know if
16 Mr. Gagliardi knew that Mr. Gordon had another source of
17 income, another source of money he could borrow, that
18 could potentially affect his decision.
19 So, for them to try to
suggest that this document
20 has nothing to do with tax evasion is ridiculous. There
21 is no way the jury can say he submitted the false
22 documents, but it wasn't an act of evasion.
23 THE COURT: You have an exception. I will charge 24 it. 25 Now, what I would like to do is get a suggested
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8762
1 charge on both the lesser included as soon as possible,
2 and before tomorrow morning, by both the government -- I
3 know you don't believe it should be charged, but assume
4 that I will charge it, as to what it should be.
5 MR. TRABULUS: I gave you one, your Honor.
6 THE COURT: In the new request?
7 MR. TRABULUS: Yes, your Honor, on 7203.
8 THE COURT: How about 7207?
9 MR. TRABULUS: I have not done it, and I will do
10 it.
11 THE COURT: Do it, both of you.
12 72
07 doesn't apply to Mr. Reffsin, does it?
13 MR. WALLENSTEIN: It could apply to Mr. Reffsin.
14 The question is as to whether I want it to apply to him.
15 THE COURT: Do you want it? Let me know tomorrow
16 morning.
17 MR. WALLENSTEIN: Yes, I will talk to Mr. Reffsin 18 about it and do some soul searching.
19 THE COURT: Go back to the other counts.
20 I will have you come in early tomorrow morning.
21 The jury is coming in at 9:30. So I will say something
22 like 8:30 tomorrow morning.
23 If we don't get through everything on the lesser 24 included, do you have any objection to going ahead with 25 the summations? At a break we will discuss more. I think
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8763
1 we will be able to, however.
2 MR. TRABULUS: I have no objection.
3 MR. WALLENSTEIN: I am the first defendant to sum
4 up, and it certainly makes a difference as to whether or
5 not the lesser included will be charged. It will make
6 more of a difference to the government.
7 THE COURT: It is going to be charged. It is a
8 question of the exact wording.
9 MR. WALLENSTEIN: As to the exact wording, I have
10 no objection.
11 THE COURT: Mr. White?
12 MR. WHITE: It makes no difference.
13 THE COURT: Let's go through counts 68 through --
14 58 through 61, which we are up to now. Filing false tax
15 returns.
16 Counts 58 through 61 of the indictment --
17 incidentally, I have not seen the revised indictment yet.
18 I think it is important that I get that.
19 MS. SCOTT: Yes, your Honor.
20 Your Honor, we are taking things out as we go
21 along here and the numbers change. So there will not be a
22 final version until the end of the day.
23 THE COURT: Okay.
24 MR. TRABULUS: Your Honor, the Tsanas issue, the 25 issue Ms. White -- Ms. Scott was going to be addressing,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8764
1 the Judge Friendly decision.
2 THE COURT: Yes. How do you pronounce that
3 name?
4 MS. SCOTT: Tsanas.
5 THE COURT: Yes, the one I don't agree with.
6 MS. SCOTT: The only thing Tsanas says is 7206
7 can be charged as a lesser included to 7201. And that is
8 not what is requested here. What is requested is a lesser
9 included 7203 and 7207 to the greater offense of 7201.
10 Tsanas actually discusses 7207, but only to say
11 it cannot be a lesser to a 7206. It is not the issue
12 here.
13 THE COURT: There is another case then.
14 MR. TRABULUS: That's the case, your Honor.
15 THE COURT: There is another case, and I remember
16 I read it when I was
in the Appellate Division. We
17 expressly disagreed with it. It says that the jury does
18 not have to come to a not guilty verdict unanimously on
19 the main charge before it goes down to the lesser
20 included.
21 MR. TRABULUS: That's Tsanas.
22 MS. SCOTT: Yes. I am sorry, I thought we were
23 still on -- 24 THE COURT: We are now on what is to be charged 25 to the jury.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8765
1 MS. SCOTT: All right.
2 THE COURT: In my opinion the government has a
3 right to a decision, up or down, on the main charge. That
4 is what was alleged in the indictment. That's what the
5 proof was. And they have a right to have the jury
6 determine that charge before it goes to the lesser
7 included. That's my view.
8 That is not Judge Friendly's view?
9 MR. TRABULUS: He says in the
absence of a
10 defense request the Court can charge it and it is not
11 error. But if the defendant requests the alternative the
12 Court should do it.
13 THE COURT: I know he says that. But the
14 question is: Is that still the law.
15 MR. TRABULUS: As far as I know it is, your
16 Honor. And in fact, although Sand sets forth the type of
17 charge your Honor prefers, in the commentary to it, it
18 talks about Tsanas and says it is still the law, and it
19 says that, you know, refers to it.
20 THE COURT: You are requesting I charge the
21 Tsanas charge if they don't reach a verdict, and they can
22 go to the lesser included?
23 MR. TRABULUS: After all reasonable efforts to 24 reach it, yes. 25 MS. SCOTT: We don't have any law on that, your
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8766
1 Honor. I don't have a
computer at my disposal here. So I
2 am going to look into it tonight and see if it is still
3 good law. That's the best I could do at this point.
4 THE COURT: Okay.
5 If I can possibly avoid the charge I will do it.
6 If it is still the law I am bound by it.
7 Now let's get to counts 58 through 61 for
8 Identification charging the defendant Bruce Gordon with
9 knowingly and willfully filing false United States income
10 tax returns for the years 1991, 1992, 1993 and 1994.
11 The statute is Section 7206(1) which provides,
12 quote, any person who willfully makes and subscribes any
13 return, statement or other document which contains or
14 which is verified by a written declaration that it is made
15 under the penalties of perjury and which he does not
16 believe to be true and correct as to any material matter
17 that be guilty of an offense against the United State
s.
18 Initially I instruct you that
19 Government's Exhibits -- which are the exhibits that are
20 the United States tax returns for 1991, '92, '93, '94, do
21 you have those numbers?
22 MR. WHITE: They are easily obtainable.
23 THE COURT: All right. 24 I instruct you initially that 25 Government's Exhibits, whatever they are, are the 1991
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8767
1 through 1994 Bruce Gordon United States income tax
2 returns. They are returns within the meaning of Section
3 7206(1). Each count concerns a separate tax return for
4 each year involved, namely, Count 58, 1991 calendar year;
8 guilty of willfully making and subscribing to a false tax
9 re
turn, the government must establish each of the
10 following four elements beyond a reasonable doubt:
11 First, that the defendant made and signed
12 individual income tax returns for the years 1991, 1992,
13 1993 and 1994, and that each of the returns contained a
14 written declaration that it was made under the penalties
15 of perjury.
16 Second, the tax returns for the year you are
17 considering was not true and correct as to a material
18 matter.
19 Third, that the defendant Bruce Gordon did not
20 believe that the information stated in his individual tax
21 returns was true and correct as to his personal taxable
22 income.
23 Fourth, that in filing the false tax returns, the 24 defendant acted willfully as to each return. 25 What about the first element, Mr. Trabulus?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8768
1 MR. TRABULUS: Meaning do I wish to hear it
2 again?
3 THE COURT: Do you concede the first element,
4 that he made and signed individual income tax returns for
5 those years and they contained a declaration?
6 MR. TRABULUS: Yes.
7 THE COURT: You don't have to.
8 MR. TRABULUS: Yes. In the case of one of
9 them -- no, that's right.
10 THE COURT: Yes?
11 MR. TRABULUS: Yes.
12 THE COURT: So the first element the defendant
13 concedes.
14 The second element which the government must
15 prove beyond a reasonable doubt is that the 1991, '92, '93
16 and '94 tax returns were not true and correct as to a
17 material matter.
18 By true and correct, I mean accurate and
19 complete. And material matter means important or
20 substantial matter.
21 As to these counts the government charges that
22 all of these individual tax r
eturns for the defendant
23 Gordon were not true and correct as to one material 24 matter, namely, that they understated Bruce Gordon's 25 taxable income.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8769
1 In this regard the government must prove beyond a
2 reasonable doubt that Bruce Gordon received additional
3 personal income other than that reported on his tax
4 returns. It is for you to decide whether the government
5 proved beyond a reasonable doubt as to each individual tax
6 return at issue, whether it was not true and correct as to
7 a material matter.
8 The third element is that the defendant did not
9 believe that the information stated in his individual tax
10 returns for the years at issue was true and correct as to
11 his personal taxable income. The government must prove
12 beyond a reasonable doubt that the defend
ant Gordon knew
13 that his individual income tax returns were false as to a
14 material matter when he signed the tax returns.
15 A statement or entry is false if it is untrue by
16 the person making the statement, or causing it to be
17 made.
18 A defendant's knowledge may be established by
19 direct or circumstantial evidence, just as any other fact
20 in this case. If you find that the defendant Bruce Gordon
21 believed that the statements as to his personal taxable
22 income in the tax returns at issue was true and correct,
23 you must find him not guilty as to counts 58 through 61. 24 The fourth and final element of the charge 25 alleged in these counts is that the defendant Gordon acted
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8770
1 willfully in making and signing the false individual
2 income tax returns for the years
, '91, '92, '93 and '94.
3 The offenses charged in these counts involve the alleged
4 making of a false statement on a tax return, and not the
5 alleged attempt to evade taxes.
6 Accordingly, as to these counts, it is not
7 necessary for you to find that the defendant Gordon had a
8 specific intent to evade the payment of taxes. The
9 government must prove, however, beyond a reasonable doubt
10 that the defendant willfully made and signed a false
11 return as to a material fact.
12 As I have previously instructed you, an act is
13 done willfully if it is done voluntarily, intentionally
14 and purposefully, and with the specific intent to do
15 something the law forbids, and that that is to say with a
16 bad purpose to disobey or disregard the law.
17 Stated otherwise "willfully" simply means a
18 voluntary intentional violation of a known legal duty.
19 Howev
er, an act is not willful if it is done
20 through carelessness, inadvertence, accident, negligence
21 or some other innocent reason.
22 Mere negligence, even gross negligence, is not
23 sufficient to establish willfulness. 24 A defendant does not willfully make and sign a 25 false tax return if it is shown that he is merely careless
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8771
1 in keeping the books, or if errors of judgment are made,
2 or if there is a failure to hire a competent accountant,
3 or if there is employed a tax return preparer who is
4 incompetent or inefficient. There must be established a
5 specific intent to make and sign a false return.
6 Good faith on the part of the defendant Gordon is
7 an absolute offense to the charges alleged in these
8 counts. A return made with a good faith belief that it is
9 correc
t is not a criminal act. I have already instructed
10 you at length on the good faith offense which the
11 government must disprove beyond a reasonable doubt.
12 It is sufficient if you find that the government
13 has established beyond a reasonable doubt that one
14 material item was falsely reported or falsely failed to be
15 reported on the individual tax returns alleged in these
16 counts.
17 You are instructed that in attempting to prove
18 that the defendant Gordon violated Section 7206(1), the
19 government does not have to prove that there was a tax due
20 and owing for the year at issue.
21 Whether the government has or has not suffered a
22 pecuniary or monetary loss as a result of the alleged
23 return is not an element of Section 7206(1). 24 Count 62 through 65, assisting in the filing of 25 false income tax returns.
HARRY RAPAPORT, CSR,
CP, CM OFFICIAL COURT REPORTER 8772
1 The defendant Martin Reffsin is charged in counts
2 62 through 65 with violating 26 United States Code,
3 Section 7206(2). That section makes it a crime for anyone
4 willfully to assist in the preparation of a return under
5 the Internal Revenue Service laws, which is fraudulent or
6 false, as to any material matter.
7 And then I read those counts.
8 Section 7206(2) provides in part as follows:
9 Any person who willfully aids or assists in or
10 procures, counsels, or advises the preparation or
11 presentation under or in connection with any manner
12 arising out of the Internal Revenue Service laws of a
13 return, which is fraudulent or false as to any material
14 matter, whether or not such falsity or fraud is with the
15 knowledge or consent of the person authorized to present
16 such return, shall be guil
ty of an offense against the
17 United States.
18 Initially I instruct you that
19 Government's Exhibits -- do we have the numbers for these
20 now?
21 MR. WHITE: Yes, your Honor, Exhibits 409 through
22 412.
23 THE COURT: All right, 409, 410, 411 and 412; is 24 that correct? 25 MR. WHITE: Yes, your Honor, in chronological
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8773
1 order.
2 THE COURT: The same ones for the filing of false
3 tax returns; is that correct?
4 MR. WHITE: Correct.
5 THE COURT: Initially I instruct you that
6 Government's Exhibit s 409 through 412, which is the 1991
7 through 1994 Bruce Gordon individual tax returns are,
8 quote, returns, and within the meaning the section. Each
9 count concerns a separate tax return for each year
10 involved.
11 In order to find the
defendant Martin Reffsin 12 guilty on counts 62 through 65 of aiding and assisting in
13 the preparation and presentation of the allegedly false
14 Bruce Gordon United States individual income tax returns
15 for the years '91 through '94, the government must
16 establish each of the following four elements beyond a
17 reasonable doubt:
18 First, that the defendant Reffsin aided or
19 assisted in or procured, counselled, or advised the
20 preparation of the Bruce Gordon United States individual
21 income tax returns, arising under the Internal Revenue
22 laws for the years 1991, 1992, 1993 and 1994.
23 Second, that the Bruce Gordon United States 24 income tax returns for the years named, were false as to a 25 material matter, namely, that they understated Bruce
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8774
1 Gordon's taxable in
come.
2 Third, that the defendant Martin Reffsin knew
3 that information provided for the preparation of the Bruce
4 Gordon income tax returns for the years 1991 through 1994
5 was false.
6 Fourth, that the defendant Martin Reffsin acted
7 knowingly and willfully at the time he aided or assisted
8 in the preparation or presentation of the false Bruce
9 Gordon income tax returns for these years, and that he
10 knew that the statements as to the taxable income of Bruce
11 Gordon in the returns were false; and he acted with the
12 specific intent to violate a known legal duty and not as a
13 result of accident, negligence or a good faith
14 misunderstanding of the law, inadvertence or some other
15 innocent reason.
16 First element is that the defendant Reffsin 17 aided, assisted, procured, counselled or advised the
18 preparation or presentation of the allegedl
y false Bruce
19 Gordon income tax returns for the years 1991 through 1994.
20 You will note that the words of the statute in
21 this element relate to the preparation or presentation of
22 the tax returns.
23 MR. WALLENSTEIN: Judge, we will concede the 24 first element. 25 THE COURT: Okay.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8775
1 The second and third elements of the charges
2 alleged in Counts 62 through 65 are that the Bruce Gordon
3 individual income tax returns named in these counts were
4 each false as to at least one material matter, namely,
5 that the returns understated Bruce Gordon's taxable
6 income, and that the defendant Reffsin knew that the
7 information provided for the preparation of the income tax
8 returns for the years '91, '92, '93, '94 respectively was
9 false as to that material matter.
10 The fourth and last element you must find beyond
11 a reasonable doubt is that the defendant Reffsin acted
12 knowingly and willfully.
13 I have defined these terms earlier, and the
14 definitions apply with equal force here.
15 To recap, you must find that the defendant
16 Reffsin acted deliberately and with the intent to violate
17 the tax law and not carelessly, accidentally, negligently
18 or inadvertently.
19 Thus, the government must prove beyond a
20 reasonable doubt that the defendant Reffsin had actual
21 knowledge that the tax returns at issue on these counts
22 contain a material and false entry at the time he
23 allegedly participated in aiding and assisting in the 24 preparation or presentation of the returns. 25 The word "willfully" as that term is used in
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8776
1 these instructions, means that the act was committed
2 voluntarily and purposefully with the specific purpose to
3 do something that the law forbids; that is, voluntarily
4 and with the specific intent to violate the income tax
5 laws.
6 Thus, the government must prove that the
7 defendant Reffsin intended to aid in the preparation of
8 each false return with knowledge of its falsity, or
9 knowingly committed an act or acts that furthered the
10 preparation of a false return.
11 A defendant is not willfully aiding and assisting
12 in the preparation of a false return if he is merely
13 careless or incompetent and/or inefficient. There must be
14 a specific intent to aid and assist in the preparation of
15 a false return.
16 Good faith is an absolute defense to the charges
17 made in Count 62 through 65.
18 If the defendant Reffsin in good faith beli
eved
19 that the information provided in the tax return's
20 truthfully reports Bruce Gordon's taxable income, the
21 defendant Reffsin cannot be guilty of willfully aiding or
22 assisting in the preparation of a false income tax return.
23 The defendant's views need not be legally 24 correct, just as long as he honestly and in good faith 25 believed them to be true.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8777
1 In considering the defendant's claim that he
2 assisted in the preparation of the tax return in good
3 faith, the question is whether or not he truly held such a
4 belief; whether such belief was reasonable or
5 unreasonable. Your determination of these questions must
6 be made after examining all of the evidence.
7 The burden of establishing lack of good faith and
8 criminal intent rests upon the prosecution. A defe
ndant
9 is under no burden to prove his good faith. Rather, the
10 prosecution must prove lack of good faith beyond a
11 reasonable doubt.
12 Counts 60 through 68 -- I am sorry, 66 through
13 68; charge the defendant Bruce Gordon with knowingly and
14 willfully making, subscribing and filing three false
15 collection information statements in violation of Title 26
16 of the United States Code, Section 7206(1). The counts
17 read as follows, the statute provides -- I gave it to you
18 already, I don't have to give it to you again.
19 In sum, Counts 66 through 68 charge Bruce Gordon
20 with submitting to and filing with the IRS collection
21 information statements --
22 By the way, I got this from you, Mr. Trabulus.
23 MR. TRABULUS: I see. 24 THE COURT: Which as I told you is very helpful. 25 In sum, counts 66 through 68 charge Bruce Gordon
H
ARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8778
1 with submitting to and filing with the IRS collection
2 information statements Form 433-A, made and subscribed by
3 him, and each containing a written declaration that it was
4 made under the penalties of perjury, which the indictment
5 alleges he knew and believed were not true and correct in
6 that they allegedly failed to disclose certain matters
7 which the indictment alleges were material.
8 In this regard these counts allege a failure to
9 disclose Bruce Gordon's 1, income; 2, assets; 3, living
10 expenses; 4, compensation from Who's Who Worldwide as a
11 result of the payment by Who's Who Worldwide of his
12 personal living expenses; 5, ownership, interest in the
13 Who's Who Worldwide; and, 6, possession, and use of an
14 American Express gold card.
15 Counts 66 through 68 allege an addition
al seventh
16 failure to disclose loans made by Bruce Gordon to other
17 individuals.
18 In order to find the defendant Gordon guilty of
19 willfully making, subscribing and filing a false
20 collection information statement, the government must
21 establish each of the following four elements beyond a
22 reasonable doubt:
23 First, that the defendant Gordon made and signed 24 collection information statements on or about the dates 25 specified in counts 66 through 68, namely September 16,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8779
1 1991, July 8th, 1993, and December 29th, 1993. And each
2 statement contained a written declaration that it was made
3 under the penalties of perjury.
4 Second, that the collection information statement
5 for the year you are considering was not true and correct
6 as to a material matt
er.
7 Third, that the defendant Bruce Gordon did not
8 believe that the statements contained in his collection
9 information statements dated September 16th, 1991, July
10 8th, 1993, and December 29th, 1993, were true and
11 correct.
12 Fourth, in filing the false collection
13 information statements, the defendant Gordon acted
14 willfully as to each statement dated September 16th, 1991,
15 July 8th, 1993, and December 29th, 1993.
16 Now, as to the first element.
17 The first element is that the defendant Gordon
18 made and signed collection information statements dated
19 the three dates, and that each of the statements contained
20 a declaration that it was made under the penalties of
21 perjury.
22 In this statute the word "subscribe" is used.
23 The word "subscribe" simply means the signing of one's 24 name to a document. These counts are based
on three 25 collection information statements signed and filed by the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8780
1 defendant allegedly -- allegedly signed and filed by the
2 defendant Bruce Gordon which are Government's Exhibits --
3 do we know what exhibit numbers they are?
4 MR. WHITE: Yes, your Honor. The 1991 form is
5 Exhibit 404. The July '93 one is Exhibit 420-D, like in
6 Dog.
7 THE COURT: 420-D as in Dog?
8 MR. WHITE: Right.
9 The December 1993 one is Exhibit 423.
10 THE COURT: These counts are based on three
11 collection information statements allegedly signed and
12 filed by the defendant Gordon which are
13 Government's Exhibits 404, 420-D and 423.
14 These collection information statements are in
15 evidence, and they are tax, quote, statements, end quote,
16 within the meaning of the statute
.
17 There is no dispute that the defendant Bruce
18 Gordon signed the three collection information statements
19 at issue.
20 MR. TRABULUS: That's fine, your Honor.
21 Earlier on when we conceded the other element
22 with respect to the other counts, did your Honor say made
23 and signed or just say signed? 24 The reason I raise that is because the word 25 "made" is ambiguous, but the jury may not understand
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8781
1 it --
2 THE COURT: I said made and signed.
3 MR. TRABULUS: I wonder if the definition of
4 "made" may be given or just eliminated?
5 THE COURT: How about signed?
6 MR. TRABULUS: That's fine.
7 THE COURT: There is no problem with that, is
8 there?
9 MR. WHITE: I don't believe so, your Honor.
10 THE COURT: I don't think it makes any differen
ce
11 to me. If you think of any difference, you let me know.
12 All right, the defendant signed.
13 Do you want to concede this first element?
14 MR. TRABULUS: Yes, sure.
15 THE COURT: The second element which the
16 government must prove beyond a reasonable doubt as to
17 these counts is that the three collection information
18 statements were not true and correct as to a material
19 matter.
20 By "true and correct" I mean accurate and
21 complete.
22 "Material matter" means important or substantial
23 matter. 24 As to these counts, the government charges that 25 all of these collection information statements made and
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8782
1 filed by the defendant Gordon were not true and correct as
2 to at least one material matter. Specifically, the
3 government alleges an
d must prove beyond a reasonable
4 doubt that the three collection information statements
5 were false as to the defendant Gordon's personal income,
6 assets, living expenses, his access to an American Express
7 Gold Card, his compensation from Who's Who Worldwide, the
8 loans he received from Who's Who Worldwide and other
9 parties, and his ownership interest in Who's Who
10 Worldwide.
11 Also, I instruct you that the government must
12 prove beyond a reasonable doubt that any false statement
13 contained in these documents is material, that is that it
14 could have influenced the decisions or the activities of
15 the Internal Revenue Service.
16 An omission to disclose a fact is material if the
17 fact, once disclosed to the decision-maker, would have a
18 natural tendency to influence him or her. If the fact
19 would not have such a tendency a failure to disclose i
t is
20 not material.
21 If the government establishes beyond a reasonable
22 doubt a knowing and willful failure to disclose a fact on
23 the collection information statement, you may nevertheless 24 not convict, unless it also establishes beyond a 25 reasonable doubt that the fact if disclosed on the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8783
1 statement would have had a natural tendency to influence
2 the Internal Revenue Service in making the particular
3 decision for which the collection information statement
4 had been submitted. The government must establish this by
5 evidence that is clear, unequivocal and convincing.
6 MR. WHITE: Before we proceed, your Honor, can I
7 make one comment?
8 THE COURT: Yes.
9 MR. WHITE: When you were cataloguing the matters
10 in which the government alleges the form was false
, you
11 mentioned compensation from Who's Who Worldwide.
12 I think you mentioned loans from Who's Who
13 Worldwide and other parties.
14 Obviously the government contends they were not
15 loans, we should leave it at compensation, as to whether
16 they are income or loans.
17 MR. TRABULUS: The language which your Honor
18 charged, or indicated you would charge is taken from my
19 request, which I believe takes the language from the
20 indictment verbatim. The indictment says loans.
21 MR. WHITE: No. It refers to loans from other
22 parties. It refers to the loans from the company as
23 compensation as a result of payment by Who's Who of his 24 personal living expenses. 25 MR. TRABULUS: I think what Mr. White is talking
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8784
1 about is items -- item 4.
2 THE COURT: Ju
st a minute. Let me get to where
3 this is now.
4 (Whereupon, at this time there was a pause in the
5 proceedings.)
6 It says loans in two of the counts, namely 67 and
7 68. It says, quote, loans made to the defendant Bruce
8 Gordon by other individuals.
9 MR. WHITE: Right. That's a reference to the
10 alleged Dr. Grossman loan.
11 THE COURT: I see.
12 MR. WHITE: It is specifically differentiated in
13 both those counts from the compensation he got from Who's
14 Who as a result of the payment of his personal living
15 expenses.
16 THE COURT: So, I will make it loans made to the
17 defendant Bruce Gordon by other individuals.
18 MR. TRABULUS: I thought that's what your Honor
19 said.
20 THE COURT: No, I said Who's Who.
21 MR. TRABULUS: Because with regard to Who's Who
22 it says compensation as a result of the payment of his
23 personal living expenses -- okay. 24 THE COURT: The compensation is from Who's Who? 25 MR. TRABULUS: Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8785
1 MR. WHITE: Just the loans are not.
2 THE COURT: The loans are not.
3 MR. WHITE: Right.
4 MS. SCOTT: Your Honor, I have one other
5 request. That is in defining "materiality" when you
6 defined it as to the perjury count, your Honor said the
7 statement is material if it has a natural tendency. It
8 must have a natural tendency to influence or be capable of
9 influencing the decision-making body. And I would ask for
10 the second part for all the other materiality instructions
11 or be capable of influencing.
12 THE COURT: Would have a natural tendency to
13 influence?
14 MS. SCOTT: That's what you said all along. But
15 in the perjury materiality you sai
d not only have a
16 natural tendency to influence, but you added and be
17 capable of influencing. You did that with respect to the
18 perjury count and not with respect to the other counts. I
19 think it should go into all others.
20 THE COURT: All right.
21 MS. SCOTT: Thank you.
22 THE COURT: The third element is that the
23 defendant Bruce Gordon did not believe that the statements 24 contained in the three collection information statements 25 at issue were true and correct.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8786
1 The government must prove beyond a reasonable
2 doubt that defendant Gordon knew that the collection
3 information statement you are considering was false as to
4 a material matter when he signed the document.
5 A statement or entry is false if it is untrue by
6 the person making the statement or
causing it to be made.
7 A defendant's knowledge may be established by
8 direct or circumstantial evidence just as any other fact
9 in this case.
10 If you find that the defendant Bruce Gordon
11 believed that the statements at issue in the collection
12 information statement you are considering was true and
13 correct, you must find him not guilty as to that count.
14 The fourth and final element of the charge is
15 alleged in these counts -- alleged in these counts is that
16 the defendant Gordon acted willfully in making and signing
17 each of the false collection information statements dated
18 the three dates we mentioned.
19 The offenses charged in these counts involve the
20 alleged making of a false statement on a collection
21 information statement, and not the alleged attempt to
22 evade taxes.
23 Accordingly as to these counts, it is not
24 necessary for to you find that the defendant Gordon had a 25 specific intent to evade the payment of taxes. However,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8787
1 the government must prove beyond a reasonable doubt that
2 the defendant willfully made and signed a collection
3 information statement which contained a false material
4 fact.
5 As I previously instructed you, an act is
6 willfully if done voluntarily, intentionally and
7 purposefully and with the specific intent to do something
8 the law forbids, that is to say with a bad purpose to
9 disobey or disregard the law.
10 Willfulness simply means a voluntary intentional
11 violation of a known legal duty.
12 However, an act is not willful if it is done
13 through carelessness, inadvertence, accident, negligence
14 or some innocent reason.
15 Mere negligenc
e, even gross negligence is not
16 sufficient to establish willfulness.
17 A defendant does not willfully make and sign a
18 false collection information statement if it is shown that
19 he is merely careless in keeping the books, or if errors
20 of judgment are made, or if there is a failure to hire a
21 competent accountant.
22 There must be established a specific intent to
23 make and sign a collection information statement 24 containing a false material fact. 25 As to being truthful and correct, you should
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8788
1 consider what was and what was not disclosed on the
2 collection information statements -- this is from your
3 charge, Mr. Trabulus.
4 MR. TRABULUS: Thank you.
5 THE COURT: You should consider what was and not
6 disclosed on the collection information statement as
filed
7 in the context of the printed language on the forms 433-A,
8 as well as any Internal Revenue Service instructions in
9 evidence you may find were relied upon in filling them
10 out.
11 The words used should be given their common and
12 ordinary meaning, unless the context clearly shows that a
13 different meaning was understood by both the Internal
14 Revenue Service and the defendant.
15 The burden is upon the government to establish
16 beyond a reasonable doubt that the forms as subscribed and
17 filed by the defendant Gordon were as a result of failing
18 to make disclosures in the respects alleged not true and
19 correct.
20 Ambiguity.
21 If you should find that in one of those respects
22 the form itself was ambiguous, that is, subject to at
23 least more than one interpretation as to what had to be 24 disclosed, and that under one reaso
nable interpretation of 25 the form the defendant did not have to disclose something
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8789
1 which the indictment alleged he failed to disclose, the
2 form subscribed to and signed by the defendant would
3 nevertheless be true and correct in that respect
4 notwithstanding the failure to disclose.
5 Knowingly and willfully.
6 If you decide that the forms as subscribed by the
7 defendant were not true and correct, then you must decide
8 whether the defendant knowingly and willfully made and
9 subscribed the false collection information statement;
10 that is, at the time the collection information statement
11 was submitted and filed, did the defendant know and
12 believe that it was not true and correct? And if so, did
13 the defendant omit to disclose the matters which made it
14 that way
consciously and in the exercise of his free
15 will?
16 Unless you find beyond a reasonable doubt that
17 the defendant Bruce Gordon both knew that the collection
18 information statement was not true and correct, and that
19 he purposely or intentionally failed to disclose the
20 things which would have made it true and correct, you may
21 not find the defendant guilty.
22 Unanimity.
23 Counts 66 through 68 each alleged multiple 24 respects in which the collection information statements 25 are said to have failed to disclose facts. It is not
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8790
1 necessary that the government proved that each of these
2 non-disclosures rendered the collection information
3 statement not true and correct.
4 The government satisfies its burden of proving
5 that a collection information statem
ent was not true and
6 correct if it proves beyond a reasonable doubt that the
7 collection information statement unambiguously called for
8 the disclosure of any of the matters allegedly omitted,
9 and that these matters were indeed omitted, and were
10 indeed factual.
11 However -- and this is important -- you may not
12 find the defendant Bruce Gordon guilty unless you all
13 agree unanimously, that one particular omission rendered
14 the collection information statement not true and correct.
15 It is not enough that you all believe that some
16 omission rendered the statement not true and correct.
17 That is, you cannot find the defendant guilty if some of
18 you think that only the omission to disclose fact A
19 rendered the statement not true and correct, and the rest
20 of you think that only the omission to disclose fact B
21 rendered the statement not true an
d correct. All of you
22 must find beyond a reasonable doubt that at least one of
23 the omissions was not true and correct. 24 The same requirement of unanimity applies to the 25 element of materiality. You may not find the defendant
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8791
1 guilty unless you all agree unanimously that one
2 particular omission which rendered the collection
3 information statement not true and correct was also
4 material. It is not enough that you all believe that some
5 such admission was material. That is, you cannot find the
6 defendant Bruce Gordon guilty if some of you think that
7 only the omission to disclose fact A was material, and the
8 rest of you think that only the omission to disclose fact
9 B was material.
10 In sum, there must be at least one specific
11 knowing and willful failure to di
sclose that all of you
12 believe renders the collection information statement not
13 true and correct, and that all of you believe was material
14 in order to convict the defendant Bruce Gordon of filing a
15 false collection information statement.
16 Good faith on the part of the defendant Gordon is
17 an absolute defense to the charges alleged in Counts 66
18 through 68. Making and signing a false collection
19 information statement with a good faith belief that it is
20 correct is not a criminal act.
21 I have already instructed you at length on the
22 good faith defense. I remind you that the government has
23 the burden of proving lack of good faith on the part of 24 the defendant. 25 We will take a ten-minute recess. The only thing
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8792
1 left is the money laundering. And I want
to show you a
2 draft of what the verdict sheet will look like. That
3 should conclude our activities for today.
4 We will take a ten-minute recess. And that will
5 give you a chance to do a little more research.
6
7 (Whereupon, a recess is taken.)
8
9 THE COURT: You want to proceed without
10 Ms. Scott?
11 MS. SCOTT: Yes, your Honor. She is upstairs
12 trying to print out a redacted indictment for you.
13 THE COURT: All right.
14 Count 69, money laundering.
15 MR. WALLENSTEIN: Before you get into money
16 laundering, your Honor, I wonder if we can back up for a
17 moment?
18 With respect to the false statements, Mr. Reffsin 19 is not charged in those counts, but they are charged in
20 essentially the same language as overt acts in the client
21 conspiracy. So I would ask to the extent that those acts
22 are something Mr. R
effsin is charged with participating,
23 in the instructions you give with respect to the 24 information statements, your Honor, that they be made 25 applicable to him as well.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8793
1 THE COURT: What instructions?
2 MR. WALLENSTEIN: With respect to the definitions
3 and the elements on the false collection statements.
4 THE COURT: I don't understand. Specifically
5 what do you wish I say?
6 MR. WALLENSTEIN: When you instruct the jury with
7 respect to the conspiracy, you are going to indicate to
8 them that some of the overt acts in the conspiracy concern
9 the submission of allegedly false information statements.
10 I don't remember the specific numbers of the overt acts,
11 but they are charged specifically as part of the
12 conspiracy.
13 When you defined earlier the definit
ions
14 applicable to the charges in -- do we have the count
15 numbers?
16 MR. TRABULUS: The false information statements?
17 MR. WALLENSTEIN: Right.
18 Whatever those three counts are involving the
19 false information statements.
20 MR. TRABULUS: It would be 66 --
21 MR. WALLENSTEIN: 67, and 68, I think.
22 MR. TRABULUS: Yes.
23 MR. WALLENSTEIN: You mentioned only Mr. Gordon 24 since he is the only one charged in those counts. But I 25 would ask when you complete that that you indicate the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8794
1 elements with respect to that are applicable to the
2 conspiracy to those filings as overt acts in the
3 conspiracy. Is that clearer?
4 THE COURT: No.
5 What should be applicable to that?
6 MR. WALLENSTEIN: The elements of what constitute
7 a false informa
tion collection statement.
8 THE COURT: The conspiracy you are talking about
9 is to defraud the United States by impeding, impairing,
10 obstructing and defeating the lawful functions of the
11 IRS.
12 MR. WALLENSTEIN: Correct.
13 THE COURT: I am not sure what you want me to
14 say?
15 MR. WALLENSTEIN: When you charge the jury with
16 respect to the elements of the false information
17 statements in those counts, when you indicate to them that
18 those elements are applicable to their finding on the
19 conspiracy as to whether or not these constitute false
20 collection statements, because they are chargeable as acts
21 which Mr. Reffsin is chargeable for in the conspiracy, but
22 not in these substantive counts.
23 THE COURT: In the conspiracy which is Count 56, 24 they are mentioned as overt acts. They are not mentioned 25 as substantive crimes of
any kind.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8795
1 MR. WALLENSTEIN: I understand.
2 THE COURT: They are only overt acts. All the
3 government has to prove with respect to the conspiracy
4 that this overt act, at least one of them, was made in
5 furtherance of the conspiracy.
6 MR. WALLENSTEIN: I understand that. But the
7 acts they have to find is that the false collection
8 information statement was submitted.
9 MS. SCOTT: All the government has to prove is
10 that they were submitted.
11 THE COURT: Where do you see "false"? All it
12 says is that the defendant submitted a Form 433-A. It
13 doesn't say false.
14 MR. WALLENSTEIN: Then I am reading it
15 incorrectly.
16 THE COURT: As I say, it could be an innocent
17 act. As long as it is in furtherance of the conspiracy.
18 I don't think it i
s appropriate.
19 MR. WALLENSTEIN: I did request in writing a
20 charge with respect to Mr. Reffsin's reliance on the
21 information supplied by Mr. Gordon.
22 THE COURT: Wait until I get through and we will
23 take that up. Remind me about that. 24 MR. WALLENSTEIN: Fine. 25 THE COURT: Where were we?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8796
1 MR. TRABULUS: Money laundering.
2 THE COURT: Okay.
3 In Count 69 the defendant Bruce Gordon is charged
4 with conducting a financial transaction involving the
5 proceeds of a specified unlawful activity, namely, mail
6 fraud.
7 The indictment reads, and then Section 1956 of
8 Title 18, United States Code deals with a participation in
9 a financial transaction involving property constituting
10 the proceeds of specified unlawful activity.
11 Section 1956, su
bdivision 1, provides, quote,
12 whoever, knowing that the property involved in a financial
13 transaction, represents the proceeds of some form of
14 unlawful activity, conducts, or attempts to conduct such a
15 financial transaction which in fact involves the proceeds
16 of specified unlawful activity. (a)(ii), small 2, with
17 intent to engage in conduct constituting a violation of
18 Section 7201 or 7206 of the Internal Revenue Code, 1986.
19 By the way, are you pressing that section? Or
20 are you going only on subdivision B, to conceal and
21 disguise in nature? I think that's all you allege in the
22 indictment, isn't it?
23 MS. SCOTT: No. Both are alleged. 24 THE COURT: Are you pursuing both? 25 MS. SCOTT: Yes. Because the conduct proved here
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8797
1 fits under both.
2 M
R. TRABULUS: Your Honor, I want to make clear,
3 I submitted my suggestion instruction on this which
4 incorporates both, but that is not with reference to my
5 Rule 29 motion that your Honor ruled on. And I point out
6 that the Rule 29 motion could be decided differently with
7 respect to the two prongs. I submit they failed to make
8 it out on either. There is some argument on the 7201 or
9 7206 prong that your Honor might consider even if you were
10 not to grant it on the other.
11 THE COURT: First of all, I was somewhat confused
12 by the fact that the government's request don't include,
13 except the general statement, they don't include any
14 specific charges on the first prong. The government's
15 sole request to charge are on concealing. I will now have
16 to add it to the charge if I think it is applicable.
17 Anybody have 7201 and 7206 in front of them?
18
MS. SCOTT: Yes.
19 THE COURT: Can I see it, please.
20 You have it in this blue book? Where is it in
21 this blue book? Wait a minute, there are two sections.
22 You better give it to me.
23 MS. SCOTT: There is no instruction on the tax 24 prong. There is also not any in Sand. I was not able to 25 find any anywhere.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8798
1 (Whereupon, at this time there was a pause in the
2 proceedings.)
3 THE COURT: I can see perhaps 7201, Mr. White,
4 which is any person who willfully attempts to defeat any
5 tax. In other words, using the money to put into property
6 with intent to engage in conduct constituting a violation
7 of Section 7201, I can see that. But where does 7206 come
8 into it? 7206 --
9 MS. SCOTT: That's the filing of a false return.
10 THE COURT: Yes. What does it
have to do with
11 buying property?
12 MS. SCOTT: Mr. Gordon is also charged with the
13 substantive offense of filing a false tax return.
14 THE COURT: That may be. We are talking about
15 money laundering.
16 MS. SCOTT: Yes.
17 The point is among the items that the government
18 contends, income omitted from that false tax return, was
19 the income he obtained from the provision or providing to
20 him of this condominium by the corporation. In other
21 words, he can't have it in his name, so he has Who's Who
22 Worldwide send the money to this other shell corporation
23 that buys and owns the house. And that assists him in 24 filing a false return by not having it in his name, and he 25 can thereby more easily leave it off his tax return.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8799
1 MR. TRABULUS: This is all too
remote, so is
2 7201. At the time that money is transferred from Who's
3 Who Worldwide to PVI no taxes were owed on that money.
4 That money was Who's Who Worldwide money. There is no
5 dispute that Who's Who Worldwide paid its corporate income
6 taxes on that money.
7 Than the money goes to PVI and there is no taxes
8 due on that. So when PVI pays for the condo and the
9 furnishing and maintenance of the condo, down the road
10 Mr. Gordon's personal tax return is not going to report
11 that income. It is too remote from the transaction.
12 THE COURT: I agree that it is much too
13 attenuated and I will not charge it. You pick up your
14 book.
15 So, you don't have to look that one up,
16 Ms. Scott. I am relieving you of one burden which you
17 don't want to be relieved of.
18 MS. SCOTT: That's right.
19 THE COURT: Getting back to the money launderi
ng,
20 the section says, who ever, knowing they are involved in a
21 transaction representing the proceeds in some form of
22 unlawful activity conducts or attempts to conduct an
23 unlawful transaction which in fact involves the proceeds 24 of specified unlawful activity, knowing that the 25 transaction is designed in whole or in part -- knowing
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8800
1 that the transaction is designed in whole or in part to
2 conceal, disguise, the nature of the transaction, the
3 sale, the source, of the proceeds of specified unlawful
4 activity, etcetera, is guilty of a crime.
5 In order to prove the crime of money laundering
6 as charged in Count 69 -- let me tell the jury that it is
7 the final count. And that will make them happy, I guess.
8 It certainly makes me happy.
9 In order to prove the cri
me of money laundering
10 as charged in Count 69 the government must prove beyond a
11 reasonable doubt each of the following four elements:
12 First, that the defendant Bruce Gordon knowingly
13 conducted or attempted to conduct a financial transaction;
14 Second, that the defendant Bruce Gordon conducted
15 or attempted to conduct the financial transaction with
16 money that involved the proceeds of mail fraud.
17 Let's get right down to it.
18 Third, that at that time the defendant Bruce
19 Gordon conduct or attempted to conduct the -- that at the
20 time the defendant Bruce Gordon conduct or attempted to
21 conduct the financial transaction he knew that the
22 property involved in the financial transaction was the
23 proceeds of some form of unlawful activity, namely, mail 24 fraud. 25 And, fourth, that the defendant Bruce Gordon
HARRY RAPAPORT,
CSR, CP, CM OFFICIAL COURT REPORTER 8801
1 engaged in the financial transaction, knowing that the
2 transaction was designed in whole or in part to conceal or
3 disguise the nature or location, the source, the
4 ownership, the control of the proceeds of mail fraud.
5 Conducting a financial transaction.
6 The first element the government must prove
7 beyond a reasonable doubt is that the defendant Bruce
8 Gordon conducted or attempted to conduct a financial
9 transaction.
10 The term "conduct" includes initiating,
11 concluding, or participating in initiating or concluding a
12 transaction.
13 The term "financial transaction" means the
14 transaction involving the movement of funds by wire or
15 other means, or involving one or more monetary
16 instruments, or involving the transfer of title to any
17 real property which in any way or deg
ree affects
18 interstate commerce, or a transaction involving the use of
19 a financial institution which is engaged in, or the
20 activities of which affect interstate commerce in any way
21 or degree.
22 With respect to a financial institution, a
23 "transaction" includes a deposit withdrawal, transfer 24 between accounts, exchange of currency, extension of 25 credit, purchase, sale, loan, pledge, gift, delivery or
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8802
1 other payment or transfer or delivery by, through, or to a
2 financial institution by whatever means affected.
3 The question of whether an activity or business
4 is considered interstate commerce is a question of law for
5 me to decide. However, you, the jury, must determine the
6 question of whether there was an affect on interstate
7 commerce. If you decide there
was an affect at all on
8 interstate commerce, then it is enough to satisfy this
9 element.
10 The effect can be minimal.
11 For example, the use of funds to purchase
12 articles which travel through interstate commerce would be
13 a sufficient effect on interstate commerce. If you find
14 that the property involved in money laundering was derived
15 from mail fraud, then there would be an effect on
16 interstate commerce.
17 You do not have to decide whether the effect on
18 interstate commerce was harmful or beneficial to a
19 particular business or to commerce in general. The
20 government satisfies its burden of proving an effect on
21 interstate commerce, if it proves beyond a reasonable
22 doubt any effect, whether it was harmful or not.
23 In addition, it is not necessary for the 24 government to show that the defendant Bruce Gordon 25 actual
ly intended or anticipates an effect on interstate
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8803
1 commerce by his actions; or that commerce was actually
2 affected. All that is necessary is that the natural and
3 probable consequences of the acts the defendant took would
4 be to affect interstate commerce.
5 Second element, a financial transaction with
6 money that involved the proceeds of mail fraud.
7 The second element of the offense that the
8 government must prove beyond a reasonable doubt is that
9 the defendant Bruce Gordon conduct or attempted to conduct
10 the financial transaction with money that involved the
11 proceeds of mail fraud.
12 In this case the only alleged specified unlawful
13 activity for you to consider is mail fraud.
14 Accordingly, if you find the defendant Bruce
15 Gordon not guilty of mail fraud,
you must find him not
16 guilty of money laundering. Unless you find Bruce Gordon
17 guilty of mail fraud, you will return a verdict of not
18 guilty on the money laundering count without further
19 consideration.
20 However, even if you find Bruce Gordon guilty of
21 mail fraud, you must find him not guilty of money
22 laundering, unless the government has established each of
23 the elements of money laundering beyond a reasonable 24 doubt. 25 Third element, knowledge that property involved
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8804
1 was the proceeds of mail fraud.
2 The third element of the offense which the
3 government must prove beyond a reasonable doubt is that
4 the defendant Bruce Gordon knew that the property involved
5 in the financial transaction was the proceeds of some form
6 of unlawful activity, in
this case mail fraud.
7 I instruct you that this element refers to a
8 requirement that the defendant Bruce Gordon knew that the
9 property involved in the financial transaction represented
10 proceeds from some form of activity that constitutes a
11 felony under state or federal law.
12 I instruct you as a matter of law that mail fraud
13 is a felony.
14 Fourth element, knowledge that transaction is
15 designed to conceal the origin of the property.
16 The fourth element that the government must prove
17 beyond a reasonable doubt is that the defendant Bruce
18 Gordon acted intentionally with knowledge that the
19 transaction was designed to conceal or disguise the
20 nature, location, source, ownership or control of the
21 proceeds of mail fraud.
22 To act intentionally, means to act willfully; not
23 by mistake or accident with the deliberate purpose of
24 promoting, facilitating or assisting the carrying on of 25 money laundering of the proceeds of mail fraud.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8805
1 The government must prove beyond a reasonable
2 doubt that the defendant Bruce Gordon knew of the purpose
3 of the particular transaction at issue and that he knew
4 that the transaction was designed to conceal or disguise
5 the true origin of the property in question.
6 So that in Count 69, Mr. White, the only claim of
7 the financial transaction, the only financial transaction
8 is a single one, the Manhasset condominium.
9 MS. SCOTT: No. That's not correct, your Honor.
10 THE COURT: Where or what other transactions.
11 I thought it was the Manhasset condominium and
12 the Manhattan penthouse.
13 MS. SCOTT: No. The transactions encompassed by
14 the indictment tha
t were proven were transfers from Who's
15 Who Worldwide to Publishing Ventures for the purposes set
16 forth here, namely, the purchase, improvement, furnishing
17 and maintenance. There is a whole series transactions,
18 money that goes to purchase the property, to various
19 vendors to furnish the property, for the condo
20 development, the maintenance of the property.
21 THE COURT: All involving the Manhasset
22 condominium?
23 MS. SCOTT: Yes. 24 MR. TRABULUS: They all involve, they allege, the 25 purchase, improvement, furnishing and maintenance. I
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8806
1 inferred it did not include the transfer from Who's Who
2 Worldwide to PVI, but the expenditures by PVI to purchase,
3 improve and maintain it. I don't know if it makes that
4 much difference, but the indictment does allege
5 transactions in the plural.
6 THE COURT: That's why you want the unanimity
7 clause?
8 MR. TRABULUS: Yes.
9 THE COURT: All right.
10 The indictment alleges attempts to conduct --
11 well, the indictment alleges a number of financial
12 transactions, namely, the purchase, improvement,
13 furnishing and maintenance of the Manhasset condominium.
14 In order to prove the crime of money laundering
15 against Bruce Gordon the government must establish beyond
16 a reasonable doubt each of the four elements that I have
17 instructed you on with respect to a particular financial
18 transaction.
19 For you to convict there must be one financial,
20 at least one -- at least one financial transaction as to
21 which all four elements have been established beyond a
22 reasonable doubt. It cannot suffice for the government to
23 establish one or two elements w
ith respect to financial 24 transaction A and the remaining element or elements with 25 respect to financial transaction B. You cannot convict
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8807
1 the defendant Bruce Gordon unless there is at least one
2 specific financial transaction as to which all of you
3 believe that all of the elements have been established
4 beyond a reasonable doubt.
5 MR. TRABULUS: May I suggest in this language --
6 when I drafted I was thinking of three elements and I
7 wasn't thinking of interstate commerce one. Instead of
8 saying one or two element and the remaining elements, it
9 might be better to say some element or elements, and then
10 the remaining element or elements.
11 THE COURT: Okay.
12 That concludes my request on the law, any
13 question with respect to any additional counts?
14 M
R. DUNN: Before you get to that. Do we address
15 the statement requests? I submitted a request to charge
16 this morning, a brief one from Sand basically.
17 THE COURT: Let's do that.
18 Where did you get this request from?
19 MR. DUNN: From Sand.
20 THE COURT: In this manner?
21 MR. DUNN: Except I took out three words. If you
22 go to the first sentence, instead of "admitted certain
23 facts," it said "admitted certain things in the 24 indictment." I don't think this statement made reference 25 to anything in the indictment. It was a more generalized
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8808
1 statement about mailing lists, that he worked there not as
2 long as he said he did.
3 THE COURT: What section in Sand is that from?
4 MR. DUNN: I believe it was 5-19, I believe was
5 the page section.
6 THE COURT
: This is -- you are requesting a
7 statement on the alleged admission of the defendant
8 Rubin?
9 MR. DUNN: Yes.
10 THE COURT: Which statement are you referring to,
11 Mr. Dunn?
12 MR. DUNN: Mr. Jordan testified that out in the
13 car going back --
14 THE COURT: Yes, I see.
15 Do you want to say that about that statement?
16 Because the other statements he made on tape.
17 MR. DUNN: That's true. I guess I could have put
18 in there specifically in reference --
19 THE COURT: Do you want to do that?
20 MR. DUNN: I don't think there would be any
21 confusion with that. I think they probably know. But to
22 play it safe.
23 THE COURT: There might be confusion, just as 24 there was in my part when I read it. 25 MR. DUNN: You are right, your Honor.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8809
1 THE COURT: Statements in a --
2 MR. DUNN: In a motor vehicle.
3 THE COURT: Okay, in a motor vehicle?
4 MR. DUNN: That will be fine, your Honor.
5 THE COURT: I am going to charge that.
6 MR. DUNN: Fine. Thank you, your Honor.
7 MS. SCOTT: In a motor vehicle is kind of vague.
8 Do you want to use the date, or on the date of his
9 arrest?
10 THE COURT: How about in a motor vehicle on the
11 date of his arrest?
12 MR. DUNN: That's good. Thank you.
13 THE COURT: All right.
14 MR. WALLENSTEIN: We still have outstanding,
15 Judge, my request to charge Mr. Reffsin's defense --
16 THE COURT: Yes, let's get into that now. Is
17 that in your requests to charge?
18 MR. WALLENSTEIN: Yes, my final request in the
19 requests, yes.
20 THE COURT: What page is that?
21 MR. WALLENSTEIN: I didn't number the pages. It
22 is the last pa
ge of my requests.
23 MR. TRABULUS: Your Honor, in conjunction with 24 this, I submitted today the flip side of this request 25 relating to Mr. Gordon's reliance on Mr. Reffsin.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8810
1 THE COURT: This is your latest request to
2 charge?
3 MR. TRABULUS: Yes. The one I filed today, your
4 Honor, beginning page 4, which is called 7-3. It is a
5 page and a half. The two requests are somewhat in
6 conflict with each other. And that's why I call it to
7 your attention at this point.
8 THE COURT: There is an old story. In the very
9 delightful Broadway show, Fiddler on the Roof, you will
10 remember that Tevya said many times, you know something,
11 you are right and you are right. And I want to just take
12 a look at this charge. Give me one moment and I will be
13 right out.
14 (Whereupon, at this time there was a pause in the
15 proceedings.)
16 THE COURT: Well, the two charges come squarely
17 in-between the one set forth in Sand. And in Sand it
18 indicates with some citation of authority, not from the
19 Second Circuit, that failure of a defendant to have made
20 full disclosure of the relevant tax information to his
21 accountant disqualifies him from being entitled to the
22 reliance on advice instruction. And it goes into the
23 Seventh Circuit decision. 24 It is not a defense that he relied on his 25 accountant, unless he made a full disclosure of all the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8811
1 facts to his accountant and relied on his accountant's
2 advice.
3 MR. TRABULUS: Your Honor, that Sand instruction
4 was based on cases decided before Cheek. And the problem
5 wit
h it is that, let's say you have a client who hears
6 advice from -- who only knows what full disclosure is from
7 what his accountant tells him. And if his accountant
8 tells him something it doesn't need to be disclosed, or it
9 is the type of something that doesn't need to be
10 disclosed, and in reliance on that the client doesn't
11 disclose it, he still may have acted in full faith on the
12 disclosure he did.
13 But this is in reliance of the charge, based on
14 the objective test based on what is disclosed and what is
15 not disclosed. But it is an objective test, or should be
16 based on what the defendant believes should have been
17 disclosed.
18 In this specific case there is evidence in the
19 record, if you accept Mr. Reffsin's testimony, Mr. Gordon
20 did not disclose to him certain loans made by Sterling and
21 other corporate ends. But at the same tim
e there is the
22 testimony that in preparing the collection statements
23 filed before that and in the tax returns filed before 24 that, he didn't list corporate loans to Mr. Gordon either 25 as income or as things having to be based on the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8812
1 collection statements.
2 Based on that Gordon may feel -- based on that
3 Mr. Gordon might have determined he did not need to
4 disclose the loans to Sterling or the other entities,
5 because based on what Mr. Reffsin had done he could
6 conclude they don't need to be disclosed on collection
7 information statements, they don't need to be disclosed on
8 his own personal tax returns.
9 Mr. Reffsin himself was not performing accounting
10 services for Sterling or those other companies, so there
11 was no other reason for Mr. Gordon to have told
that to
12 Mr. Reffsin. So Mr. Gordon could have acted in complete
13 good faith in determining not to disclose those loans and
14 relied upon the advice of Mr. Reffsin in that regard. And
15 under the Sand instruction he wouldn't get the benefit of
16 it if the jury found that it should have been disclosed
17 under an objective standard, that's why the Sand
18 instruction 59-9, as you can see is based on cases decided
19 before Cheek has to be modified. And the modification on
20 which -- in which I prepared which is basically taken from
21 Sand, and just adds in what Gordon fully believed was
22 appropriate.
23 THE COURT: Let me just see that for a moment. 24 (Whereupon, at this time there was a pause in the 25 proceedings.)
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8813
1 MR. WALLENSTEIN: Judge, I don't want to be
2 accused of shifting the burden of proof. But I think in
3 order for Mr. Gordon to get the instruction he is
4 requesting he would have had to have testified or would
5 have to affirmatively adduced some evidence to show he
6 relied on Mr. Reffsin.
7 Mr. Reffsin did testify. And Mr. Reffsin's
8 testimony is that Gordon provided the information from
9 which Mr. Reffsin then prepared documents which were later
10 signed by Mr. Gordon.
11 I think, therefore, that Mr. Reffsin is entitled
12 to the charge which I have requested, which I confess is
13 somewhat unique on what is a modification of Sand 59-9, to
14 fit my particular theory in this case, because I think
15 that that is what the evidence shows. The evidence shows
16 that Reffsin consulted with Gordon, requested information
17 from Gordon, received information from Gordon, and relied
18 on the information from G
ordon. Mr. Gordon has not
19 adduced any evidence to show that he relied upon
20 Mr. Reffsin. And I don't think he has to. He doesn't
21 have to prove anything, as we all know.
22 In the absence of some positive step on his part,
23 he is not entitled to this particular instruction, which I 24 think is diametrically opposed to my instruction. 25 Otherwise I would say give him both.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8814
1 MR. TRABULUS: Your Honor, Mr. Reffsin testified
2 he prepared the collection statement or prepared the
3 returns, and there is no evidence that Mr. Gordon changed
4 them before signing them. And Mr. Reffsin testified he
5 was being paid to advise Mr. Gordon on tax matters. So I
6 don't think it is necessary that Mr. Gordon himself had to
7 have testified to establish that he relied on Mr. Reffsin 8 if
not for facts, but for the accounting or tax treatment
9 to be given to those facts as embodied on the returns.
10 And it is clear that Mr. Reffsin made some decisions as to
11 what did or did not have to be disclosed on the collection
12 information statements. He testified to that when I
13 cross-examined him.
14 Certainly, having then seen the product of the
15 decisions that Mr. Reffsin then made, Mr. Gordon might
16 well have relied upon those decisions in deciding
17 subsequently what he did and did not have to tell
18 Mr. Reffsin concerning some other corporate loans. After
19 all he had seen what didn't show up in the returns? Why
20 tell him about any others?
21 MR. WALLENSTEIN: I think it is speculative.
22 THE COURT: Listening to both and looking at the
23 charges, I don't think they are entirely contradictory. 24 MR. TRABULUS: They are not. 25 THE
COURT: And I think I will charge both of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8815
1 them. And the reason is as follows:
2 First with respect to Mr. Gordon, although he did
3 not testify, there is certainly evidence that Mr. Reffsin 4 is his accountant, and was his accountant.
5 MR. WALLENSTEIN: That's conceded.
6 THE COURT: Therefore there is circumstantial
7 evidence in that relationship alone that could leave a
8 jury to believe that Mr. Reffsin gave advice to
9 Mr. Gordon, if he didn't testify to that effect on the
10 stand, I don't recall. But without that there is
11 circumstantial evidence that an accountant would give
12 advice to a client. That is what he is there for.
13 So, I think taking Mr. Gordon's charge, I think
14 it is accurate and it fits in with Cheek. So I will
15 charge that.
16 Now, this ha
s to do with the filing, the filing
17 of the false tax returns, right, and the false collection
18 statements.
19 MR. TRABULUS: It goes to all counts, your Honor.
20 MR. WHITE: Your Honor, it doesn't go at a
21 minimum to the collection information statements. Because
22 Mr. Reffsin testified that he got that information from
23 Mr. Gordon. There is no issue about a lack of disclosure 24 between Gordon and Reffsin in either direction about the 25 collection information statements. In other words, both
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8816
1 Mr. Gordon and Mr. Reffsin know about the loans, the
2 credit cards, etcetera.
3 Now, the tax returns and the specific loans that
4 Mr. Trabulus is talking about, that may be a different
5 issue. But there is no issue about a lack of disclosure
6 of the things that were on those 43
3s.
7 MR. TRABULUS: It goes perhaps to Mr. Reffsin's
8 request to charge. It doesn't go to mine.
9 If Mr. Gordon disclosed that to Mr. Reffsin, and
10 Mr. Reffsin on that basis prepared a collection
11 information statement that Mr. Gordon didn't disclose to
12 him. Mr. Gordon is entitled to rely on what Mr. Reffsin 13 as an accountant prepared. He is relying on Mr. Reffsin 14 for what has to be disclosed or not on the statement,
15 after having disclosed to himself, to Gordon, the
16 underlying facts.
17 THE COURT: I think it goes to both the filing of
18 the false tax returns, it goes to filing the collection
19 information statement, and also as set forth in the
20 request to charge, it goes to any affirmative act of
21 evasion by way of payment of tax in Count 57, charging tax
22 evasion. I think that that defense would go to all of
23 those and I will ch
arge it. 24 With respect to Mr. Reffsin, let me look at this 25 again.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8817
1 This goes to the same counts?
2 MR. WALLENSTEIN: Going to the counts which
3 Mr. Reffsin is charged with assisting in the false
4 returns. It would also be applicable to the evasion
5 counts, yes.
6 THE COURT: I think they are not contradictory.
7 MR. TRABULUS: Your Honor, I have a problem with
8 a little bit of the language in Mr. Reffsin's charge, and
9 it is the second paragraph. It now reads: On the other
10 hand, even if you were persuaded beyond a reasonable doubt
11 that Bruce Gordon did provide complete and accurate
12 information to Martin Reffsin, you cannot convict Martin
13 Reffsin, etcetera.
14 The problem with that is it may unwittingly shift
15 to Mr. Gordon the burden of provi
ng his innocence beyond a
16 reasonable doubt.
17 MR. WALLENSTEIN: Objection to the word
18 unwittingly.
19 MR. TRABULUS: Well, the problem could be
20 resolved if the following words were omitted, you are
21 persuaded beyond a reasonable doubt that, so it reads --
22 THE COURT: Where is that?
23 Yes, that has to come out. 24 MR. TRABULUS: It should say: On the other hand, 25 even if Bruce Gordon did provide --
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8818
1 THE COURT: Yes, that's true.
2 MR. WALLENSTEIN: I don't object to that.
3 THE COURT: I think I will charge them both as to
4 the -- as far as to Gordon on the filing, tax evasion,
5 filing false tax returns, and filing false collection
6 information statements.
7 As to Martin Reffsin, tax evasion, and assisting
8 in the filing; is that correct?
9 MR. WALLENSTEIN: Correct. Those are the only
10 counts he is charged with.
11 THE COURT: I will do that.
12 MR. WALLENSTEIN: Thank you.
13 THE COURT: I think it is a correct statement of
14 the law.
15 Anything else?
16 MR. NELSON: You had already asked that we
17 provide a limiting instruction relating to the Pinkerton
18 charge as to Mr. Osman, Sterling Who's Who and also on
19 behalf of Steve Rubin.
20 THE COURT: Do you have it?
21 MR. NELSON: I have an instruction as to
22 Mr. Osman and Sterling Who's Who, which I will hand up to
23 the Court. 24 THE COURT: How about as to Rubin? 25 MR. NELSON: I believe it is in the process of
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8819
1 being finalized this second, Judge.
2 MR. DUNN: I am almost finished with it.
3 THE COURT: All right?
4 Anything else on the counts?
5 MR. WHITE: The government has one.
6 During the trial I guess the government never
7 asked and your Honor never gave the instruction to the
8 jury that they could consider the act of the statements of
9 co-conspirators with respect to any of the other people
10 they find to be co-conspirators. We never asked you to
11 make the Bourjaily finding to instruct to the jury. You
12 frequently told them that certain evidence was admitted
13 only against certain defendants.
14 Now that your Honor made the ruling that the
15 government has at least by a preponderance shown a
16 conspiracy, the jury should be instructed that statements
17 they find are in furtherance of the conspiracy and made by
18 a co-conspirator are attributable to -- statements and
19 actions that are made in furtherance should be
20 attributable --
21 THE C
OURT: What is exactly the charge you want
22 me to charge? Do you want to write it out, please?
23 MR. WHITE: Why don't I do that. 24 THE COURT: Anything else? 25 MS. SCOTT: Yes.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8820
1 MR. NELSON: Objection to such a charge. The
2 burden of proof with respect to a co-conspiracy statement
3 is different from the burden of proof in the Court's
4 Rule 29 motion.
5 The Court made the finding that viewing the
6 evidence in the light most favorable to the government as
7 required, I would submit that the government failed to
8 make out by a preponderance of the evidence the existence
9 of a conspiracy; that the statements were made in
10 furtherance of that conspiracy; that each before defendant
11 charged here was a member of that conspiracy at the time;
12 and that the person made
that statement or that was made
13 to a person in furtherance of that conspiracy.
14 I further submit to the Court that the government
15 requesting such a charge at this time after they had
16 rested is inappropriate. The application should have been
17 made prior to such period of time that the government
18 rested.
19 MR. LEE: Judge, I join in that motion on behalf
20 of Ms. Weitz.
21 THE COURT: What about that?
22 MR. WHITE: I don't understand why Mr. Nelson
23 feels it should have been made at the close of the 24 government's case. Those statements are attributable to 25 co-conspirators regardless of when the Court gives that
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8821
1 instruction. It is as each statement comes in or later
2 when the evidence is all adduced, you give them the same
3 instruction.
4 T
HE COURT: Except for one thing, if it is given
5 at the end of the government's case, the defendant
6 theoretically would have a chance to refute it in some way
7 by bringing in evidence. And they didn't have that
8 opportunity because now both sides have rested.
9 MR. WHITE: Your Honor, it is not new evidence,
10 all the evidence is there for them to rebut.
11 THE COURT: You are changing the view of the
12 evidence. It is new evidence. Because I have instructed
13 them that many of the witness statements and evidence,
14 testimony, rather, is only against Sterling, only against
15 Who's Who dozens of times. Now I am changing it against
16 everybody else. They have no opportunity to rebut it,
17 respond to it, if they wanted to. They probably wouldn't
18 have anyway. But I don't know that. So I will deny your
19 request.
20 Anything else?
21 MR. DUNN: Your Ho
nor, this is the before and
22 after.
23 THE COURT: I will have to read this at my 24 leisure tonight, which I have none. 25 MS. SCOTT: Your Honor, I have two requests.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8822
1 THE COURT: Yes.
2 MS. SCOTT: They are from the government's
3 requests to charge. I don't know if you have it up on the
4 bench.
5 THE COURT: I have it.
6 MS. SCOTT: Request 52, page 87.
7 MS. SCOTT: There was comments made on the record
8 that the government didn't call certain witnesses, the
9 example most saliently I believe is Inspector Biegelman.
10 There were several allusions to him and the fact he was
11 not brought in. I remember one attorney saying that we
12 had spent all this money to bring victims in, and it
13 wouldn't have cost any more to bring Inspector Biegelman
14 in.
15 THE COURT: I am indeed surprised that you should
16 raise this subject.
17 Inspector Biegelman is under the control of the
18 government. There is no equal opportunity in my opinion.
19 He is a government employee. There, I will decline to
20 give the charge that you request.
21 Equality means under the quality of including
22 certain things. It is not only meaning who could be
23 subpoenaed. It is the character of the witness. He is a 24 government employee. 25 A very partial, according to the evidence I
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8823
1 heard, government employee. So don't tell me he is an
2 uncalled witness equally available. As a matter of law he
3 is not equally available.
4 MS. SCOTT: Your Honor, in addition, request
5 number 55 on page 91.
6 THE COURT: Yes, I will say that. I was going
to
7 go into that in a few minutes.
8 That's a consideration of punishment.
9 MS. SCOTT: Did you mention in your statement on
10 Thursday any statement about people not being indicted?
11 THE COURT: I will check into that.
12 MR. SCHOER: I believe you did.
13 THE COURT: If Mr. Schoer says I did, then I
14 did. But let me take a look. Just to make sure.
15 (Whereupon, at this time there was a pause in the
16 proceedings.)
17 THE COURT: Yes, failure to name a defendant,
18 yes.
19 Anything else at this time?
20 With respect to closing instructions I give them
21 detailed closing instructions as to deliberations, the
22 right to a readback, to be patient, because it takes a
23 long time, and also to tell us what part of a witness' 24 testimony they want or else they will be here two days 25 listening to a readback.
HARRY RAP
APORT, CSR, CP, CM OFFICIAL COURT REPORTER 8824
1 I tell them not to consider punishment as you
2 requested Ms. Scott, and to talk to each other, and keep
3 an open mind, and change their opinion if they feel it
4 should be done, as long as it is conscientious conviction,
5 and not just to reach a verdict, and things like that.
6 That's about it, except that they select a
7 foreperson, of course.
8 Now, I would like to show you a draft of a
9 verdict sheet. It is in draft. I have not checked it
10 out. It has to be changed probably. It gives you an
11 idea.
12 (Verdict sheet distributed.)
13 THE COURT: Now, you can see that this is simple
14 and to the point.
15 Count 1 of course has all the defendants in it.
16 And the other counts, you can check them to what
17 defendants are still in the other counts.
18 We get past the mail f
raud, which is count 52,
19 and we get to the alleged perjury, obstruction of justice,
20 etcetera.
21 Does anybody have any comments at this point
22 about the verdict sheet, corrections, revisions, ideas,
23 suggestions? You can tell me about that tomorrow morning, 24 if you would like. But as I said, it is as simple as I 25 can make it, and less confusing the better, with all these
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8825
1 counts, and everything.
2 We will recess until 8:30 tomorrow morning and
3 then we will resolve the rest of the matters.
4 Do you have a copy of the indictment?
5 MS. SCOTT: I do, your Honor. The printer I used
6 seemed to have confused some page breaks and tabs that I
7 did. In places it is messy. I thought you would want to
8 have it the way that it is, and I will find a printer that
9 do
esn't do that.
10 THE COURT: Better give copies to the defendants
11 and give me that one now.
12 MS. SCOTT: All right.
13 THE COURT: I want to tell you that we
14 communicated with the jurors and told them that we were
15 supplying lunch with them tomorrow, Wednesday and from
16 that point on. Tomorrow on we will at the expense of the
17 federal court pay for their lunch. And that means that we
18 bring in their lunch for them. They do not go out. And I
19 wanted you to know that.
20 I don't know how to figure these summations. I
21 will try to work at least until 5:30 tomorrow depending on
22 the jurors. The next day we will work late if necessary
23 to get through all the summations, and then so I can 24 charge the first thing on Thursday morning. 25 Anybody have any other ideas, requests,
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
8826
1 suggestions or anything else?
2 MR. NELSON: Judge, in the brief review of the
3 verdict sheet, it is my understanding, and I don't have my
4 notes in front of me right now. But as to what is
5 included as Count 50, the January 31st, 1995 invoice, it
6 was my understanding, and I might be incorrect, that the
7 Court dismissed that count as it related to the defendants
8 other than Bruce Gordon, Who's Who Worldwide and Sterling
9 Who's Who, based on the fact that they were not employees
10 at that time on the substantive count.
11 MR. JENKS: Which count is that?
12 MR. NELSON: 50, and that's one of them.
13 THE COURT: No, it was not one of them, I don't
14 believe.
15 MR. SCHOER: Yes, Judge, that's one of them.
16 THE COURT: 50 is dismissed?
17 MR. SCHOER: 50 was dismissed against anybody
18 except Mr. Gordon and Sterling.
19 THE COURT: Is that right, Ms. Scott?
20 MS. SCOTT: What was the original number?
21 MR. SCHOER: The original number was 54. 48 was
22 similarly, and the original number of that was 52.
23 THE COURT: Go one at a time. It is probably my 24 mistake or my secretary's mistake, one or the other. 25 MR. SCHOER: Let's start with the first one, the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8827
1 mailing of 3/7/94, which is count 39 now.
2 THE COURT: What was it before?
3 MR. SCHOER: 42.
4 THE COURT: I have here that Sterling is in only
5 in counts 42, 49, 50, 52 and 54.
6 MR. SCHOER: Right, those four counts. So now it
7 is count 39 --
8 THE COURT: Wait a minute now.
9 Let me get this straight.
10 In the original indictment, and we all have
11 copies of the original indictment. Take a look at that.
12 I
totally dismissed counts 2, 39, 40 and 47. We
13 are talking originally.
14 I dismissed 52, 53 as to Osman --
15 MR. NELSON: 53 was not dismissed. I didn't
16 provide the more information needed on that.
17 THE COURT: First of all I totally dismissed
18 original counts 2, 39, 40, 47; is that correct?
19 MR. SCHOER: Yes.
20 MR. NELSON: Correct, your Honor.
21 THE COURT: Then I dismissed counts 6 through 52
22 as to Osman?
23 MR. NELSON: Correct. 24 THE COURT: Is that correct in the verdict 25 sheet?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8828
1 MR. NELSON: Correct.
2 THE COURT: Then I dismissed as to Rubin on the
3 old counts, 3 to 41 and 56; is that correct now?
4 MR. NELSON: I believe so.
5 MR. DUNN: Yes, your Honor.
6 THE COURT: All right. So that is taken care of.
7 Then I dis
missed as to Sterling, the old counts 3
8 to 41; is that correct?
9 MR. JENKS: That's correct.
10 THE COURT: In the verdict sheet.
11 Now, I dismissed as to Sterling also, according
12 to my notes, Counts 43, 44, 45, 46 --
13 MR. JENKS: 48, 50 --
14 THE COURT: 48, 51, 53, 55 and 56.
15 MR. JENKS: That's what I have, your Honor, yes.
16 I have to match these counts with the new counts
17 in your verdict sheet.
18 THE COURT: So Sterling is only in counts 42, 49,
19 50, 52 and 54.
20 Now what did I do wrong?
21 MR. SCHOER: Those counts which you just named,
22 it should only be Sterling and Mr. Gordon, and no one
23 else. 24 THE COURT: I see. 25 So what are the new counts?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8829
1 It is four below. 38, and -- are we talking the
2 new 38?
3 MR. SCHOER: No.
4 MR. JENKS: The new 39 we are talking. The new
5 39 should have Gordon and Sterling.
6 THE COURT: If I have the former count 32, why is
7 it 39?
8 MR. JENKS: By the date, the solicitation letter.
9 THE COURT: Are you listening to this,
10 Mr. White?
11 MR. WHITE: I am. But I am not catching it all.
12 MS. SCOTT: The confusion of the numbers, your
13 Honor --
14 THE COURT: Let's do the old counts and now the
15 new count, okay?
16 Which one are you talking about?
17 MR. SCHOER: The old count 42 is now count 39.
18 THE COURT: I see that.
19 Now, 39 you say should only be --
20 MR. SCHOER: Should only be Gordon and Sterling.
21 THE COURT: Is that right.
22 MR. JENKS: Yes.
23 THE COURT: I am asking the prosecution. 24 MS. SCOTT: I am trying to find it. 25 MR. WHITE: The old 32 is now the new 38?
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8830
1 MR. JENKS: No, 39.
2 THE COURT: It is a 3/7/94 solicit letter.
3 Do you agree with that?
4 MS. SCOTT: Yes, your Honor.
5 THE COURT: That's the new count 39.
6 Next is old.
7 MR. SCHOER: The next old 49.
8 THE COURT: All right, old 49.
9 MR. SCHOER: That's the new 45.
10 THE COURT: What should that be?
11 MR. SCHOER: Also only Gordon and Sterling.
12 THE COURT: Is that correct?
13 MS. SCOTT: That's correct.
14 THE COURT: I knew I would get help from all of
15 you. That's wonderful.
16 MR. SCHOER: The next is old 50, which is now the
17 new 46.
18 THE COURT: What is that?
19 MR. SCHOER: It should also be Gordon and
20 Sterling only.
21 MR. JENKS: That's correct.
22 THE COURT: All right.
23 MR. SCHOER: The next is
old 52, which is the new 24 48, and that should be Gordon and Sterling only. 25 MR. JENKS: That's correct.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8831
1 MS. SCOTT: That's correct.
2 THE COURT: All right.
3 MR. SCHOER: The last is old 54, which should be
4 new 50. And that, too should be Gordon and Sterling.
5 THE COURT: Boy, we are going to save space here
6 and it would be terrific. And I will save two pages, so
7 it will be a verdict sheet of 22 or 23 pages instead.
8 Anything else?
9 MR. SCHOER: Right now that's it as far as we can
10 see.
11 THE COURT: All right.
12 We will recess until 8:30 tomorrow morning
13 sharp.
14 MR. DUNN: One thing. On the second handwritten
15 sheet I sent up to you, I put down March 17th, 1994
16 instead of March 17th, 1995.
17 THE COURT: On that sheet it sh
ould be March
18 17th, 1995?
19 MR. DUNN: Yes.
20 MR. DUNN: Thank you, your Honor.
21 MR. SCHOER: The list of exhibits that your Honor
22 wants, I want to make sure I understand exactly what you
23 want. 24 You just want the letters or the numbers on 25 behalf of the government, we don't have to describe the
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8832
1 document, do we? Do you want a list that says exhibit --
2 THE COURT: I would like a letter, memorandum,
3 something, something. You don't have to go in detail.
4 And you have to exchange it so you can each look at it to
5 see if it is accurate.
6 MR. GEDULDIG: Judge, is it necessary for the
7 defendants to be here tomorrow morning at 8:30?
8 THE COURT: Yes.
9 We will see you tomorrow.
10 MS. SCOTT: Your Honor, this doesn't affect
11 anythi
ng. But I need to inform the Court that I will not
12 be here after Thursday the 26th because of a pressing
13 personal matter.
14 THE COURT: I am sorry. We are going to miss
15 you.
16 MS. SCOTT: Thank you, your Honor.
17 THE COURT: You contributed very well to the
18 prosecution of the case and in a very fair manner I
19 thought.
20 MS. SCOTT: Thank you, your Honor.
21 MR. WALLENSTEIN: Judge, can I ask what time you
22 intend to start the charge on Thursday so I can arrange
23 some scheduling? 24 THE COURT: 9:30 in the morning, I would think. 25 MR. WALLENSTEIN: That's what I wanted to know.
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER 8833
1 THE COURT: Maybe 9:00.
2 MR. WALLENSTEIN: I scheduled an 8:00 o'clock
3 closing figuring I can do it in an hour and get here. I
4 was hoping you would say 9:30 in
the morning.
5 THE COURT: Probably it will be.
6 (Case on trial adjourned until 8:30 o'clock a.m.,
7 Tuesday, March 24, 1998.)
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23 24 25
HARRY RAPAPORT, CSR, CP, CM OFFICIAL COURT REPORTER
