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United States v. Margiotta

decided: October 13, 1981.

UNITED STATES OF AMERICA, APPELLANT,
v.
JOSEPH M. MARGIOTTA, APPELLEE



Appeal from an order of the United States District Court for the Eastern District of New York, Charles P. Sifton, Judge, stating that a number of rulings concerning jury instructions and the admission of evidence made at the first trial, which ended after the jury was unable to reach a verdict, would be followed at a retrial. Appeal dismissed from those portions of the order relating to the jury instructions, and affirmed on the evidentiary rulings. Dismissed in part and affirmed in part.

Before Waterman and Kaufman, Circuit Judges, and Pierce, District Judge.*fn*

Author: Kaufman

For more than a century after the founding of the Republic, the permissible scope of government appeals from adverse rulings in criminal cases was not in dispute. Independent of the double jeopardy provision of the Constitution, early common law did not provide a right of appeal for the Government in criminal cases.*fn1 Beginning in 1907, federal enactments authorized Government appeals in limited circumstances.*fn2 Despite this, courts generally made clear their disposition to interpret statutory authority strictly against the right to appeal.*fn3 The subsequent decades-long trend toward expansion of the Government's right to appeal in criminal cases culminated in the Omnibus Crime Control Act of 1970,*fn4 which amended the Criminal Appeals Act to allow Government appeals from district court orders of dismissal and certain other types of rulings.*fn5

Today we are asked to determine the boundaries of congressional authorization for Government appeals from orders in criminal cases, pursuant to 18 U.S.C. § 3731. The issue before us arises out of a criminal prosecution against Joseph M. Margiotta, long-time chairman of the Republican Committee of both Nassau County and the Town of Hempstead, New York. The Government charged Margiotta with mail fraud*fn6 and extortion*fn7 for activities involving an alleged political patronage scheme. The intricate tale of fraud unfolded during a trial lasting three weeks, at which nearly seventy witnesses testified. Following the close of the trial, the jury deliberated for eight days. After it stated that it was hopelessly deadlocked, the judge declared a mistrial. In anticipation of another closely fought contest at retrial, the Government sought reconsideration of a number of legal and evidentiary rulings Judge Sifton made at the trial. After entertaining the Government's requests, Judge Sifton entered an order in which he stated that the challenged rulings would be followed at the retrial.

The Government appeals to this Court for review of this order. We find those portions of Judge Sifton's order indicating the court would abide by certain jury instructions at retrial not appealable under § 3731. The portions of the order concerning the judge's evidentiary rulings stand on a different footing. Clearly, they are appealable pursuant to the Criminal Appeals Act. We conclude, however, that the district court acted well within its discretion in making each of the contested evidentiary rulings. Accordingly, we dismiss the appeal from the order dealing with the jury instructions, and affirm the order on the evidentiary rulings.*fn8

I.

We shall attempt to fit a convoluted set of circumstances into a framework of coherence. As we have stated, defendant-appellee, Joseph M. Margiotta, was at all relevant times the chairman of the Republican Committee of both Nassau County and the Town of Hempstead, New York. Although he held no elective office, his power and prestige as County and Town Republican Chairman, according to the Government, gave him substantial control over public officials in Hempstead and Nassau County who had been elected to office as candidates of the Republican Party. As a result, it was charged, Margiotta was able to exert influence over the appointees of these officials. These political connections purportedly offered Margiotta the opportunity to indulge in a lucrative fraudulent scheme involving the distribution of insurance commissions on municipal properties to his political allies.

In November, 1980, a federal grand jury indicted Margiotta on one count of mail fraud, in violation of 18 U.S.C. § 1341 (1976), and six counts of extortion, in violation of 18 U.S.C. § 1951 (1976). The mail fraud count (Count One) was based on a scheme to defraud the Town of Hempstead, Nassau County, New York State, and their citizens (1) of the right to have the affairs of the Town, County and State conducted honestly and free from corruption, and (2) of the right to Margiotta's honest participation in the governmental affairs of the Town, County, and State. The factual predicate underlying Count One was an insurance commission ruse in which, pursuant to an alleged secret agreement, Margiotta contrived the appointment of Richard B. Williams & Sons, Inc., an insurance agency, (hereinafter the Williams Agency) as Broker of Record for the Town and County. In return, the Agency paid portions of its commissions to insurance brokers and other persons Margiotta had designated. Counts Two through Six charged Margiotta with violating the Hobbs Act by inducing the Williams Agency to make the payments of the insurance commissions under color of official right and by means of the wrongful use of fear.

On January 6, 1981, Margiotta filed a pretrial motion to dismiss Count One,*fn9 alleging, inter alia, that Count One failed to state an offense under § 1341, that the Count was duplicitous, and that it was unconstitutionally vague. In response to these claims, the Government submitted an affidavit enumerating hundreds of items sent through the mail upon which fraudulent use of the mail could be grounded. Judge Sifton ruled that Count One stated an offense but ordered the Government to elect a single mailing to submit to the jury. The Government appealed that ruling to this Court, which held that the order was appealable and that the Government could proceed to trial on numerous specified mailings, United States v. Margiotta, 646 F.2d 729 (2d Cir. 1981).

Trial commenced on March 27, 1981. The Government presented evidence of a scheme of fraud spun into a web of political power. The involvement of the Nassau County Executive and the Presiding Supervisor of the Town of Hempstead in maintaining the properties owned and operated by their respective jurisdictions fostered the development of this artifice. One aspect of property maintenance was the provision of insurance coverage. As a matter of practice, the sole responsibility for obtaining insurance on properties owned by the County and the Town was delegated to a Broker of Record designated by these entities and serving at their pleasure. Upon placing an insurance policy on municipal property, the Broker of Record received, as a commission, a portion of the money paid by the municipality for the insurance policies as well as for their renewals and extensions.

According to the Government, this municipal insurance activity became the basis for a scheme to defraud the citizens of Hempstead and Nassau County in 1968. At that time, Richard B. Williams, founder of the Williams Agency, decided to seek the position of Broker of Record for the Town of Hempstead, then held by Mortimer Weis. A long-time political associate of Joseph Margiotta, Williams allegedly met with Margiotta and Weis to fashion an acceptable arrangement. The Government argued that a secret "deal" was struck: the Williams Agency would be named Broker of Record for the Town of Hempstead, and Weis would become a $10,000 a year consultant to the Town. In return for the appointment, the Williams Agency would make "kickbacks" amounting to 50% of its commissions to licensed insurance brokers and others designated by Margiotta. Thereafter, the Government contends, Ralph Caso, the Presiding Supervisor of Hempstead, appointed the Williams Agency as Hempstead's Broker of Record based on Margiotta's recommendation. In 1969, the Williams Agency began to write insurance for the Town of Hempstead and to make distributions of portions of its commissions. In 1970 Caso was elected County Executive of Nassau County. After his election, the Government charges, Caso met with Margiotta and Williams. Soon thereafter, the Williams Agency was appointed Broker of Record for Nassau County and commenced to distribute 50% of the commissions it earned on Nassau County properties to brokers and others politically allied with Margiotta. Between 1969 and 1978, the Government maintains, the compensation paid the Broker of Record in connection with this scheme totalled in excess of two million, two hundred thousand dollars.

To support its theory that the insurance arrangement was a scheme to defraud, the Government sought to prove that Margiotta tried to conceal the practice by directing the preparation of fictitious property inspection reports. Thus, it would create the appearance that the recipients of the insurance proceeds were legitimately earning their commissions. The Government, in addition, presented evidence showing that Margiotta tried to disguise this activity by misleading the State Investigation Commission when it inquired into the insurance commission payments in 1977 and 1978.

At trial Margiotta attempted to prove that he had no secret agreement with the Williams Agency for the distribution of insurance commissions as a quid pro quo for procuring the appointment of the Agency as Broker of Record. He offered a defense of good faith. While admitting that he recommended the Williams Agency as Broker of Record for both Hempstead and Nassau County, and that he directed the distribution of insurance commissions to his political allies, he argued that this activity was merely a longstanding patronage practice that had been undertaken for decades by both Republicans and Democrats in Nassau County. He further asserted that he was not responsible for the preparation of falsified inspection reports, and that he terminated distribution of insurance commissions after a New York state law was changed in 1978 to prohibit it.

After deliberating conscientiously for more than one week, the jury announced it was unable to reach a verdict. The court ...


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