Opinion
Case No. 1:02 M 9010
February 15, 2002
ENTRY AND ORDER OF DETENTION
Summary
Frank D. Gruttadauria is charged in a criminal complaint dated January 25, 2002 with knowingly making false statements to National City Bank, a federally insured financial institution, for purposes of influencing the actions of that institution in connection with a credit application in violation of 18 U.S.C. § 1014. At the initial appearance held on February 11, 2002, the government moved for detention under 18 U.S.C. § 3142 (f)(2).
The Court held a preliminary examination and detention hearing on February 14, 2002. The United States appeared by Robert Kern, Assistant United States Attorney; and the defendant appeared in person and by his retained counsel, Roger M. Synenberg and Joan C. Synenberg. Gruttadauria waived preliminary examination, and the case proceeded to the detention hearing. The detention hearing resulted in Gruttadauria being detained on the basis that the government proved by more than a preponderance of the evidence that he is a serious risk of flight and that there is no condition or combination of conditions of release that would reasonably assure Gruttadauria's appearance. He is ordered detained.
Findings of Fact
The defendant, Frank D. Gruttadauria, age 44, was employed as Managing Director of Lehman Brothers, Cleveland, Ohio, until approximately January 11, 2002. Lehman Brothers is a publicly-traded corporation that serves as a financial intermediary to facilitate securities transactions.
Until early January 2002, Gruttadauria resided in Gates Mills, Ohio, at 1289 Berkshire Road. He has three children from a dissolved marriage, who reside with his ex-wife in Gates Mills. Except for a period of employment in Chicago during the 1980s, Gruttadauria has lived his entire life in the Cleveland area.
The FBI opened an investigation on Gruttadauria prompted by a letter from him to the Bureau received on January 17, 2002. In that letter, Gruttadauria admitted to a scheme of misappropriation that had occurred over the past 15 years. He directed the FBI to digital tapes left in the credenza of the conference room of the Lehman Brothers office in Cleveland.
The FBI contacted Lehman Brothers on January 17, 2002 and learned that Gruttadauria was an employee and Managing Director of the Cleveland office. He was last seen at Lehman Brothers on January 11, 2002.
The FBI subsequently learned that a missing persons report had been filed on Gruttadauria with the Gates Mills Police by his ex-wife on January 14, 2002. The FBI then interviewed his ex-wife and girlfriend in Gates Mills. His ex-wife, Margo Gruttadauria, told the Bureau that she had last seen the defendant on January 9, 2002. His girlfriend, Sarah Emamy, stated that she last saw the defendant on January 11, 2002.
On January 20, 2002, the FBI received an anonymous phone call from a person in Colorado Springs, Colorado. The caller reported that a man fitting Gruttadauria's description had rented a house next door. The caller stated that this man went by the name of Peter Bonutti. The caller had recognized Gruttadauria from a picture published in The Wall Street Journal.
The FBI contacted the owner of the rental property in question. The owner disclosed that the current occupant made initial inquiry about the property over the internet on December 15, 2001. This person moved into the property on January 13, 2002. The name on the lease was Peter Bonutti. The tenant had told the landlord that he worked for a technical firm in Cleveland. He had the lease sent to P.O. Box 471 in Gates Mills, Ohio, in late December 2001. A follow-up with the Post Office in Gates Mills disclosed that P.O. Box 471 had been taken out in the name of Peter Bonutti.
A check with the Ohio Bureau of Motor Vehicles disclosed that an Ohio driver's license had been issued in the name of Peter Bonutti in September 2001. This license was issued on the surrender of an Illinois driver's license in the same name. The photograph taken for purposes of this license is that of Gruttadauria. The address given for that driver's license, 28399 Shaker Boulevard, Pepper Pike, Ohio 44124, is a non-existent address.
The FBI subsequently determined that a Peter Bonutti with the birth date and social security number given for purposes of the Ohio application resides in Illinois. The FBI interviewed Bonutti and learned that he is an orthopedic surgeon and a client and friend of Gruttadauria. Dr. Bonutti told the FBI that his Illinois driver's license was lost or stolen in 2001. He had noticed that his license was missing shortly after being in the company of Gruttadauria. Gruttadauria renewed the Ohio driver's license in his own name in November 2001.
The landlord of the Colorado Springs property leased in the name of Bonutti disclosed to the FBI a Cleveland area phone number given to him by Gruttadauria. A check of this phone number revealed that it was a number for an ATT wireless cell phone activated in October 2001 in the name of Peter Bonutti.
Gruttadauria last contacted the landlord of the Colorado Springs property on January 24 or January 25, 2002. He told him that he was leaving for London for a week and provided an address in London. An FBI check of this address disclosed that it was nonexistent.
Gruttadauria had been seen in Colorado driving a silver Chevy Tahoe. When the landlord entered the abandoned Colorado Springs premises on February 2, 2002, he found paperwork for a Colorado vehicle emissions test, Ohio license plates, and documentation of sales tax paid in Ohio. Further investigation disclosed that he had purchased this vehicle on January 4, 2002 in Ohio under the name of Eurocom Management. The FBI has been unable to determine whether Eurocom Management is a bona fide business entity or a front created by Gruttadauria to conceal his activities. Once in Colorado, Gruttadauria transferred the vehicle registration using an address that proved to be the location of a Mailboxes, Etc. store. Gruttadauria had rented a mailbox in the name of Eurocom Management at that store on January 16, 2002.
A check of the usage of the cell phone taken out in the name of Bonutti revealed use of the phone in Kansas City, Missouri, on January 27, 2002. On January 28, 2002, a Summit County Sheriff found two mountain bikes, a bike rack, snow shoes, and luggage along Interstate 271 near its intersection with State Route 303. One of the pieces of luggage bore a tag with the name Frank Gruttadauria.
Certain family members and friends of Gruttadauria received handwritten letters from him postmarked from Buffalo, New York, with a date of January 29, 2002. In those letters Gruttadauria related feelings of confusion, exhaustion, and fear. He stated that on or about January 28, 2002, he had decided to turn himself in to the FBI but then lost his courage. He expressed the sentiments that, "I don't think I can live in a cage" but that he did not want to be a fugitive.
According to the proffer made by defense counsel at the hearing, Gruttadauria returned to the Cleveland area on approximately February 6, 2002 and lived outdoors in an effort to see his children. On February 9, 2002, Gruttadauria surrendered to the FBI at the Federal Building in Cleveland. Gruttadauria did not resist arrest upon surrender.
At the detention hearing the Court questioned the defense's use of a proffer as evidence in support of the request for release. In fact, however, 18 U.S.C. § 3142 (f) expressly authorizes the defendant to present information by proffer at a detention hearing. Furthermore, the Sixth Circuit has stated that "[t]he government may proceed in a detention hearing by proffer or hearsay." United States v. Webb, 238 F.3d 426, 2000 WL 1721060 at **2 (6th Cir. 2000) (unpublished table decision). The Court has, therefore, taken the proffers of the defendant and the government into consideration in reaching its decision.
Following that surrender, he voluntarily disclosed the location of the keys to the Chevy Tahoe, which he had parked in Mayfield, Ohio. With Gruttadauria's consent, the FBI recovered the keys from a black satchel in a garage at the Berkshire Road residence. That satchel also contained approximately $34,000 in United States currency, 1,800 British Pounds, and 5,000 Swiss Francs.
Upon the search of the Chevy Tahoe, the FBI found an account statement for one client with personal information such as social security number. This client was born in 1958 and is about the same age as Gruttadauria.
At the time of his surrender, Gruttadauria had no identification on his person. His driver's license, the license taken out in the name of Peter Bonutti, and his passport have not been located. The interview of Gruttadauria's girlfriend conducted on January 24, 2002 revealed that he does have a passport, but she denied knowledge of its location. A subsequent check with the Customs Service disclosed that Gruttadauria had not left the country under that passport. Counsel for Gruttadauria proffered that the passport has been destroyed.
Gruttadauria is part owner of a Leer Jet, which he regularly used for business and pleasure. The pilot of this aircraft worked for Gruttadauria. Gruttadauria last used the Leer Jet on January 1, 2002.
The FBI's investigation of Gruttadauria has turned up no evidence of narcotics involvement, no evidence of involvement with guns or violence, and no evidence of weapons purchase or ownership.
The FBI's investigation to date has disclosed only one banking relationship for Gruttadauria, that with National City Bank. Counsel have stipulated that all funds in accounts with National City Bank to which Gruttadauria has access have been frozen.
On January 23, 2002, the FBI contacted National City Bank regarding loan activity of Gruttadauria at the bank, a federally-insured financial institution. National City Bank's records show that Gruttadauria applied for and obtained a revolving line of credit from the bank on or about December 18, 2001, evidenced by a commercial note in the amount of $6 million executed on December 18, 2001. In connection with the application for that loan, Gruttadauria submitted a collateral coverage agreement that pledged as security a Lehman Brothers account supported by a statement for that account showing a market value in excess of $13 million. On January 24, 2002, Lehman Brothers confirmed that the actual market value of that account for the relevant time period was only $6.55.
On January 24, 2002, National City Bank informed the FBI that Gruttadauria had drawn against the line of credit in the amount of in excess of $700,000 on December 21, 2001, and had drawn an additional $300,000 on that credit line on January 9, 2002. The disposition and whereabouts of those withdrawals are still unknown.
Applicable Law
When a motion for pretrial detention is made, the Court engages in a two-step analysis: first, the judicial officer determines whether one of six conditions exists for considering a defendant for pretrial detention; second, after a hearing, the Court determines whether the standard for pretrial detention is met.
United States v. Friedman, 837 F.2d 48, 49 (2nd Cir. 1988).
A defendant may be considered for pretrial detention in only six circumstances: when a case involves one of either four types of offenses or two types of risks. A defendant is eligible for detention upon motion by the United States in cases involving (1) a crime of violence, (2) an offense with a maximum punishment of life imprisonment or death, (3) specified drug offenses carrying a maximum term of imprisonment of ten years or more, or (4) any felony where the defendant has two or more federal convictions for the above offenses or state convictions for identical offenses, or, upon motion by the United States or the Court sua sponte, in cases involving (5) a serious risk that the person will flee, or (6) a serious risk that the defendant will obstruct or attempt to obstruct justice, or threaten, injure, or intimidate, a prospective witness or juror. The existence of any of these six conditions triggers the detention hearing, which is a prerequisite for an order of pretrial detention. The judicial officer determines the existence of these conditions by a preponderance of the evidence.
Id., § 3142(f)(2); United States v. Sloan, 820 F. Supp. 1133, 1135-36 (S.D. Ind. 1993).
Friedman, 837 F.2d at 49. See United States v. DeBeir, 16 F. Supp.2d 592, 595 (D. Md. 1998) (serious risk of flight); United States v. Carter, 996 F. Supp. 260, 265 (W.D.N.Y. 1998) (same).
Once it is determined that a defendant qualifies under any of the six conditions of § 3142(f), the Court may order a defendant detained before trial if the judicial officer finds that no condition or combination of conditions will reasonably assure the appearance of the person as required and the safety of any other person and the community. Detention may be based on a showing of either dangerousness or risk of flight; proof of both is not required. With respect to reasonably assuring the appearance of the defendant, the United States bears the burden of proof by a preponderance of the evidence. With respect to reasonably assuring the safety of any other person and the community, the United States bears the burden of proving its allegations by clear and convincing evidence. Clear and convincing evidence is something more than a preponderance of the evidence but less than proof beyond a reasonable doubt. The standard for pretrial detention is "reasonable assurance;" a court may not order pretrial detention because there is no condition or combination of conditions which would guarantee the defendant's appearance or the safety of the community.
United States v. Fortna, 769 F.2d 243, 249 (5th Cir. 1985).
United States v. Portes, 797 F.2d 156, 161 (3d Cir. 1986); United States v. Vortis, 786 F.2d 758, 765 (7th Cir. 1985); United States v. Himler, 785 F.2d 327, 328-29 (D.C. Cir.), cert. denied, 479 U.S. 841 (1986); Fortna, 769 F.2d at 250; United States v. Orta, 760 F.2d 887, 891 n. 20 (8th Cir. 1985); United States v. Chimurenga, 760 F.2d 400, 405-06 (2d Cir. 1985); United States v. Leibowitz, 652 F. Supp. 591, 596 (ND. Ind. 1987).
18 U.S.C. § 3142 (f); United States v. Salerno, 481 U.S. 739, 742 (1987); Portes, 786 F.2d at 764; Orta, 760 F.2d at 891 n. 18; Leibowitz, 652 F. Supp. at 596; United States v. Knight, 636 F. Supp. 1462, 1465 (S.D. Fla. 1986).
Addington v. Texas, 441 U.S. 418, 431-33 (1979).
Portes, 786 F.2d at 764 n. 7; Fortna, 769 F.2d at 250; Orta, 760 F.2d at 891-92.
The Court considers the evidence presented on the issue of release or detention weighed in accordance with the factors set forth in 18 U.S.C. § 3142 (g) and the legal standards set forth above. The factors identified by § 3142(g) are as follows:
(g) Factors to be considered. — The judicial officer shall, in determining whether there are conditions of release that will reasonably assure the appearance of the person as required and the safety of any other person and the community, take into account the available information concerning —
(1) the nature and circumstances of the offense charged, including whether the offense is a crime of violence or involves a narcotic drug;
(2) the weight of the evidence against the person;
(3) the history and characteristics of the person, including —
(A) the person's character, physical and mental condition, family ties, employment, financial resources, length of residence in the community, community ties, past conduct, history relating to drug or alcohol abuse, criminal history, and record concerning appearance at court proceedings; and
(B) whether, at the time of the current offense or arrest, the person was on probation, on parole, or on other release pending trial, sentencing, appeal, or completion of sentence for an offense under Federal, State, or local law; and
(4) the nature and seriousness of the danger to any person or the community that would be posed by the person's release.
Serious Risk of Flight
The government has proven by a preponderance of the evidence that Gruttadauria is a serious risk of flight in satisfaction of the requirements of § 3142(f). The evidence shows that Gruttadauria possesses the motivation, expertise, and resources to flee.Regarding motivation, Gruttadauria faces serious federal criminal charges and has admitted to significant wrongdoing. He has little hope of avoiding serious consequences from that wrongdoing. He has admitted fear of incarceration, which he will probably suffer as a result of the charges against him. His fraud, deception, and treachery over a period of 15 years have destroyed or seriously damaged every important relationship in his life. These very factors caused him to flee Ohio in January and to remain at large for almost a month.
As for expertise, the FBI uncovered an elaborate scheme that Gruttadauria developed to secrete himself following the revelation of his wrongdoing. This scheme included:
• the theft of the identity of a close friend and client, Peter Bonutti;
• using the stolen Bonutti identity to open a P.O. Box, rent property in Colorado, and obtain a cell phone; and
• the use of a suspect business entity, Eurocom Management, as a front to purchase and register a motor vehicle and to obtain a mailing address through Mailboxes, Etc.
This carefully crafted plan had evolved since September 2001. This scheme enabled Gruttadauria to travel cross-country without being arrested. Gruttadauria is an intelligent and calculating individual with the knowhow to function successfully as a fugitive.
Finally, unaccounted for resources provide the potential wherewithal to support flight. In December and early January, Gruttadauria withdrew $1 million on the National City Bank credit line that is the subject of the criminal complaint in this case. That money is still unaccounted for. Further, although Gruttadauria admittedly has a passport, the location of that passport has not been determined. Gruttadauria's counsel has proffered that Gruttadauria destroyed it prior to his surrender. This proffer rests solely on the credibility of Gruttadauria, the one person who definitely knows whether that passport now exists, and, if it does, its location. Given the substantial evidence of Gruttadauria's many misrepresentations and deceptions, his credibility is seriously suspect.
No Condition Will Assure Appearance
The government has also proven by a preponderance of the evidence that no conditions exist that will assure his appearance as required. As an initial observation, some of the factors set out in § 3142(g) weigh most heavily when the government seeks detention to assure the safety of any other person in the community. Such factors include whether the offense is a crime of violence or involves a narcotic drug, whether at the time of the current offense or arrest the person was on probation, parole, or other release status, and the nature and seriousness of danger to any person or the community opposed by release. Here the government has conceded on the record that it seeks detention exclusively on the ground of serious risk of flight. The factors set forth in § 3142(g) will, therefore, be viewed accordingly.
The offense currently before the Court is an alleged violation of 18 U.S.C. § 1014 for knowingly making a false statement in a credit application to a federally insured bank. Although this is a non-violent crime, as discussed above, it was part of a larger scheme of fraud and deception that, according to Gruttadauria's own admission, took place over 15 years. The evidence suggests that Gruttadauria committed this particular offense either in furtherance of this larger scheme and to conceal it or to provide the means for him to flee the consequences of the disclosure of that scheme.
The weight of the evidence against Gruttadauria on this charge is substantial. He signed the credit agreement pledging as security an account at Lehman Brothers, which he represented to be worth more than $13 million. In fact, the account pledged as collateral had at the relevant time a value of approximately $6. National City Bank extended to him $6 million in credit, which he tapped to the extent of $1 million in December 2001 and January 2002.
Finally, the history and characteristics of Gruttadauria dictate that detention at this point is appropriate. Gruttadauria's counsel at the detention hearing made continuing references to choices that Gruttadauria had made. The evidence clearly shows that those choices continually changed. Gruttadauria initially made the choice to flee Ohio using a stolen identity and a suspect business entity as a front for that flight. While in Colorado, he advised his landlord there of his intention to travel to Great Britain. After his arrest, the FBI discovered a substantial amount of British Pounds in a satchel he had left in the garage of his home. He claims that he came to Ohio in late January to turn himself in, but then lost the courage to do so. He, therefore, left Ohio and went to Buffalo for about a week. Finally, he did make the choice to surrender. The evidence of his mental condition and emotional state does not convince the Court that Gruttadauria is finished making choices regarding whether to flee or to stand and face the charges arising from his conduct.
Although Gruttadauria has lived in the Cleveland area for most of his life and has family here, his admitted fraudulent actions have destroyed many of the relationships he has made during that time and seriously strained his relationship with his family. Finally, he has no current employment in the Cleveland area and no discernable resources in the Cleveland area that he would forfeit by flight.
WHEREFORE, Frank D. Gruttadauria is hereby committed to the custody of the Attorney General or her designated representative for confinement in a corrections facility separate, to the extent practicable, from persons awaiting or serving sentences or being held in custody pending appeal. He shall be afforded a reasonable opportunity for private consultation with defense counsel. Upon order of this Court or on request of an attorney for the government, the person in charge of the corrections facility shall deliver the defendant to the United States Marshal for the purpose of an appearance in connection with the Court proceeding.