CORE TERMS: extortion, waterfront, uti, Hobbs Act, salary, longshoremen, organized crime, predicate, no-show, membership, tape, racketeering, abetted, aided, container, ship, suppressed, minutes, pension benefits, preponderance, embezzlement, conclusions of law, pension, meals, timekeeper, deep-sea, pension plan, hiring, amici, racketeering activity
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HeadnotesCOUNSEL: [**1] For UNITED STATES OF AMERICA, Plaintiff: OTTO G. OBERMAIER, ESQ., United States Attorney for the Southern District of New York, One St. Andrew's Plaza, New York, New York 10007, CHAD A. VIGNOLA, ESQ., CLAUDE M. MILLMAN, ESQ., Assistant United States Attorneys. For DONALD CARSON, Plaintiff: FREDERIC J. GROSS LAW FIRM, 7 East Kings Highway, Mount Ephraim, New Jersey 08059, FREDRIC J. GROSS, ESQ.
ANTHONY GALLAGHER, Defendant pro se. For ILA LOCALS 1588, Defendant: DONNA NEWMAN, ESQ., 3163 Kennedy Blvd., Jersey City, New Jersey 07306, LAW OFFICE OF LARRY BRONSON, 654 Avenue C, 3rd Floor, Bayonne, New Jersey 07002, LARRY BRONSON, ESQ.
For GEORGE LACHNICHT, FREEMAN, NOOTER & GINSBERG, 233 Broadway, Suite 3201, New York, New York 10279, LOU FREEMAN, ESQ.
For VENERO MANGANO, GOLDMAN & HAFETZ, 60 East 42nd Street, New York, New York 10165, FREDERICK P. HAFETZ. ESQ., SUSAN R. NECHELES, ESQ.
For ILA LOCAL 1909, VLADECK, WALDMAN, ELIAS & ENGELHARD, P.C., 1501 Broadway, Room 800, New York, New York 10036, SEYMOUR M. WALDMAN, ESQ., JULIAN BIRNBAUM, ESQ.
For ILA LOCALS 824, 1809, GLEASON & MATHEWS, 26 Broadway, 17th Floor, New York, New York 10004, THOMAS W. GLEASON, ESQ., ERNEST [**2] L. MATHEWS, JR., ESQ., KEVIN MARRINAN, ESQ.
For ILA LOCALS 1814, BOGUCKI & SCOTTO, 401 Franklin avenue, Garden City, New York 11530, ROBERT H. BOGUCKI, ESQ.
JUDGES: Sand
OPINIONBY: LEONARD B. SAND
OPINION: [*1308] OPINION
SAND, J.
On February 20, 1990, the government instituted this civil action pursuant to the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961, et seq. ("RICO"), alleging a pervasive influence of organized crime over the Port of New York and New Jersey (the "Waterfront"). The complaint named as defendants six locals of the International Longshoremen's Association (the "ILA"), n1 several union officers, several purported members of the Genovese and Gambino organized crime families, two waterfront employers, and two waterfront employers' organizations. n2 In total there were more than eighty individuals and entities named as defendants in the complaint.
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n1 Named as defendants were ILA Locals 1804-1, 1588, 1814, 1809, 824, and 1909, as well as twenty-five sitting officers of those locals and nine former officers.
n2 The union locals, the waterfront employers, and the employers' organizations were not named as RICO violators, but as nominal defendants in order to effectuate complete relief.
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The non-jury trial in this case began on April 15, 1991, and consumed approximately ten trial weeks over an eleven month period. n3 Before, during, and after the trial, most of the defendants in this case either defaulted or entered into consent decrees or consent judgments with the government. As a result, only four individual defendants remain in the case today: Donald Carson, Anthony Gallagher, George Lachnicht, and Venero Mangano (collectively the "remaining defendants").
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n3 The trial occurred during the periods from April 15, 1991 to May 10, 1991; September 30, 1991 to November 26, 1991; and intermittently thereafter through March 26, 1992.
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In its demand for relief, the government seeks to enjoin the remaining defendants from participating in (1) any activities on the New York/New Jersey Waterfront; (2) the affairs of the ILA, any of its locals, or any other labor organization about any matters which relate directly or indirectly to the affairs of the ILA, any of its locals, or any other labor organization; [**4] and (3) in the ownership, operation or employment of or by any Waterfront employer. The complaint also seeks to enjoin the defendants from committing any acts of racketeering activity and from associating, directly or indirectly, with any member of La Cosa Nostra. Finally, the government seeks a disgorgement of the proceeds of any violations of the civil RICO statute. Amended Complaint at 120-24.
The task before the Court is to determine whether these four defendants participated in a criminal enterprise and are liable for civil penalties set forth in the RICO statute. We must also consider the issues raised in Carson v. Local 1588, 90 Civ. 5618 (LBS), a consolidated case in which defendant Donald Carson claims entitlement to pension benefits. After careful consideration of all the evidence in this case -- including live testimony which comprised more than 5000 pages in transcript form, deposition testimony, and more than ten thousand trial exhibits -- this Court concludes that the Government has proved by a preponderance of the evidence the existence of the RICO enterprise. We also conclude that the government proved defendants Carson, Gallagher, Mangano, and Lachnicht's [**5] participation in the enterprise by the commission of two predicate acts. Finally, this Court concludes that defendant Carson is not entitled to pension benefits from Local 1588. This Opinion constitutes the Court's decision, and includes the Court's findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 52(a). n4
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n4 This Opinion marks the culmination of the liability phase of the case. Having determined that the defendants are liable to the government under the RICO statute, it remains to be determined, in further proceedings, the consequences of that liability.
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[*1309] DISCUSSION
The government asserts that it is entitled to the civil remedies set forth in 18 U.S.C. § 1964 because the defendants violated 18 U.S.C. § 1962(c), which provides, in pertinent part:
It shall be unlawful for any person employed by or associated with any enterprise engaged in . . . interstate or foreign commerce, to conduct or participate, directly [**6] or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.
18 U.S.C. § 1962(c). See Amended Complaint PP 71-106. n5 The government alleges a number of predicate acts for each of the defendants. n6 See Id., PP 73-106.
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n5 In the Amended Complaint, the government asserted three additional claims for relief: First, it alleged that the defendants violated § 1962(d) which makes it unlawful to conspire to violate § 1962(c); second, it asserted a claim under § 1962(b) which makes it unlawful for any person to "acquire or maintain, directly or indirectly, any interest in or control of any" criminal enterprise; and finally, the government alleged that the defendants violated § 1962(d) which makes it unlawful to conspire to violate § 1962(b). See Amended Complaint PP 107, 109, 110. The government alleged the same predicate acts for each of its claims. See id., PP 73-104. Apparently the government has abandoned these claims, for it failed to propose findings of fact and conclusions of law with regard to these claims. See Govt's Amended Proposed Findings of Fact & Conclusions of Law at 64. [**7]
n6 Since the majority of the defendants named in the complaint are no longer parties in this case, a number of the predicate acts alleged in the complaint are irrelevant. In its Amended Proposed Findings of Fact and Conclusions of Law, the government has isolated those predicate acts that relate only to the remaining defendants.
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The terms "enterprise," "racketeering activity" and "pattern of racketeering activity," are defined in § 1961 as follows:
(1) "racketeering activity" means (A) any act or threat involving murder, kidnapping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in narcotic or other dangerous drugs, which is chargeable under State law and punishable by imprisonment for more than one year; (B) any act which is indictable under any of the following provisions of Title 18, United States Code: Section 201 (relating to bribery) . . . section 664 (relating to embezzlement from pension and welfare funds) . . . section 1341 (relating to mail fraud), section 1343 (relating to wire fraud) . . . section 1951 (relating to interference with commerce, [**8] by robbery or extortion), section 1952 (relating to racketeering) . . . (C) any act which is indictable under title 29, United States Code, section 186 (dealing with restrictions on payments and loans to labor organizations) or section 501(c) (relating to embezzlement from union funds)
* * *
(4) "enterprise" includes any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity;
(5) "pattern of racketeering activity" requires at least two acts of racketeering activity, one of which occurred after the effective date of this chapter and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity.
18 U.S.C. §§ 1961(1), (4), and (5).
Since the government is seeking civil remedies -- rather than criminal penalties -- under the RICO statute, it must prove each element of the statute by a preponderance of the evidence. Liquid Air Corp. v. Rogers, 834 F.2d 1297, 1302 (7th Cir. 1987), cert. [**9] denied, 492 U.S. 917 (1989); United States v. Local 560, 780 F.2d 267, 279-80 n.12 (3rd Cir. 1985), cert. denied, 476 U.S. 1140 (1986); United States v. Local 359, 705 F. Supp. 894, 897 (S.D.N.Y.), aff'd in part, remanded in part, 889 F.2d 1232 (2d Cir. 1989); see also Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 491 (1985) ("That the offending conduct is described by reference to criminal statutes does not mean that its occurrence [*1310] must be established by criminal standards.").
With these standards in mind, the Court will now consider whether the government has met its burden of proving each element of a civil RICO claim. In Part I, the Court will determine whether the government has proved the existence of a RICO enterprise. In Part II, the Court will determine whether the government offered sufficient evidence to demonstrate a "pattern of racketeering activity." In Part III, the Court will summarize each defendant's alleged participation in the RICO enterprise. Finally, in Part IV, the Court [**10] will determine whether the predicate acts allegedly committed by each defendant have been proved.
I.
THE WATERFRONT ENTERPRISE
This Court must first determine whether the government has adduced sufficient evidence to prove the existence of an "enterprise," for "the essence of the violation is the commission of [racketeering] acts in connection with the conduct of an enterprise." Sedima, 473 U.S. at 497. The Complaint alleges that the RICO enterprise in this case is the "Waterfront" which the government defines as the "unholy alliance" among ILA, ILA union officials, Waterfront businessmen, members of the Genovese organized crime family in New Jersey, and members of the Gambino organized crime family and their henchmen, the Westies, in Brooklyn and Manhattan. Government's Amended Proposed Findings of Fact & Conclusions of Law ("Govt's PFF&CL") P 3; Amended Complaint PP 69-70. According to the government, the objective of the enterprise was "the corrupt control and influence of Waterfront industries and labor unions [by the defendants] in order to enrich themselves and their associates." Complaint P 70. This objective was allegedly accomplished [**11] through a cooperative arrangement between the Gambino and Genovese crime families, whereby each recognized and respected the other's sphere of influence and control on the Waterfront. Id.
Before the Court sets forth its findings of fact with regard to the existence of a Waterfront enterprise, a few observations are in order regarding the nature of the task confronting the Court.
Several of the parties have expressed concerns about the breadth of the factual findings that this Court is required to make. ILA locals 824, 1588, 1809, 1814, and 1909 -- all of which were named as defendants in the complaint but subsequently entered into consent judgments in complete settlement of the government's claims against them -- submitted an amicus curiae brief arguing that the Court should not make findings of fact with regard to any of the individuals or entities as to whom consent judgments have been entered. Essentially, the amici make two points. First, since many of the named defendants did not participate in the trial, but instead settled or defaulted, the amici claim that the Court was presented with a "one-sided, unopposed case from which to make its determinations." Amici Br. at [**12] 2. Moreover, amici argue, since the remaining defendants are indifferent to certain "institutional" interests of the amici -- namely, the effect of the Court's decision upon "developing labor law, the duties of union officers, or the fortunes of the labor organization" -- the remaining defendants did not challenge the government's case with regard to these issues with sufficient vigor. Id. at 16-17.
One example of the one-sided nature of the trial proofs is the failure of any of the defendants who participated in the trial to challenge that the "Waterfront" constituted a RICO enterprise. The Court recognizes that this was due, in large part, to the fact that a vast majority of the defendants either defaulted or settled with the government. The remaining defendants devoted their time and energy at trial, and in their post trial submissions, to disputing the government's contention that they had participated in the criminal enterprise by committing the alleged predicate acts. In essence, these defendants took a position which assumed the existence of the "Waterfront" enterprise. This Court recognizes the amici's [*1311] concern as a legitimate one. Accordingly, the Court has made [**13] independent inquiries into the evidence presented by the government, and reaches the conclusion that the Waterfront constitutes an enterprise within the meaning of the RICO statute only after careful scrutiny of the government's case.
In their brief, the amici express a second concern about the potential adverse consequences to the settling defendants from any factual determinations made by the Court with regard to those defendants. Presumably, amici worry not only about "bad press" from adverse factual findings, but also about any potential res judicata or collateral estoppel effect of this Court's decision. In order to avoid this problem, the amici conclude that all reference to the settling defendants should be avoided by the Court. This Court disagrees. The amici ignore the fact that many of the settling defendants are alleged co-conspirators of the remaining defendants. As such, the alleged illegal conduct of both groups of defendants is inextricably interwoven, and, as a practical matter, it would be impossible to address the conduct of the remaining defendants without occasionally making factual findings concerning the settling defendants. Amici cite no authority for [**14] the proposition that a witness or co-conspirator, who is not a party to an action, is entitled to have his name omitted from pertinent factual discussions of claims against defendants to a lawsuit. Therefore, we hold that we may make factual findings involving persons no longer parties to this action where appropriate.
Furthermore, this Court believes that the danger of unnecessary factual findings has been at least partially mitigated by the fact that the government avoided references to the settling defendants in its Proposed Findings of Fact unless their participation in racketeering plainly pertained to claims against the remaining defendants. See Government's Reply Memorandum at 3. So too, the Court, to the extent possible, will avoid any unnecessary mention of those no longer parties to the action and will find only those facts upon which it has based its final judgment. n7
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n7 The amici make two other points in their brief. First, they claim that default judgments should have been entered against various defendants. In fact, default judgments have been entered against all defendants who have defaulted. Second, the amici claim that certain factual assertions by the government are not supported by the record. The government's proposed findings of fact have been adopted only when supported by the record.
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One final observation is appropriate. This Court is called upon to make findings of fact pursuant to Fed. R. Civ. P. 52. Pursuant to this rule, the Court has requested proposed findings of fact and conclusions of law from each of the remaining parties in this litigation. By utilizing this procedure the Court has sought to ascertain the parties' views on each of the disputed issues of law and fact. The Court recognizes that Rule 52 requires it to weigh and appraise the evidence offered, not by one party to the controversy, but by all parties. Dole Fresh Fruit Co. v. United Bananas Co., 821 F.2d 106, 109 n.2 (2d Cir. 1987). Contrary to what the amici assert, the Court has no intention of merely "rubber stamping" the government's proposed findings of fact. See Amici Br. at 16. The Court hardly needs reminding that the mere adoption of one side's proposed findings would be an abdication of its responsibility as finder of fact.
Having made these preliminary observations, the Court turns to its findings of fact with regard to the existence of the RICO enterprise.
Findings of Fact
During the course of the trial, the government's proffered [**16] evidence of the existence of the RICO enterprise consisted principally of: (1) public reports documenting conclusions and findings developed from extensive factual investigation and analysis; (2) eye witness and expert testimony; and (3) electronic surveillance interceptions. n8 After carefully considering all [*1312] of the evidence, this Court concludes that the government proved the existence of a Waterfront enterprise by a preponderance of the evidence.
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n8 In United States v. Carson, 969 F.2d 1480 (3d Cir. 1992), the Third Circuit held that 108 tapes obtained by the United States Attorney's Office for the District of New Jersey pursuant to Title III of the Omnibus Crime Control and Safe Streets Act of 1968 should have been suppressed in the criminal case against defendants Anthony Gallagher and Donald Carson. Seven exhibits received in evidence in this case were derived from those suppressed tapes. See GX 107AA DIG, 108AA DIG, 109AA DIG, 109BB DIG, 113AA DIG, 114AA DIG, and 115AA DIG. The government excised from its Amended Proposed Findings of Fact & Conclusions of Law all references to the suppressed tapes. This Court believes that the government succeeded in proving the existence of the RICO enterprise by a preponderance of the evidence without consideration of these tapes. This Court will revisit the tape issue in connection with its discussion of the MOTBY operation. See part IV.A infra.
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The New York/New Jersey Waterfront is an integrated economic marketplace composed of several separate ports occupying a common harbor and encompassing some 1500 square miles and 234 municipalities. The Waterfront harbor plays a critical role in the movement of manufactured, agricultural, and other goods throughout the eastern seaboard and has a major impact on this nation's commerce.
The history of La Cosa Nostra's (LCN's) n9 infiltration of and influence over the Waterfront has been well-documented. The Court admitted, pursuant to Fed. R. Evid. 803(8)(C), n10 portions of several official reports which document the existence of LCN and its invidious influence over ILA and the Waterfront. Tr. 1490. Specifically, the Court admitted the following reports: (1) Report of the President's Commission on Organized Crime, THE EDGE: Organized Crime, Business, and Labor Unions (1986) ("PCOC Report") (GX 2256); (2) Report of the Senate Permanent Subcommittee on Investigations, Waterfront Corruption (March 27, 1984) ("1984 Senate Report") (GX 2259); and (3) Hearings Before the Permanent Subcommittee on Investigations of the Senate Committee on Governmental Affairs, Organized Crime: [**18] 25 Years After Valachi (1988) ("1988 Senate Report") (GX 2258). These reports were the result of extensive investigations of organized crime's influence on the Waterfront, and the factual findings therein were based upon both independent, public fact-finding hearings and several successful criminal investigations and prosecutions.
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n9 La Cosa Nostra is a nationwide criminal organization consisting of various organized crime "families," including the Gambino and Genovese families. See, e.g., United States v. Salerno, 868 F.2d 524, 528 (2d Cir. 1989) (proof of ruling LCN Commission and Genovese and Gambino Families).
n10
Federal Rule of Evidence 803 provides, in pertinent part: The following are not excluded by the hearsay rule, even though the declarant is available as a witness:
. . . .
(8) Public records and reports. Records, reports, statements, or data compilations, in any form, of public offices or agencies, setting forth . . . (C) in civil actions and proceedings and against the Government in criminal cases, factual findings resulting from an investigation made pursuant to authority granted by law, unless the sources of information or other circumstances indicate lack of trustworthiness.
Fed. R. Evid. 803(8)(C).
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These reports document that the piers of New York and New Jersey have been fertile ground for organized crime for the better part of this century, and that control of union locals has been an integral part of organized crime's schemes to exploit the Waterfront. See also Fourth Report of the N.Y. State Crime Comm'n to the Governor 11-56 (1953) (GX 2273). The President's Commission on Organized Crime describes how LCN gained influence over the Waterfront through control of the local unions:
Criminal activities have always prospered on the docks. The necessity for speed [because of perishable cargo], plus the lack of rail connections to the piers, gave rise to the coveted "loading" racket, which involved moving cargo from the pier floor to waiting trucks. Since demand for cargo loading was inelastic and dependent upon immediate need when ships arrived, loading generated extraordinary profits, and was a principal incentive for organized crime to infiltrate the ILA. . . . The waterfront work force -- casual, unskilled, demoralized, insecure due to hiring practices, [*1313] and frequently immigrant -- was fertile territory for gamblers and loan sharks.
GX 2256 at 33-34 (PCOC [**20] Report) (emphasis added). Organized crime members quickly understood that control of the local unions was a "prerequisite" to conducting racket operations on the piers. Id. Control of the unions enabled the crime families to profit from kickbacks and other traditional racketeering schemes, including gambling, loan sharking, theft, and fraud. LCN infiltration of the ILA became so pervasive that the American Federation of Labor expelled the ILA on September 23, 1953. n11 Unfortunately, the expulsion did nothing to curb organized crime's influence over ILA.
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n11 The Executive Council of the AFL-CIO subsequently explained the expulsion order as follows:
This action, severing an affiliation of 60 years, was taken because of public disclosure of crime and corruption on the New York waterfront, which established that the ILA had permitted irresponsible, corrupt and criminal elements to fasten themselves upon the body of the organization and destroy its integrity, its effectiveness and its trade union character and because the ILA . . . stubbornly refused to rid itself of corrupt elements and to take other corrective action necessary to a fulfillment of its responsibilities as a labor organization worthy of affiliation with the AFL.
GX 2256 at 33-34 (PCOC Report).
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The evidence presented at trial demonstrated that since the late 1950's, the Gambino and Genovese crime families have shared control of the Waterfront. Vito Genovese and Carlo Gambino, former bosses of the two families, entered into an "arrangement" by which it was agreed that the Gambino family would dominate the Brooklyn piers, and the Genovese family would dominate the New Jersey piers. GX 2256 at 37-38 (PCOC Report); GX 2259 at 45-71 (1984 Senate Report); GX 2257 at 254-57 (1981 Senate Report). Electronic interceptions of conversations confirm the existence of this arrangement. For example, in a May 31, 1983 intercept, former (now deceased) Gambino crime boss Paul Castellano discussed the nature of the Gambino and Genovese families partnership with Thomas Gambino, a Capo:
CASTELLANO: You see what I'm doing with the ILA? What we tried to do from the very beginning, partnership. Why? Cause we've got Brooklyn. Getting a few dollars off (IA). n12 And they had the International.
GAMBINO: Yeah. Yeah.
CASTELLANO: Okay? And we could do a lot of things with the guy, cause if you go partners with them, I feel we'd improve.
GX 3236-B at 26-27. From the outset, [**22] the nature of the Gambino and Genovese Families' cooperative "venture" was the criminal exploitation of the Waterfront.
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n12 IA is an abbreviation that indicates those portions of the intercept that are inaudible.
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There have been many criminal prosecutions which confirm LCN's corrupt influence on the New York/New Jersey waterfront, and demonstrate that La Cosa Nostra is still a dominant Waterfront presence. n13 Most noteworthy are the prosecutions denominated UNIRAC ("Union Racketeering"), which were commenced in 1975, and which disclosed that LCN had obtained control of the Waterfront by using the New York and New Jersey ILA union locals as leverage to engage in racketeering activities. These racketeering activities included the extortion of money from many steamship and stevedore companies seeking the "privilege" of doing business on the Waterfront, and widespread illegal payoffs by businessmen to union officials in order to gain an unlawful advantage over their competitors. GX 2259 at 9, 28, 34 (1984 [*1314] Senate Report); [**23] GX 2256 at 40 (FCOC Report). A partial summary of the Genovese family's UNIRAC racketeering is set forth in United States v. Clemente, 640 F.2d 1069, 1071-76 (2d Cir. 1981), while the Gambino family's UNIRAC racketeering is described in United States v. Scotto, 641 F.2d 47, 51-52 (2d Cir. 1980). n14
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n13 See, e.g., (1) "Westies" murder and extortion prosecutions (United States v. Coonan, et al., 87 Cr. 249 (S.D.N.Y.) (WK), aff'd, 876 F.2d 891 (2d Cir.), cert. denied, 110 S. Ct. 499 (1989) and United States v. Kelly, 938 F.2d 1553 (2d Cir. 1991), cert. denied, 60 U.S.L.W. 3653 (1992)); (2) UNIRAC labor racketeering prosecutions (e.g., United States v. Clemente, et al., 79 Cr. 142 (S.D.N.Y.) (LBS), 494 F. Supp. 1310 (S.D.N.Y. 1980), aff'd, 640 F.2d 1069 (2d Cir.), cert. denied, 454 U.S. 820 (1981)); (3) Twenty-year bank manipulation of union benefit funds by ILA officers and LCN associates (United States v. Guido, et al., 90 Cr. 60 (E.D.N.Y.) (ILG)) (GX 2000 February 1990 plea minutes); and (4) Job-selling receipt of a bribe by Gambino family associate/ILA official (People v. Lagana, Ind. No. 88/6724 (N.Y. Sup. Ct. Kings Co.)) (GX 3301, February 1990 plea minutes). [**24]
n14 As of February 1981, the UNIRAC investigations had resulted in 129 indictments and 117 convictions. Those convicted included 52 union officials, nine of whom were organized crime members or associates, management officials and corporations, and other members or associates of organized crime families.
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Subsequent investigations by federal and state authorities indicate that organized crime's influence over ILA locals did not end with UNIRAC. The Senate Permanent Subcommittee on Investigations concluded in its 1984 Report that despite many successes, the government had failed to "rid the waterfronts of all crime and all criminals. Corrupt practices . . . already have begun to return to the Atlantic and gulf coast docks." GX 2259 at 9 (1984 Senate Report). A few years later, the President's Commission on Organized Crime concluded that "[d]espite the success of UNIRAC the Genovese crime family continues to maintain a firm hold on the New Jersey waterfront," and the ILA remains a "nest for waterfront pirates -- a racket, not a union." GX 2256 at 33 (quoting D. Dubinsky and A. Raskin, David [**25] Dubinsky: A Life With Labor 164 (1977)). Finally, the 1988 hearings before the Senate Permanent Subcommittee on Investigations also confirm LCN's continuing influence over the Waterfront.
Conclusions of Law
Based upon the materials set forth in these studies and the evidence independently introduced in this trial, this Court holds that the government has proven the existence of the Waterfront enterprise by a preponderance of the evidence.
The RICO statute defines "enterprise" as, inter alia, "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4). The language and legislative history of the statute indicates that Congress sought to define the term "enterprise" as broadly as possible. United States v. Indelicato, 865 F.2d 1370, 1382 (2d Cir. 1989). The Supreme Court has explained that a RICO enterprise can be proved "by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit." United States v. Turkette, 452 U.S. 576, 583 (1981). [**26] See also United States v. Coonan, 938 F.2d 1553, 1559 (2d Cir. 1991), cert. denied, Kelly v. United States, 112 S. Ct. 1486 (1992). Proof of various racketeering acts may be relied on to establish the existence of the enterprise. Coonan, 938 F.2d at 1560. n15
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n15
The Supreme Court has noted:
While the proof used to establish [the "enterprise" and the "pattern of racketeering activity"] may in particular cases coalesce, proof of one does not necessarily establish the other. The "enterprise" is not the "pattern of racketeering activity"; it is an entity separate and apart from the pattern of activity in which it engages. The existence of an enterprise at all times remains a separate element which must be proved by the Government.
Turkette, 452 U.S. at 583.
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"The enterprise can be any enterprise." United States v. Porcelli, 865 F.2d 1352, 1362 (2d Cir. 1989). [**27] The statute makes explicit reference to unions and businesses, and several courts have held that unions and businesses can constitute RICO enterprises. See e.g., United States v. Stolfi, 889 F.2d 378, 380 (2d Cir. 1989) ("a racketeering enterprise may consist of an association of separate legal entities") (union local and its benefit funds constitute enterprise). Section 1962 applies to both legitimate and illegitimate enterprises. Turkette, 452 U.S. at 585. The Court must consider the activities and relationships among the separate entities to determining which entities are part of the enterprise and which are not. United States v. District Council, 778 F. Supp. 738, 757 (S.D.N.Y. 1991) (Haight, J.).
Section 1961(4) describes two categories of associations that come within the [*1315] purview of the "enterprise" definition. See Turkette, 452 U.S. at 581-82. The first category encompasses "legal entities" such as corporations and partnerships. The second covers "any union or group of individuals associated in fact, although not a legal entity." There is [**28] no statutory provision that says that a single "enterprise" cannot consist both of so-called "legal entities" and "associations in fact." See id. at 580 ("no restriction upon the associations embraced by the definition."). Indeed, courts have found the existence of enterprises that are so constituted. For example, Judge Griesa in United States v. Local 359 recognized that the Fulton Fish Market -- a commercial center consisting of various wholesale seafood businesses and serviced by Seafood Workers Local 359 members -- constituted a RICO enterprise. 705 F. Supp. at 897.
As in Local 359, the criminal enterprise here -- the Waterfront -- is an integrated market. Its participants consist of local unions, employers, union officials, and members of La Cosa Nostra. This Court holds that there is sufficient evidence of the existence of an association in fact among the ILA, the ILA locals, the Waterfront employers, and members of the Gambino and Genovese crime families so that the "Waterfront" properly can be characterized as a RICO enterprise.
II.
PATTERN OF RACKETEERING ACTIVITY
To satisfy the "pattern" requirement [**29] of RICO, the government must demonstrate that each defendant committed at least two acts of racketeering activity, "one of which occurred after the effective date of this chapter [October 15, 1970] and the last of which occurred within ten years (excluding any period of imprisonment) after the commission of a prior act of racketeering activity." 18 U.S.C. § 1961(5). The Supreme Court has stated that a plaintiff alleging a pattern of racketeering activity must demonstrate (1) that there is a "relationship" between the predicate acts and (2) that the predicates themselves amount to, or that they otherwise constitute a threat of, continuing racketeering activity. H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 241-43 (1989). "It is this factor of continuity plus relationship which combines to produce a pattern." Id. at 239; see also Sedima, 473 U.S. at 496 n.14 (quoting with approval legislative history stressing the relevance of "continuity plus relationship" to the pattern requirement); United States v. Minicone, 960 F.2d 1099, 1106 (2d Cir. 1992), [**30] cert. denied, 112 S. Ct. 1511 (1992); United States v. Indelicato, 865 F.2d 1370, 1381 (2d Cir. 1989).
The Supreme Court has noted that the relatedness requirement is satisfied if the acts "have the same or similar purposes, results, participants, victims, or methods of commission or otherwise are interrelated by distinguishing characteristics and are not isolated events." H. J., Inc., 492 U.S. at 240. n16 The Second Circuit recently elaborated upon the definition of "relatedness" by noting that the term embodies two different concepts: first, the racketeering acts must be related to each other (so-called "horizontal" relatedness); and second, the predicate acts must be related to the enterprise (so-called "vertical" relatedness). Minicone, 960 F.2d at 1106.
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n16 The Second Circuit has stated this same notion differently:
An interrelationship among various acts, suggesting the existence of a "pattern," could be established in a number of ways: These include proof of their temporal proximity or common goals, or similarity of methods, or repetitions.
Indelicato, 865 F.2d at 1382.
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"Continuity" refers either "to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition." H.J., Inc., 492 U.S at 241. The Court also noted that "the threat of continuity is sufficiently established where the predicates can be attributed to a defendant [*1316] operating as part of a long-term association that exists for criminal purposes." Id. at 242-43. With regard to the proofs required to show relatedness and continuity, the Second Circuit has observed:
In some cases both the relatedness and the continuity necessary to show a RICO pattern may be proven through the nature of the RICO enterprise. For example, two racketeering acts that are not directly related to each other may nevertheless be related indirectly because each is related to the RICO enterprise. The nature of the enterprise may also serve to show the threat of continuing activity. Where the enterprise is an entity whose business is racketeering activity, an act performed in furtherance of that business automatically carries with it the threat of continued racketeering activity. [**32] Even where the enterprise is legitimate, if the racketeering acts were performed at the behest of an organized crime group, that fact would tend to belie any notion that the racketeering acts were sporadic or isolated.
Indelicato, 865 F.2d at 1383-84 (emphasis added).
Though these standards may, in some cases, be difficult to apply, n17 in this case, where the breadth of the government's evidence of the Waterfront criminal enterprise is so overwhelming, the Court finds that the government has clearly sustained its burden of demonstrating a "pattern of racketeering." First, this Court believes that the government has demonstrated that the defendants' predicate acts are "related" to each other and to the "Waterfront" enterprise. The common thread running through the alleged acts of racketeering in this case is exploitation of the Waterfront enterprise by LCN figures and their ILA confederates through control of ILA Local 1588. The existence of the pattern is confirmed by the public report evidence and expert and fact testimony set forth above.
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n17 See generally H.J., Inc., 492 U.S. at 251 (Scalia, J., concurring in judgment).
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We also believe that the government offered sufficient evidence to support the conclusion that the predicate acts had the requisite continuity. The Supreme Court has noted that a RICO pattern may surely be established if the related predicates themselves involve "a distinct threat of long-term racketeering activity, either implicit or explicit." In the context of organized crime enterprises, the Second Circuit has noted that "continuity" may virtually be presumed. Indelicato, 865 F.2d at 1383-84. For, "the fact that an act is done at the behest of organized crime makes it likely that a pattern will continue." District Council, 778 F. Supp. at 760.
III.
THE PARTIES
In order to make out a RICO claim under § 1962(c), the government must prove that each defendant committed at least two acts in furtherance of the RICO enterprise. In RICO parlance, these are known as "predicate acts." Before we consider the predicate acts in detail, we will first summarize the various allegations against each defendant, and make some preliminary factual findings with regard to each defendant.
A. Venero "Benny Eggs" Mangano [**34]
Defendant Venero Mangano has had a long association with the Genovese crime family. He is presently the Underboss of the Genovese crime family. GX 3425 P 20 (Declaration of Lenehan); Tr. 52-53 (Hyman) (identifying Mangano as a member of Genovese family). In 1981 and 1982, he was a Genovese Capo. In 1989, Mangano was convicted of extortion. See United States v. Gigante, et al. (E.D.N.Y.) (the "Windows Case").
The government alleges that Mangano committed the following predicate acts: (1) aiding and abetting multiple Hobbs Act extortions and Taft-Hartley violations in connection with the MOTBY scheme and [*1317] Local 1588, and (2) multiple Hobbs Act extortions of Local 1588 members' economic and democratic rights. See Amended Complaint PP 78, 80. n18
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n18 The government has apparently abandoned its claim, set forth in PP 76-77 of the complaint, that Mangano committed multiple Hobbs Act extortions of the economic and democratic rights of members of Local 1804-1, for no reference is made to this claim in the government's Amended Proposed Findings of Fact and Conclusions of Law.
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Mangano did not participate in the trial: he neither called witnesses nor introduced any evidentiary exhibits. n19 He did, however, file a detailed memorandum of law opposing the government's amended proposed findings of fact and conclusions of law ("Mangano's Brief") in which he argues that there is insufficient evidence in the record to establish any liability for the claims asserted against him. Peppered throughout his Brief, Mangano includes his own proposed findings of facts.
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n19 Mangano explains that he did not present a defense in this case because he was simultaneously on trial in a criminal case in the Eastern District of New York and because he wanted to avoid the litigation expense. Mangano's Br. at 5.
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B. Anthony Gallagher
Defendant Anthony Gallagher is connected with several high level figures in the Genovese family. He was an associate of deceased Genovese family soldier John DiGilio. Gallagher was convicted of racketeering, racketeering conspiracy, and other offenses in connection with his [**36] participation in a scheme to skim money from slot machines in Atlantic City and Las Vegas. State of New Jersey v. Gallagher, Index 87-03-0365-ASG (N.J. Sup. Ct.).
Gallagher owned a number of Waterfront businesses, including Bar Bea Trucking, B & A Reefer, and Consolidated Pier Deliveries. As we will discuss below, these companies allegedly played an important part in the MOTBY scheme.
The government alleges that Gallagher committed the following predicate acts: (1) multiple Hobbs Act extortions and Taft-Hartley violations in connection with the MOTBY scheme and ILA local 1588; and (2) multiple Hobbs Act extortions of Local 1588 members' economic and democratic rights. See Amended Complaint PP 78, 80.
Gallagher was incarcerated during much of the trial in this case, and never obtained counsel. n20 Periodically the Court received written submissions from Mr. Gallagher. While the breadth of topics covered in Mr. Gallagher's submissions is impressive, many of the literally hundreds of pages submitted bore no apparent relation to proceedings before this Court. Mr. Gallagher's Proposed Findings of Fact and Conclusions of Law ("Gallagher's PFF&CL") are more or less in this [**37] vein.
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n20 Gallagher was incarcerated for convictions that were vacated on appeal. See Part IV.A.1, infra (discussion of United States v. Carson, 969 F.2d 1480 (3d Cir. 1992)).
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C. Donald Carson
From 1972 until 1988, Carson was the Secretary-Treasurer of Locals 1587 and 1588. Carson held the second highest posts in the International and District Council, as the ILA and ACD's Executive Vice-President.
The government alleges that defendant Donald Carson committed the following predicate acts: (1) multiple Hobbs Act extortions and Taft-Hartley violations in connection with the MOTBY scheme and ILA local 1588; (2) multiple Hobbs Act extortions of Local 1588 members' economic and democratic rights; (3) multiple Taft Hartley violations for unlawfully receiving meals and entertainment in connection with Local 1588; and (4) embezzlement of union funds (along with Lachnicht) in violation of 29 U.S.C. § 501(c). See Amended Complaint PP 78-80. [**38] See also this Court's Order dated July, 7, 1992 (amending complaint to include, inter alia, embezzlement claim against Carson).
Carson was also incarcerated during much of the trial. n21 During the course of [*1318] the trial, and during pre-trial proceedings, Carson both represented himself pro se and was represented by counsel. Carson, through his attorney, submitted Proposed Findings of Fact ("Carson's PFF&CL") and a brief addressing the effect of the Third Circuit's decision in United States v. Carson, 969 F.2d 1480 (3d Cir. 1992), on this case ("Carson's Tape Brief").
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n21 Carson was incarcerated for convictions that were vacated on appeal. See Part IV.A.1, infra (discussion of United States v. Carson, 969 F.2d 1480 (3d Cir. 1992)).
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D. George Lachnicht
For approximately three decades, defendant George Lachnicht was a longshoreman and vice president of Local 1588. From January 1972 until he retired in 1990, Lachnicht was employed as [**39] a hiring agent by Prolerized Shiabo Neu ("PSN") at Claremont Terminal, New Jersey. Throughout the period that he worked for PSN as a hiring agent, Lachnicht was Vice President of the local that supplied PSN with longshoremen. Lachnicht Dep. 116-118.
The Government alleges that defendant George Lachnicht committed the following predicate acts: (1) A Hobbs Act extortion of his "no-show" job from his employer; (2) multiple Taft-Hartley Act violations for accepting gifts from his employer; (3) Taft-Hartley, Wire Fraud Act, and Hobbs Act violations for illegally providing organized crime figures with "no-show" waterfront jobs; (4) Hobbs Act extortions and Taft-Hartley violations in connection with the MOTBY scheme and ILA local 1588; (5) multiple Hobbs Act extortions of Local 1588 members' economic and democratic rights; (6) Mail Fraud Statute Violations in conjunction with his filing of a false workers' compensation claim; (7) embezzlement of union funds (along with Carson) from Local 1588 in violation of 29 U.S.C. § 501(c). See Amended Complaint PP 78-80. See also this Court's Order dated July, 7, 1992 (amending complaint to include, inter [**40] alia, specific claims against Lachnicht).
Of the four remaining defendants, Lachnicht participated to the greatest extent at the trial. He also filed Proposed Findings of Fact and Conclusions of Law ("Lachnicht's PFF&CL").
IV.
THE PREDICATE ACTS
A. The MOTBY Predicate Acts
The government alleges that three of the remaining four defendants -- Carson, Gallagher, and Mangano -- participated in what it designates the "MOTBY scheme." The MOTBY scheme occurred at the Military Ocean Terminal at Bayonne, New Jersey, and formed the basis for the criminal RICO convictions of defendants Carson and Gallagher in New Jersey. See United States v. DiGilio, 86 Cr. 340 (DRD) (D.N.J.), vacated and remanded sub. nom., United States v. Carson, 969 F.2d 1480 (3d Cir. 1992). n22 Originally, the government had intended to rely on those prior convictions as res judicata to establish one or more of the predicate acts in this civil RICO lawsuit. However, in United States v. Carson, 969 F.2d 1480 (3d Cir. 1992), the Third Circuit vacated Carson and Gallagher's convictions, holding that 108 of the government's surveillance [**41] tapes must be suppressed for failure to seal them in a timely manner in accordance with the federal wiretapping statute, 18 U.S.C. § 2510, et. seq. The case was remanded to the district court to determine the sufficiency of the remaining evidence.
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n22 Carson and Gallagher were convicted of conspiracy in violation of 18 U.S.C. § 1962(d) in conducting the affairs of the "John DiGilio Group" through a pattern of racketeering manifested by the payment of money by United Terminals, Inc., a stevedoring company, and its receipt by Carson, an official of the ILA in violation of the Taft-Hartley Act, 29 U.S.C. § 186. Carson and Gallagher were also convicted of conspiracy to extort money from United Terminals, Inc., in violation of the Hobbs Act, 18 U.S.C. § 1951. A third defendant, John DiGilio, was acquitted of all charges in this case. His body washed ashore a few months later, riddled with bullet holes.
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The government has abandoned its efforts to reinstate Carson and Gallagher's convictions, and the indictments were dismissed in January of 1993. Obviously, the government can no longer rely on Carson and Gallagher's criminal convictions as res judicata.
The Carson opinion raises a second problem: many of the surveillance tapes that were suppressed by the Third Circuit had [*1319] been admitted as evidence in this civil RICO action. In response to the Third Circuit's opinion, the government submitted Amended Proposed Findings of Fact and Conclusions of Law which omitted any reference to the tapes that were suppressed. In addition, the parties briefed the issue of the effect of the Third Circuit's opinion in this case. The government contends that even without the suppressed tapes, it can still prove by a preponderance of the evidence that Carson, Gallagher, and Mangano participated in the MOTBY scheme.
Therefore, this Court will make factual findings with regard to the alleged MOTBY scheme, without reference to the suppressed surveillance tapes.
Before discussing the complicated structure of the MOTBY scheme, it might be useful to summarize, in broad strokes, the government's allegations. [**43] The government contends that defendants Carson, Mangano, and Gallagher, along with LCN co-conspirators, used threats of labor unrest to extort money from United Terminals, Inc. ("UTI"), a Bayonne stevedoring firm that employed members of Local 1588. This scheme involved the use by UTI of ILA warehouse workers rather than more highly paid deep-sea workers as contracted for by a shipper that utilized Sealand's services (Sealand Services, Inc) and as was required by ILA policy. Some of the money that UTI saved by using the cheaper work force -- which the government claims exceeded one half million dollars -- was allegedly retained by UTI officials and some was siphoned out of UTI by the Genovese Family at a rate of $ 25 for each container "stripped" at the MOTBY facility. The cooperation of Local 1588 in the MOTBY scheme was allegedly obtained by paying off Local 1588 boss Donald Carson: in return for a share of the MOTBY kickbacks, the government alleges that Carson acquiesced to the use of lower paid warehouse labor in violation of ILA policy. This "shakedown" was allegedly enforced by the threat of labor troubles.
After careful consideration of all of the evidence in the record, [**44] this Court concludes that the government has proved the existence of the MOTBY operation, at least in the sense that the defendants, together with others, defrauded Sealand Services, Inc. and profited thereby. We do not believe, however, that the government has demonstrated by a preponderance of the evidence that the MOTBY scheme constituted an "extortion" as that term is defined in the Hobbs Act. We further conclude that, through the MOTBY scheme, Carson received payments in violation of Taft-Hartley, and that Gallagher and Mangano aided and abetted Carson's Taft-Hartley violations.
Findings of Fact
Sealand Service, Inc. ("Sealand") is an international shipping company that moves containerized cargo worldwide. Cargo imported from the far east is shipped by rail from the west coast to various east coast destinations. At the east coast sites, a stevedoring company employed by Sealand "strips" n23 the containers, temporarily stores the contents, and then arranges with consignees to pick up the unloaded merchandise.
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n23 "Stripping" means unloading of cartons from the vessel. Tr. 3933, 3938 (Mickey).
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In 1981, Sealand operated this type of container stripping business at Shed 138 at Port Newark, New Jersey. Tr. 3775 (Blickstein); Tr. 3932, 3939 (Mickey). Sealand's contractual stevedore was United Terminals, Inc. ("UTI"). All of the stripping and "stuffing" n24 work at Port Newark was performed by deep-sea longshoremen who were members of the ILA Local in Port Newark, in accordance with ILA policy and with the contract between UTI and Sealand. GX 3411 at 1926-27 (Scott testimony).
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n24 "Stuffing" means the loading of cartons onto the trucks of consignees who come to pick up the merchandise.
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In 1981, the Port Newark operation at Shed 138 had to be relocated because the shed, owned by the Port Authority, was scheduled to undergo extensive repairs. [*1320] GX 3411 at 1920, 1927, 2061 (Scott); GX 603 DIG (Sealand interoffice memorandum). Sealand considered several alternative sites but ultimately decided to relocate its operations from Port Newark to the Military Ocean Terminal in Bayonne ("MOTBY").
MOTBY is a Government-owned [**46] port facility which is used primarily to handle military cargo. At some time prior to 1981, the government had leased thirty-three acres of MOTBY to Consolidated Pier Deliveries ("CPD") for commercial use. n25 CPD was controlled by defendant Anthony Gallagher. UTI subleased from CPD a building located within the thirty-three acre commercial portion of MOTBY leased to CPD. n26 Tr. 3781-82 (Blickstein). This building was known as "Building 13." UTI continued to act as Sealand's stevedore after its move to MOTBY in June of 1981. GX 3411 at 1957-58, 2039.
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n25 The government alleges that CPD was controlled by Gallagher and that Mangano had a "beneficial interest" in CDP. We will address that issue below. See Part IV.A.2 infra.
n26 The commercial area was physically separated from the military area by fences and was operated as a separate entity by CPD.
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There are two different classes of laborers that are commonly used on the waterfront to load and discharge cargo ships: warehousemen labor and deep-sea [**47] labor. In Bayonne, the deep-sea longshoremen are members of Local 1588, and the warehousemen are members of Local 1587. During the period in question, both locals were run by defendant Donald Carson. The critical difference between these two classes of longshoremen, for the purposes of this lawsuit, is that warehousemen are paid significantly less (i.e., five dollars an hour less and lesser fringe benefits) than deep-sea laborers. n27 Also critical is the fact that at all times during the existence of the alleged scheme, ILA policy required that deep-sea labor be used for loading and discharging of ocean going vessels and opposed the use of mixed labor at pier facilities. The use of a "mixed labor" force at MOTBY was unprecedented.
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n27 The difference in wages and benefits was the result of the fact that ILA warehousemen were not covered by the master contract. Tr. 3935-36 (Mickey).
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By contract, Sealand agreed to pay UTI for its stevedoring services at a price based on the higher deep-sea wages. GX 3411 at [**48] 2056-57 (Scott testimony). Although this agreement was to remain unchanged after UTI moved to MOTBY, the evidence presented during the trial demonstrated that UTI violated this contract after its move to MOTBY. UTI president David Richman arranged with Donald Carson, the Secretary-Treasurer of the ILA's two locals in Bayonne, to use cheaper "warehousemen" labor for a major portion of the MOTBY operation instead of deep-sea longshoremen. GX 1 DIG (contract between Local 1587 and UTI).
Under Carson's arrangement with UTI, warehousemen were used to strip the containers and place the goods in Building 13. The deep-sea longshoremen merely loaded the merchandise onto the trucks of consignees who came to pick up their merchandise. Because the warehousemen were paid approximately five dollars less per hour than the ILA deep-sea longshoremen -- not including fringe benefits -- UTI saved a total of $ 546,000 during the fifteen month period of MOTBY operation. This estimate does not reflect the amount saved in overtime payments.
The MOTBY operation began in June 1981 and continued through September 1982. Throughout this period, UTI continued to bill Sealand for labor costs at the higher [**49] deep-sea longshoremen rate
UTI retained approximately $ 370,000 of the extra profit for itself. n28 The government claims Gallagher, Carson, and Mangano each received a payoff in return for their participation in the scheme. We will separately consider the evidence presented by the government that each defendant participated in and profited from the MOTBY scheme.
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n28 The government arrives at this number by subtracting the sum given to Gallagher (approximately $ 175,000), see discussion infra, from its estimate of the amount saved by UTI ($ 546,000).
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[*1321] 1. Gallagher
Gallagher played an instrumental role in the MOTBY operation. First, he was the primary lessor of the MOTBY commercial property from the government. As noted above, he subleased Building 13 to UTI.
Second, the government offered overwhelming proof that Gallagher used his company B & A Reefer to siphon off a portion of the money UTI saved by using the cheaper warehousemen labor (the "MOTBY profits"). Between June 1981, and September 1982, [**50] B & A Reefer submitted weekly bills to UTI for services supposedly rendered within the MOTBY facility, specifically, for moving containers. n29 Tr. 3883 (Ruffino). B & A Reefer billed UTI at a rate of $ 27.50 per container move. The evidence demonstrates that none of the container moves ever took place and that the B & A Reefer bills were for fictitious services:
First, Sealand had previously contracted with Bar-Bea Truck Leasing Company, Inc. ("Bar-Bea") -- another company controlled by Gallagher -- to move its containers. GX 3411 at 67, 1980, 1996, 1997-98 (Scott testimony); Tr. 3930 (Mickey). Bar-Bea performed this work and submitted bills to UTI which were paid.
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n29 B & A Reefer billed UTI at a rate of $ 27.50 per container move.
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Second, the Court credits the testimony of Joseph Mickey, UTI's terminal manager who supervised the stripping operation. Mickey stated that B & A Reefer never provided any services to UTI at the MOTBY Sealand operation. Tr. 3945, 3987-88 (Mickey).
Third, the Court notes that the [**51] B & A Reefer invoices contained no back-up documentation for the services supposedly rendered by B & A Reefer. n30
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n30 Special Agent Rosario Ruffino compared the invoices for both Bar Bea and B & A Reefer and testified:
Q. Can you compare those invoices for us? What are the similarities and differences?
A. There are obvious differences on the face. On the Bar Bea invoice the container numbers shipped in the MOTBY facility were listed. On B & A Reefer there were no container numbers listed on those invoices.
The other thing that comes to mind would be the invoices for Bar Bea Truck Leasing that were sent over to Sealand and paid by Sealand had backup documentation. There were trailer inspection reports, . . . drivers picking up the cartons and signing for them, other documents which would support the . . . invoice.
In B & A Reefer's case all I saw there when I examined it was just an invoice, no container moves were indicated on the invoice, and no documentation at all.
Tr. 3882-83 (Ruffino).
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Fourth, the Court finds it highly suspect that UTI's normal 30- to 60-day billing cycle was ignored for the "bills" from B & A Reefer. Instead, the B & A Reefer bills were always paid by check on the same day that they were submitted. Tr. 3885-86 (Ruffino);
Finally, and perhaps most damning, the false invoices submitted to UTI by B & A Reefer were accounted for on UTI's profit and loss statements for MOTBY as "extra equipment" or "rent" and not as container moves. Tr. 3792-96 (Blickstein). This was so even though no "extra equipment" was ever provided to UTI by B & A Reefer or by Gallagher. Indeed, Joseph Mickey testified that Gallagher provided UTI with the figures to include as "extra equipment" in its profit and loss statement on a weekly basis. Tr. 3949-53 (Mickey).
In total, Gallagher, through B & A Reefer, received UTI checks totalling $ 175,800 during this period. n31 The government alleges that Gallagher then shared the money he received from UTI with various Genovese family co-conspirators, including Mangano and Carson. Govt's PFF&CL P 60. The Court will next consider the role that Carson and Mangano allegedly played in the scheme, including whether they received [**53] kickbacks from Gallagher.
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n31 Checks totalling $ 115,000, representing billings from approximately November 1981 to September 1982, were cashed immediately by check cashing companies. Checks totalling $ 60,800, representing billings from approximately June 1981 to November 1981, were deposited into B & A Reefer's bank account at the Commercial Trust Company in New Jersey. Tr. 3887-88 (Ruffino).
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[*1322] 2. Mangano
The government alleges that (1) Mangano loaned money to Gallagher for the MOTBY operation and consequently had an ownership interest in Gallagher's company CPD which held the underlying lease on the facility at MOTBY; (2) that he intended to assist Gallagher in the criminal scheme; and (3) that he in fact received payoffs. Govt's PFF&CL P 60, 68. See also Govt's Memorandum in Opposition to Venero Mangano's R