Opinion
94 Civ. 6487 (RWS)
January 10, 2002
OPINION OF THE MONITOR
Pursuant to a consent order entered in United States v. Mason Tenders, 94 Civ. 6487 (RWS) on December 27, 1994 (the "Consent Decree"), this disciplinary matter has been presented for adjudication.
As explained in more detail below, Respondent Anthony Paccione is currently incarcerated at Schuykill Federal Corrections Facility and Respondent Michael Paccione is currently incarcerated at Allenwood United States Penitentiary. Respondents were indicted on February 26, 1998 in the United States Court for the Eastern District of New York, and charged with one count of conspiracy to commit arson in violation of 18 U.S.C. § 371; one count of arson in violation of 18 U.S.C. § 844 (i), and eight counts of mail fraud in violation of 18 U.S.C. § 1341.See Exh. C. On March 3, 1999, Respondents were convicted of all counts, except for one count of mail fraud. See Exh. B. Each was sentenced to eighty-seven months imprisonment and ordered to pay restitution of $2,744,306.80 to insurance companies they were convicted of defrauding. Id.
Citations to exhibits refer to the exhibits attached to the Investigations Officer's Memorandum in Support of the Charges, dated May 11, 2001.
Prior to Respondents' federal indictments and convictions, they were indicted for various state crimes in New York. On May 9, 1997, a Kings County, New York grand jury returned an indictment that charged Respondents with eight counts: (1) Robbery in the First Degree; (2) Robbery in the Second Degree (two counts); (3) Grand Larceny in the Second Degree; (4) Tampering with Physical Evidence; (5) Criminal Possession; (6) Burglary in the Second Degree; and (7) Criminal Mischief. See Exh. D. These charges stemmed from Respondents' armed robbery of a Costco store and subsequent attempts to destroy evidence. On June 1, 2000, Respondents were convicted of all counts except Criminal Possession and Criminal Mischief and were sentenced to prison terms totaling 10 to 20 years. See Exh. E. Respondents' prison sentences of 10 to 20 years for the New York State convictions are to run consecutively to their federal prison sentences of 87 months. Id.
I. Background
Respondents have been members of Local 66 since 1996. See letter from the Investigations Officer to the Monitor dated November 26, 2001. On December 15, 1998, the Investigations Officer submitted charges under the Consent Decree based on the same facts underlying the federal indictment, alleging that Respondents committed racketeering activity in violation of the RICO statute and the Consent Decree. Specifically, the Charges allege that, on April 7, 1994, Respondents deliberately set fire to a building known as Uncle Sams and Spit, in violation of 18 U.S.C. § 1961, et seq., and sought to defraud the Insurance Company of the State of Pennsylvania using the United States mail, in violation of 18 U.S.C. § 1341. See Exh. F.
On December 23, 1998, I received a letter from Randi L. Chavis, Esq., the federal public defender representing Michael Paccione in his criminal case, requesting that the disciplinary matter be held in abeyance until the conclusion of the criminal case against Respondents. On December 28, 1998. Adrian L. DiLuzio, Esq. wrote, on behalf of Respondent Anthony Paccione, objecting to the Charges. See Exh. G.
On January 25, 2000, subsequent to Respondents' convictions but while their appeals were pending, Marlen Kruzhkov, an associate of Latham Watkins, sent a letter to Respondent Michael Paccione on behalf of the Investigations Officer informing him that, if an objection to the Charges were not received by February 18, 2000, the Investigations Officer would request that the Monitor adopt the charges without a hearing. See Exh. H.
On February 10, 2000, Respondent Michael Paccione wrote to me advising that he objected to the Charges, and requesting a hearing and the aid of counsel. See Exh. I. Also, on February 10, 2000, Frederick J. Annibale, Jr., Esq. contacted Mr. Kruzhkov on behalf of Respondent Michael Paccione advising that, while he did not represent Mr. Paccione, he was informing Mr. Kruzhkov that Mr. Paccione objected to the Charges, requested a hearing and objected to permanent expulsion from the union as unduly harsh. See Exh. J. On March 3, 2000, Respondent Anthony Paccione sent a letter of objection to me substantially similar to the letter sent by Respondent Michael Paccione on February 10, 2000. See Exh.K.
On February 3, 2000, the Second Circuit Court of Appeals affirmed both of the Respondents' convictions for arson and mail fraud. See Exh. L. On June 5, 2000, the Supreme Court of the United States denied Respondents' petitions for writ of certiorari with respect to their federal convictions, exhausting the Respondents' direct appeals of those convictions.
The Second Circuit noted that in some cases, there might be concern about the fairness of using collateral estoppel:
[s]uch unfairness might result . . ., where a defendant had `little incentive to defend vigorously' in the first action; where the `judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant'; or where `the second action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result.'
None of those considerations are involved here.
On May 11, 2001, the Investigations Officer submitted a pre-hearing memorandum in support of the Charges and asserted that no hearing need be held in this matter since the Respondents would be collaterally estopped from contesting the Charges by virtue of their criminal convictions arising out of the same conduct. On June 11, 2001, I contacted Respondents and asked them to submit any opposition to the Charges by August 1, 2001. On June 15, 2001, I received a request by letter from Respondent Anthony Paccione for additional time to respond, and I extended the date for opposition materials to be submitted until September 15, 2001. On August 1, 2001, I received another letter from Respondent Anthony Paccione requesting an additional 180 days to respond to the charges. By letter dated September 24, 2001, I rejected the request for 180 days but gave the Respondents until November 1, 2001 to submit any materials in opposition to the Charges. On November 8, 2001, I received a letter from the Investigations Officer noting that no response had been received and urging me to rule on the Charges.
The Investigations Officer has responded to Respondents' requests for counsel in his pre-hearing memorandum. That memorandum correctly notes that there is no constitutional right to counsel in a civil proceeding such as this one. See, e.g., In re Martin-Trigona, 737 F.2d 1254, 1260 (2d Cir. 1984) Moreover, nothing in the Consent Decree authorizes me to appoint counsel for Respondents.
Respondents have also suggested in their correspondence that going forward with an adjudication of the Charges is improper because they are currently incarcerated and are unable to attend a hearing. However, the right to appear personally in a civil case is not a constitutional right and prisoners cannot necessarily expect to attend hearings in civil matters that are scheduled during the period of their incarceration. See Bagley v. Bagley, 292 N.Y.S.2d 796, 798 (N.Y.Sup.Ct. 1968), ("[w]hile it appears that the right to defend is an absolute constitutional right, the right to appear personally is civil cases is not"); see also Price v. Johnston, 334 U.S. 266, 285-86 (1947). In any event, that issue is moot since, as set forth more fully below, the Respondents are collaterally estopped from contesting the facts underlying their criminal convictions, making a hearing on these Charges unnecessary.
II. Legal Analysis and Findings
Paragraph 3(a) of the Consent Decree prohibits all members of the MTDC and its constituent locals from engaging in "any act of racketeering". Racketeering activity, as defined by the RICO statute, includes, inter alia, any violation of 18 U.S.C. § 1341 (mail fraud), as well as "any act or threat involving . . . arson . . . which is chargeable under State law and punishable by imprisonment for more than one year." 18 U.S.C. § 1961 (1)(A)(B).
As noted by the Second Circuit, the facts underlying Respondents' federal convictions are "relatively straightforward." See Exh. L at 2. On April 7, 1994, Respondents set fire to Levittown Events, an unprofitable nightclub owned by Respondent Anthony Paccione and managed by Respondent Michael Paccione. The crime was committed as part of a larger scheme to defraud the insurance company of insurance money so that Respondents could pay off their debts. As part of the scheme, Respondents submitted a false insurance claim for equipment, supplies and other items not in the club at the time of the fire. Id. Respondents were convicted of seven counts of mail fraud in violation of 18 U.S.C. § 1341. Such multiple violations of 18 U.S.C. § 1341 are clear examples of "racketeering activity" as defined by both the RICO statute and the Consent Decree.
The Respondents were also convicted of arson and conspiracy to commit arson under 18 U.S.C. § 844(i), and 18 U.S.C. § 371. See Exh. B. Although their convictions were for the federal offense of arson, the conduct established by the conviction is also "racketeering activity" as defined by the RICO statute, since it is conduct "chargeable under State law and punishable by imprisonment for more one year" 18 U.S.C. § 1961 (1)(a). In determining whether a State law offense constitutes racketeering activity under the RICO statute, "[t]he test . . ., is whether the indictment charges a type of activity [that is] generally known or characterized in [a] proscribed category . . ." United States v. Forsythe, 560 F.2d 1127, 1137 (3d Cir. 1977). Thus, if a defendant's conduct is generally characterized as an offense enumerated in the RICO statute — for example, "arson," see 18 U.S.C. § 1961 — and that offense is punishable under State law by more than one year in prison, then, regardless of whether the offense is pled as a state or federal crime, it constitutes "racketeering activity" under the RICO statute and violates the Consent Decree. Here, the evidence demonstrates that the Respondents committed a violation of N.Y. Penal Law Section 150.10 (a class C felony) and thus engaged in "racketeering activity" as defined by the RICO statute and the Consent Decree.
Because of their convictions — now final —, Respondents are collaterally estopped from asserting that they did not commit the conduct alleged in the Charges. "It is well established that a criminal conviction may act to collaterally estop a litigant from challenging in a subsequent civil action issues decided in that prosecution." Nat'l Union Fire Ins. Co. v. Sun, 111 F.3d 123, 1997 U.S. App. Lexis 6174, at *1 (2d Cir. 1997) (citing Maietta v. Artuz, 84 F.3d 100, 103 n. 1 (2d Cir. 1996)). For example, in United States v. Int'l Bhd. of Teamsters, 725 F. Supp. 162 (S.D.N.Y. 1989), aff'd., 905 F.2d 610 (2d Cir. 1990), the Investigations Officer brought charges against IBT members Harold Friedman ("Friedman") and Anthony Hughes ("Hughes") for embezzling of IBT funds and committing racketeering offenses in violation of 18 U.S.C. § 1962 (c) and (d). Id. at 164-65. Both Friedman and Hughes had previously been convicted in federal court for the embezzlement charged by the Investigations Officer. Id. at 165. The Independent Administrator determined that Friedman and Hughes should be collaterally estopped from contesting the substance of the charges against them. "since the charges [were] essentially the same as those previously decided in their criminal trials." Id. at 167.
On appeal, the district court upheld the Independent Administrator's application of collateral estoppel, noting that Friedman (1) "had ample opportunity to raise whatever defenses he could in his criminal trial," (2) had the greatest incentive to "fully and comprehensively defend himself against criminal charges," (3) "faced charges alleging the exact same conduct as that proved in his criminal trial," and (4) was afforded even greater procedural guarantees during his criminal proceeding. United States v. Int'l Bhd. of Teamsters, 743 F. Supp. 155, 166 (S.D.N.Y. 1990). The Second Circuit affirmed the use of collateral estoppel.United States v. Int'l Bhd. of Teamsters, 905 F.2d 610, 621 (2d Cir. 1990).
I was informed in a holiday card that I received in early December from Respondent Anthony' Paccione that Respondents have filed habeas corpus applications.
The same factors support the application of collateral estoppel here. There is no dispute that Respondents were parties to the prior criminal action. See Int'l Bhd. of Teamsters, 725 F. Supp. at 167 n. 11. In addition, the issues to be estopped — whether Respondents committed arson and mail fraud — are the same issues that were determined inUnited States v. Paccione, 98 Cr. 200 (JM); Respondents were found guilty of (1) conspiracy to commit arson; (2) arson; and (3) seven counts of mail fraud.
Third, these issues were actually litigated and necessary to Respondents' judgments of conviction of the crimes identified above. See Int'l Bhd. of Teamsters, 725 F. Supp. at 167 n. 11. Facing a lengthy prison sentence and substantial restitution (ultimately determined to be 87 months and $2,744,306.80), Respondents had every incentive to fully litigate the issues at their criminal trial. See 905 F.2d at 621.
Accordingly the Charges are ADOPTED.
III. Conclusion
Pursuant to paragraph 4(e) of the Consent Decree, Respondents are banned permanently from membership in, association with, and employment by the Mason Tenders District Council of Greater New York and any unions or trust funds affiliated with it.
Pursuant to the Consent Decree, any appeal from this decision should be taken within 10 days, but since the Respondents are in prison, I will request that Judge Sweet accept any appeal noticed within 30 days of the decision.