Zeuberis guilty plea agreement 2001-06-18

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

 
UNITED STATES OF AMERICA )
)   No. 00 CR 918

VS. 

)  Judge Matthew F. Kennelly
)
FRANK B. ZEUBERIS )

PLEA AGREEMENT

This Plea Agreement between the United States Attorney for the Northern District of Illinois, SCOTT R. LASSAR, and the defendant, FRANK B. ZEUBERIS, and his attorney, LUIS M. GALVAN, is made pursuant to Rule II of the Federal Rules of Criminal Procedure.

This Plea Agreement is entirely voluntary and represents the entire agreement between the United States Attorney and defendant regarding defendant's criminal liability in case 00 CR 918.

This Plea Agreement concerns criminal liability only, and nothing herein shall limit or in anyway waive or release any administrative or judicial civil claim, demand or cause of action, whatsoever, of the United States or its agencies. Moreover, this Agreement is limited to the United States Attorney's Office for the Northern District of Illinois and cannot bind any other federal, state or local prosecuting, administrative or regulatory authorities except as expressly set forth in this Agreement.

By this Plea Agreement, SCOTT R. LASSAR, United States Attorney for the Northern District of Illinois, and the defendant, FRANK B. ZEUBERIS, and his attorney,

LUIS M. GALVAN, have agreed upon the following:

I . Defendant acknowledges that he has been charged in the indictment in this case with: conducting the affairs of an enterprise, that is, a labor organization of which he was chief officer, through a pattern of racketeering activity consisting of multiple a embezzlements of union funds, in violation of Title 18, United States Code, Section 1962(c); embezzling union funds and property to his own use and the use of others, in violation of Title 29, United States Code, Section 501(c); and causing false entries to be made in union records required to be kept under Title 29, United States Code, Section 436, in violation of Title 29, United States Code, Section 439(c). The indictment also seeks forfeiture of $473,106 in proceeds from the unlawful activities charged in Count One, pursuant to Title 18, United States Code, Section 1963.

2. Defendant has read the charges against him contained in the indictment, and those charges have been fully explained to him by his attorney.

3. Defendant fully understands the nature and elements of the crimes with which he has been charged.

4. Defendant will enter a voluntary plea of guilty to Count One of the indictment in this case.

5. Defendant will plead guilty because he is in fact guilty of the charge contained in Count One of the indictment. In pleading guilty, Defendant admits the following facts and that those facts establish his guilt beyond a reasonable 'doubt:


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As charged in Count One of the indictment, Defendant was the chief officer of Local 5 of the Laborers International Union of North America ("LIUNA") ("Local 5"), Chicago Heights, Illinois, serving as its President and Business Manager from April 1, 1994 until his resignation on October 23, 1998. Local 5 was a labor organization within the meaning of Title 29, United States Code, Sections 402(i) and (j), engaged in an industry affecting commerce, and an "enterprise" within the meaning of Title 18, United States Code, Section 1961(4). Pursuant to Title 29, United States Code, Section 431, Local 5 adopted and was subject to the terms of the LIUNA Uniform Local Constitution ("constitution").

As Local 5's President and Business Manager, Defendant was entrusted with the power and responsibility of presiding as chairman over all Local 5 membership and Executive Board meetings, signing all checks or orders for payment of monies from the Local 5 accounts together with the SecretaryTreasurer, and verifying that the affairs and business of Local 5 were conducted in accordance with the constitutions, rules, regulations, policies, practices, lawful orders and decisions of LIUNA and Local 5.

Under Title 29, United States Code, Section 501(a), Defendant occupied positions of trust in relation to Local 5 and its members as a group, and was under a duty, taking into account the special problems and functions of a labor organization, to hold Local 5's money and property solely for the benefit of Local 5 and its members, and to manage, invest, and expend the same in accordance with Local 5's constitution and to refrain from dealing with Local 5 as an adverse party or in behalf of an adverse party in any matter connected. with his

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duties and from holding or acquiring any pecuniary or personal interest which conflicted with the interests of Local 5, and to account to Local 5 for any profit received by him in whatever capacity in connection with transactions conducted by him or under his direction on behalf of Local 5.

Local 5 was governed by a seven (7) member Executive Board consisting of the President and Business Manager, Vice-President, Recording Secretary, Secretary-Treasurer, and three other members elected by the membership of Local 5, with powers and duties established by and set forth in the constitution. The Local 5 Executive Board ("Executive Board") was entrusted with the authority to make commitments and disbursements in its discretion from the funds, assets and property of Local 5 for the regular, recurrent and incidental expenses of Local 5 including salaries and other compensation, allowances and reimbursements for expenses. Salary increases, other than for cost-of-living, proposed to be effective during a term of office required the further approval of the membership of Local 5, either by majority vote of the members present at a meeting of the Local after written notice of the proposal to all members in good standing, or approval of the increase at two consecutive membership meetings.

The Executive Board was required to meet at least once a month and, when possible, prior to the regular meeting of the Local 5 membership, and to submit a report of its activities and minutes to each regular meeting of the Local 5 membership. Accurate minutes of all Local 5 regular membership and Executive Board meetings were required to be prepared and

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maintained.

From on or about April 1, 1994 and continuing through on or about October 23, 1998, in the Northern District of Illinois, Eastern Division, and elsewhere, Defendant, being a person employed by and associated with an enterprise, that is, Local 5, which was engaged in and the activities of which affected interstate commerce, unlawfully and knowingly conducted and participated, directly and indirectly, in the conduct of the affairs of the enterprise through a pattern of racketeering activity as defined in Title 18, United States Code, Sections 1961(1) and 1961(5), consisting of the following racketeering acts indictable under and in violation of Title 29, United States Code, Section 501(c), any two of which constitute a pattern of racketeering activity.

Throughout his tetra of office from April 1, 1994 through October 23, 1998, Defendant did embezzle, steal, and unlawfully and willfully abstract and convert to his own use and to the use of his wife, Joann, a Local 5 employee, and James A. DiForti (deceased)1, the Local 5 Secretary Treasurer, the moneys, funds, and property of Local 5, in violation of Title 29, United States Code, Section 501(c). Through his domination and control of Local 5, Defendant granted salary and paid vacation increases, and bonuses to himself, his wife and

_______________________


1 Upon assuming office on April 1, 1994, Defendant appointed James A. DiForti to succeed him as Local 5's Secretary-Treasurer in express violation of Local 5's constitution which required membership in good standing in the local for two years prior to any such appointment. DiForti had only transferred into Local 5 from LIUNA Local 1006 on or about January 3, 1994. Defendant also continued the clerical employment of his wife, Joann Zeuberis, at Local 5.

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DiForti that were unauthorized and fraudulent. He further granted himself and DiForti automobile expense reimbursements that were unauthorized and fraudulent. Defendant caused these fraudulent salary and paid vacation increases, bonuses and reimbursements to be paid even though he knew that Local 5 was in serious financial difficulty. Defendant made all these embezzlements appear to be legitimate expenditures by causing Local 5's Executive Board and regular membership meeting minutes and other records to be falsified to reflect that the expenditures were authorized and appropriate. In fact, none of these expenditures were presented to or approved by the Executive Board or the regular membership as required by Local 5's constitution. Defendant also "sold" the union office of Business Agent for $5,000, and kept the proceeds.

These embezzlements constitute the following pattern of racketeering activity:

Fraudulent Salary Increases

As charged in Racketeering Acts One, Two, Four - Six, Thirteen - Sixteen, and Twenty, Defendant granted unauthorized and fraudulent salary increases to himself, to his wife, Joann, and DiForti totaling $275,850, above their authorized salaries.

Fraudulent Bonuses

As charged in Racketeering Acts Seven - Nine, Seventeen - Nineteen, and TwentyOne - Twenty-Five, Defendant granted unauthorized and fraudulent bonuses to himself, his wife, Joann, and DiForti, totaling $86,100. In addition to the creation of false Executive Board and regular membership meeting minutes, Defendant further concealed the full

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amounts and the unauthorized nature of the 1995 bonuses in a false statement that he signed and submitted to LIUNA dated January 4, 1996. This was done to circumvent a requirement of the LIUNA General Executive Board, effective, October 1, 1995, that all locals disclose bonuses in excess of $5,000 and cumulative gifts to any recipient exceeding $10,000 to the LIUNA Inspector General who had the power to disallow them if "inconsistent with the objectives and purposes of the [LIUNA Ethical Practices) Code and the Ethics and Disciplinary Procedure."

Fraudulent Paid Vacation

As charged in Racketeering Acts Ten - Twelve, and Twenty-Six - Twenty-Eight, Defendant granted unauthorized and fraudulent paid vacation increases to himself, his wife, Joann, and DiForti totaling $88,700. This amount was part of the total unauthorized paid vacation increases of $116,700 that Defendant granted to himself, his wife and DiForti. The difference of $28,000 was not charged in view of amount of paid vacation accorded to union officers and employees under existing and prior practice. After October 3, 1995, these paid vacation increases also were a means used by Defendant to circumvent the LIUNA policy limiting bonuses to $5,000 per year.2


_____________________

2 This LIUNA policy took effect on October 3, 1995. Defendant caused the minutes of the Executive Board meeting of October 3, 1995, to be falsified to reflect the granting of twelve weeks paid vacation per year to employees with 20 years of service. The minutes of the Regular Membership Meeting of October 3, 1995, make no reference to this topic, and the general motion to approve the Executive Board Meeting minutes "as read" did not authorize this undisclosed benefit.

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Fraudulent Auto Expense Reimbursement

As charged in Racketeering Acts Three and Thirty, Defendant granted himself and DiForti unauthorized and fraudulent automobile expense reimbursement. As to DiForti, he was permitted to submit his vehicle lease expense on a monthly basis and receive 70 percent reimbursement totaling $14,510.18. The last reimbursement check to DiForti was dated July 14, 1997, three days after his resignation from Local 5, and covered the next lease period when Diforti was no longer employed by Local 5. No other officer or employee of Local 5 was allowed to bill the union for auto lease expense, and DiForti's use of the leased vehicle on union business was minimal at best.

Defendant also sought and obtained fraudulent reimbursement from Local 5 for 80 percent of the cost of 10 fictitious automobile repair invoices. These false invoices were prepared at his direction and submitted by him to Local 5 for reimbursement. Defendant embezzled $2,946.64 from Local 5 through this scheme.


Embezzlement of Business Agent's Position.


As charged in Racketeering Act Twenty-Nine, Defendants ought and obtained $5,000 from a union member in return for appointing that member as a Local 5 Business Agent. As Local 5's Business Manager, Defendant was empowered to recommend the appointment of Business Agents to the Executive Board which has final authority to appoint them and to determine their salary and other compensation. In return for a $5,000 cash payment, Defendant sold this power of appointment and the Business Agent's position itself.


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Thereafter, Defendant caused the minutes of a "Special Meeting" of Executive Board on February 20,1997, to falsely reflect the approval of this "appointment" and did not disclose nor account to Local 5 for the $5,000 he had received for it. In doing so, he embezzled both the Business Agent's position itself and the $5,000 he received in payment to his own use.

6. For purposes of applying the guidelines promulgated by the United States Sentencing Commission pursuant to 28 U. S. C. § 994, the parties agree on the following points:

(a) Under Guideline 2F-1.1(a)(1), the base offense level for this offense is level 19.

(b) This offense level is increased two levels for abuse of trust under Guideline 3B 1.3.

(e) This offense level is further increased two levels under Guideline 3BL1(c) because Defendant was an organizer, leader, manager, and supervisor of the participants in the criminal activity.

(d) Defendant has clearly demonstrated a recognition and affirmative acceptance of personal responsibility for his criminal conduct, If the government does not receive additional evidence in conflict with this provision, and if Defendant continues to accept responsibility for his actions, within the meaning of Guideline 3E1,1, a two-level reduction in the offense level is appropriate.

(e) Defendant has provided timely complete information concerning his own

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involvement in the offense and has notified the government timely of his intention to enter a plea of guilty, thereby permitting the government to avoid preparing for trial and permitting the Court to allocate its resources efficiently. Therefore, within the meaning of Guideline 3E1.1(b), an additional one-point reduction in the offense level is appropriate, provided the Court determines the offense level to be 16 or greater prior to the operation of Guideline 3E 1.1(a).

(f) Based on the facts known to the government, Defendant's criminal history points equal 0 and Defendant's criminal history category is 1.

(g) Defendant and his attorney and the government acknowledge that the above calculations are preliminary in nature and based on facts known to the government as of the time of this Agreement. Defendant understands that the probation Office will conduct its own investigation and that the Court ultimately determines the facts and law relevant to sentencing, and that the Court's determinations govern the final Sentencing Guidelines calculation. Accordingly, the validity of this Agreement is not contingent upon the probation officer's or the Court's concurrence with the above calculations.

7. Errors in calculations or interpretation of any of the guidelines may, be corrected by either party prior to sentencing. The parties may correct these errors or misinterpretations either by stipulation or by a statement to the probation office and/or court setting forth the disagreement as to the correct guidelines and their application. The validity of this Agreement will not be affected by such corrections, and Defendant shall not have a

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right to withdraw his plea on the basis of such corrections

8. Defendant understands the count to which he will plead guilty carries the following penalties:

(a) Count One carries a maximum penalty of 20 years imprisonment and a maximum fine of the greater of twice the gross gain or twice the gross loss or 5250,000, and any restitution ordered by the Court.

(b) Defendant understands that this count also carries a term of supervised release of not more than three years, which the court may specify.

Therefore, the total potential sentence carried under the count to which defendant will plead guilty is 20 years imprisonment and a maximum fine of the greater of twice the gross gain or twice the gross loss or $250,000, a term of supervised release, as well as any restitution ordered by the Court.

9. Defendant understands that in accord with federal law, 18 U.S.C. § 3013, upon
entry of judgment of conviction, he will be assessed S 100 on the count to which he has pled
guilty, in addition to any other penalty imposed. Defendant agrees to pay the special
assessment of $100 at the time of sentencing with a check or money order made payable to
the Clerk of the U. $. District Court.

10. Defendant understands that by pleading guilty he surrenders certain rights, including the following:

(a) If Defendant persisted in a plea of not guilty to the charges against him,

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he would have the right to a public and speedy trial. The trial could be either a jury trial or a trial by the judge sitting without a jury. Defendant has a right to a jury trial. However, in order that the trial be conducted by the judge sitting without a jury. Defendant, the government, and the judge all must agree that the trial be conducted by the judge without a jury.

        (b) If the trial is a jury trial, the jury would be composed of twelve laypersons selected at random. Defendant and his attorney would have a say in who the jurors would be by removing prospective jurors for cause where actual bias or other disqualification is shown, or without cause by exercising so-called peremptory challenges. The jury would have to agree unanimously before it could return a verdict of either guilty or not guilty. The jury would be instructed that Defendant is presumed innocent, and that it could not convict him unless, after hearing all the evidence, it was persuaded of Defendant's guilt beyond a reasonable doubt and that it was to consider each count of the indictment separately.

        (c) If the trial is held by the judge without a jury, the judge would find the facts and determine, after hearing all the evidence, and considering each count separately, whether or not the judge was persuaded of Defendant's guilt beyond a reasonable doubt.

        (d) At a trial, whether by a jury or a judge, the government would be required to present its witnesses and other evidence against Defendant. Defendant would be able to confront those government witnesses and his attorney would be able to cross-examine them. In turn, Defendant could present witnesses and other evidence in his own behalf. If the


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witnesses for Defendant would not appear voluntarily, he could require their attendance through the subpoena power of the Court.

        (e) At a trial, Defendant would have a privilege against self-incrimination so that he could decline to testify, and no inference of guilt could be drawn from his refusal to testify, If Defendant desired to do so, he could testify in his own behalf.

11. Defendant understands that by pleading guilty he is waiving all the rights set forth in the prior paragraph. Defendant's attorney has explained those rights to him, and the consequences of his waiver of those rights. Defendant further understands he is waiving all appellate issues that might have been available if he had exercised his right to trial, and only may appeal the validity of this plea of guilty or the sentence.

12. Defendant is also aware that Title 18, United States Code, Section 3742 affords a defendant the right to appeal the sentence imposed. Acknowledging this, Defendant knowingly waives the right to appeal any sentence within the maximum provided in the statute of conviction (or the manner in which that sentence was determined), in exchange for the concessions made by the United States in this Plea Agreement. Defendant also waives his right to challenge his sentence or the manner in which it was determined in any collateral attack, including but not limited to a motion brought under Title 28, United States Code, Section 2255. The waiver in this paragraph applies only to challenges based on matters known to Defendant at the time of his guilty plea. and does not apply to a claim of involuntariness, or ineffective assistance of counsel, which relates directly to this waiver or

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to its negotiation, nor does it apply to appeals or challenges based on new legal principles in Seventh Circuit or Supreme Court cases decided after the date of this agreement which are held by the Seventh Circuit or Supreme Court to have retroactive effect.

13. Defendant agrees he will fully and truthfully cooperate with the government in any matter in which he is called upon to cooperate.

(a) Defendant agrees to provide complete and truthful information in any investigation and pro-trial preparation, and complete and truthful testimony, if called upon to testify, before any federal grand jury and United States District Court proceeding, and any related civil administrative or court proceeding.

(b) Defendant further agrees to cooperate fully and truthfully in identifying and forfeiting assets subject to forfeiture, regardless where they may have been transferred or hidden. Defendant agrees to submit to a polygraph examination regarding his domestic or foreign holdings.

14. Defendant understands that the indictment and this plea Agreement are matters of public record and may be disclosed to any party.

15. Nothing in this Agreement shall limit the Internal Revenue Service in its collection of any taxes, interest or penalties from Defendant.

(a) Defendant agrees to transmit his original records, or copies thereof, and any additional books and records which may be helpful, to the Examination Division of the Internal Revenue Service so that the Internal Revenue Service can complete any civil audit

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of Defendant.

(b) Preliminary to or in connection with any judicial proceeding, as that term is used in Rule 6(e) of the Federal Rules of Criminal Procedure, Defendant will interpose no objection to the entry of an order under Rule 6(e) authorizing disclosure of

16. Defendant acknowledges that because of his conviction in this case, Title 29, United States Code, Sections 504 and 1111 will prohibit him from directly or indirectly holding certain positions or employment in or with respect to any labor organization or employee benefit plan during or for a period of 13 years after this conviction or the end of any imprisonment, whichever is later. Defendant further acknowledges that if he violates these prohibitions, he may be punished by imprisonment for not more than five years and a fine of not more than $10,000, or both.

17. Defendant understands that the United- States Attorney's Office will fully apprise the District Court and the United States Probation Office of the nature, scope and

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extent of Defendant's conduct regarding the charges against hurt, and related matters, including all matters in aggravation and mitigation relevant to the issue of sentencing.

18. At the time of sentencing, the government shall make known to the sentencing judge the extent of Defendant's cooperation, and shall recommend that the Court impose a sentence at the low end of the applicable guideline range.

19. It is understood by the parties that the sentencing judge is neither a party to nor bound by this Agreement and, subject to the limitations of the Sentencing Guidelines, may impose the maximum penalties as set forth in paragraph 8 above. Defendant further acknowledges that if the Court does not accept the sentencing recommendation of the parties, Defendant will have no right to withdraw his guilty plea.

20. The indictment charges that Defendant is liable to the United States for approximately $473,106 which is subject to forfeiture pursuant to Title 18, United States Code, Section 1963, because these funds represent proceeds that Defendant embezzled and converted to his own use and the use of his wife, Joann, and James A. DiForti, directly and indirectly, from the aforesaid pattern of racketeering activity during the period charged in Count One, in violation of Title 18, United States Code, Sections 1962(c) and 1963(a)(3), By entry of a guilty plea to Count One of the indictment, Defendant understands that any funds acquired in violation of Title 18, United States Code, Sections 1962(c) and 1963(a)(3), are subject to forfeiture to the United States. 

21. Defendant agrees to the entry of a forfeiture judgment in the amount of

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$473,106 and that these funds are subject to forfeiture, as a result of the violations alleged in Count One. Defendant further agrees to the entry of a preliminary order of forfeiture at the time of sentencing relinquishing any right of ownership he has in the funds and seizure of the funds by the United States Marshal so that these funds may be disposed of according to law.

22. Defendant acknowledges that the, conduct which forms the basis for the charge to which he is pleading guilty caused a loss of $473,106. Regarding restitution, the parties acknowledge. that the amount of restitution owed to Local 5 is $355,714.67 and further owed to Fidelity and Deposit Company of Maryland, local 5's bonding company, is $117,391.33, and that pursuant to Title 18, United States Code, Section 3663A, the Court must order Defendant to make restitution in this amount, minus any credit for funds repaid prior to sentencing. Defendant understands that Title 18, United States Code, Section 3664 and Guidelines 5E1.I and 5E1.2 set forth the factors to be weighed in setting a fine and in determining the schedule, if any, according to which restitution is to be paid in this case. Defendant agrees to provide full and truthful information to the Court and United States Probation Officer regarding all details of his economic circumstances in order to determine the proper restitution schedule according to which Defendant may be ordered to pay. Defendant understands that providing false or incomplete information may be prosecuted as a violation of Title 18, United States Code, Section 1001, or as a contempt of the court. 

 

23. As described more fully in paragraph 22, Defendant understands that a

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restitution judgment in the amount of $473,106 shall be entered against him. Defendant understands that the government is entitled to receive both restitution on behalf of the victims of his embezzlements and funds in satisfaction of the forfeiture judgment- The government agrees that any funds paid in satisfaction of the restitution order shall be credited to reduce the restitution order and the outstanding forfeiture judgment.

24. After sentence has been imposed on the count to which Defendant pleads guilty as agreed herein, the government will move to dismiss the remaining counts of the indictment.

 

25. Defendant understands that his compliance with each part of this Plea Agreement extends throughout and beyond the period of his sentence, and failure to abide by any term of the Plea Agreement is a violation of the Agreement. He further understands that in the event he violates this Agreement, the government, at its option, may move to vacate the Plea Agreement, rendering it null and void, and thereafter prosecute Defendant not subject to any of the limits set forth in this Agreement, or to seek resentencing of Defendant. Defendant understands and agrees that in the event that this Plea Agreement is breached by Defendant, and the Government elects to void the Plea Agreement and prosecute Defendant, any prosecutions that are not time-barred by the applicable statute of limitations on the date of the signing of this Agreement may be commenced against Defendant in accordance with this paragraph, notwithstanding the expiration of the statute of limitations between the signing of this Agreement and the commencement of such prosecutions.


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26. Defendant and his attorney acknowledge that no threats, promises, or representations have been made, nor agreements reached, other than those set forth in this Agreement, to cause Defendant to plead guilty.

27. Defendant agrees this Plea Agreement shall be filed and become a part of the record in this case.

28. Should the judge refuse to accept Defendant's plea of guilty, this Agreement shall become null and void and neither party will be bound thereto.

29. Defendant acknowledges that he has read this Agreement and carefully reviewed each provision with his attorney. Defendant further acknowledges that he understands and voluntarily accepts each and every term and condition of this Agreement.