United States v. Paul Defiore, Joseph Coppola and Robert Galler

720 F.2d 757, 14 Fed. R. Serv. 741, 1983 U.S. App. LEXIS 15623

• Court: Court of Appeals for the Second Circuit
• Decided: November 2, 1983
• Docket: 1206, 1319 and 1332, Dockets 82-1447, 83-1014 and 83-1025
• Status: Published

Opinions

MALETZ, Senior Judge:

Defendants-appellants Paul DeFiore, Joseph Coppola and Robert Galler were convicted under a ten count indictment which alleged a scheme to defraud the Department of Taxation and Finance, State of New York, and the Finance Department, City of New York, of substantial cigarette tax revenues. The scheme allegedly involved secretly transporting cigarettes from North Carolina to New York on which no New York cigarette taxes had been paid, and thereafter selling them in New York. Ten telephone calls, corresponding to the ten counts charged in the indictment, allegedly brought the scheme within the federal wire fraud statute, 18 U.S.C. § 1343 (1976).¹ Defendants DeFiore and Galler were convicted on all ten counts, defendant Coppola on all but counts five and eight.

Defendant DeFiore advances essentially five arguments in support of his appeal. He first argues that the wire fraud statute was not intended for the prosecution of schemes designated to violate state tax laws. Assuming the applicability of the wire fraud statute here, DeFiore’s second contention is that the evidence offered at trial to prove either a scheme to defraud or use of the wires was insufficient.

The balance of DeFiore’s arguments are all addressed to an assortment of alleged trial defects which, he contends, require reversal: (1) a purportedly erroneous supplemental charge by the trial court in response to a jury question, (2) the admission into evidence of prior similar acts by De-Fiore predating the commencement of the statute of limitations, and (3) prosecutorial misconduct in the form of leading questions to government witnesses and prejudicial summation.

Defendant Coppola raises two arguments on- his appeal. First, he submits, the government failed to adduce sufficient evidence of his knowing participation in the fraudulent scheme. Coppola further contends that voir dire of prospective jurors by the United States magistrate, even though conducted pursuant to local court rule, was violative of the Magistrates Act, 28 U.S.C. § 636, and Article III of the Constitution.

Defendant Galler has filed no briefs, but by letter of counsel has adopted the points raised by his co-defendants.

For the reasons that follow, we reverse the convictions of defendants DeFiore and Galler on counts five and eight of the indictment. In all other respects, the judgments of conviction are affirmed.

I

Background

The scheme to defraud was fairly simple ■ in nature. As testified to by John Cox, the president of Piedmont Wholesale Company (Piedmont), a North Carolina wholesale distributor of cigarettes, Piedmont was authorized to affix only North Carolina tax stamps on cigarettes. Nevertheless, in 1974 Cox and DeFiore struck a deal whereby DeFiore and Galler would place telephone orders with Cox for cigarettes to be transported to New York but which were untaxed under New York law. At that time the North Carolina tax on cigarettes was two cents per pack compared to the New York tax of 23 cents per pack. The cost to defendants was slightly higher than the price of cigarettes generally charged by Piedmont, but less than the price of cigarettes in New York. In this way the parties to the scheme would be able to realize a mutual profit.

Initially, DeFiore carried cash — in the range of $20,000 — to North Carolina from New York to pay for the cigarettes. Shortly thereafter, at DeFiore’s suggestion, Cox opened a bank account at First National City Bank in Brooklyn in the name of Piedmont in order to eliminate the inconvenience of transporting large sums of cash to North Carolina. Two employees of that bank testified that DeFiore made weekly cash deposits to the Piedmont account. Using the bank’s customer service number, Cox would verify that a deposit had in fact been made to that account. Telephone toll records of Piedmont reflecting the dates of long-distance calls to the bank coincided with the dates of DeFiore’s large cash deposits.

Both DeFiore and Galler ordered cigarettes from Cox. After confirming De-Fiore’s deposit to Piedmont’s account Cox would release the cigarettes. Some packs of cigarettes which Cox sold bore North Carolina stamps, but others bore no stamps whatsoever. Cox testified that as for this latter- group, the tax stamps were destroyed, although the North Carolina taxing authorities had been paid the two-cent-per-pack tax. The orders were packed at the Piedmont warehouse in High Point, North Carolina, ten packs of cigarettes to a carton, thirty cartons to a case. Each case was constructed of plain brown cardboard sealed with brown tape, marked only by numbers. There were no distinguishing marks on the cases to indicate to the casual observer that they contained cigarettes. Once packed, the cases of cigarettes were moved from High Point to a barn owned by a Piedmont employee, Howard Sechrest, for subsequent loading and shipment. These loading and shipment operations were not in the normal course of Piedmont’s business.

As part of the arrangement between Cox and DeFiore, Cox purchased two vans and a truck. The latter vehicle was ostensibly designed to carry four-inch diameter pipe, but had been specially designed to secretly transport cases of cigarettes. The truck, bearing the marking “Tri-State Plumbing” on the cab door, had a removable side panel which concealed an interior compartment. This truck had been registered to several different persons, including Galler, and was last registered in New Jersey under the name of Tri-State Plumbing Company. The vehicle’s certificate of ownership was signed by Joseph Coppola on behalf of TriState. A certificate of doing business issued by the State of New Jersey to TriState Plumbing Supply Company was also signed by Coppola in the capacity of owner. As it turned out, Tri-State’s New Jersey business address on the latter certificate was fictitious.

Once loaded at Seehrest’s barn the trucks would be driven to New York. Testimony was adduced that the trucks were unloaded at a warehouse in Brooklyn, and that Galler assisted in the unloading. An agent of the Bureau of Alcohol, Tobacco and Firearms testified that on April 4, 1978 he observed the pipe truck leave the Brooklyn warehouse and cross the Verrazzano Narrows Bridge. On April 6 he observed Coppola driving the truck into the warehouse.

Other evidence of Coppola’s involvement shows that on one occasion a Piedmont employee, Wayne Sexton, drove the pipe truck loaded with cigarettes to a truck stop in Warrington, Virginia, where he .switched vehicles with Coppola. Sechrest testified that defendant Coppola was present when the pipe truck was loaded at his barn. Coppola was further identified by Sechrest as one of the drivers who picked up cigarettes. The government produced receipts signed by Coppola evidencing that he had stayed at a motel in North Carolina on six occasions in 1978.

Finally, a government witness testified that during 1978 he regularly purchased cartons of cigarettes without New York tax stamps from Galler.

With this background we first consider DeFiore’s contention that the federal wire fraud statute may not be utilized to prosecute schemes to defraud a state of taxes due it.

II

The Applicability of the Wire Fraud Statute

DeFiore’s argument that section 1343 was not intended to cover the fact situation alleged in the indictment is twofold in nature. First, he submits, the wire fraud statute should not apply to schemes to defraud federal or state governments of taxes due them. As a corollary DeFiore adds that the indictment here is a thinly veiled effort to prosecute as a federal offense acts which clearly are a violation of state law.

We find no room for agreement with DeFiore. Indeed, four circuits before us have squarely applied the federal fraud statutes to state tax law violations. See United States v. Melvin, 544 F.2d 767 (5th Cir.1977) (mail fraud in connection with interstate sale of cigarettes); United States v. Brewer, 528 F.2d 492 (4th Cir.1975) (same); United States v. Mirabile, 503 F.2d 1065 (8th Cir.1974) (mail fraud in connection with false state tax return), cert. denied, 420 U.S. 973, 95 S.Ct. 1395, 43 L.Ed.2d 653 (1975); and United States v. Flaxman, 495 F.2d 344, 349 (7th Cir.) (“Just because the State ... was the victim and makes such a scheme illegal does not preclude the Federal Government from prosecuting the perpetrators under ... federal law”), cert. denied, 419 U.S. 1031, 95 S.Ct. 512, 42 L.Ed.2d 306 (1974). Moreover, United States v. Henderson, 386 F.Supp. 1048 (S.D. N.Y.1974), upon which defendant places great reliance, involved the use of section 1343 in connection with a federal income tax fraud prosecution. Cf. United States v. Miller, 545 F.2d 1204, 1216 n. 17 (9th Cir. 1976) (Henderson rejected in the context of federal tax violations), cert. denied, 430 U.S. 930, 97 S.Ct. 1549, 51 L.Ed.2d 774 (1977).

Section 1343 on its face is not limited in the manner suggested by DeFiore, nor does it purport to exempt the conduct in which he engaged. It plainly applies to “any scheme or artifice to defraud” in which the jurisdictional means — the wires — are employed. Its focus is upon the misuse of the wires, not the regulation of state affairs. Congress clearly has the authority to regulate such misuse.² See Brewer, 528 F.2d at ; Mirabile, 503 F.2d at 1067. In short, principles of federalism do not provide a basis for reversal. See also United States v. Corey, 566 F.2d 429, 430-31 & n. 2 (2d Cir.1977) (defendant’s claim of improper federal jurisdiction over what is essentially a state offense is “wholly without merit” and “frivolous”).

Ill

Sufficiency of the Evidence

We turn next to a consideration of DeFiore’s and Coppola’s claim that the evidence was insufficient to convict them as a matter of law. A defendant advancing a claim based on insufficiency of the evidence bears a very heavy burden. See, e.g., United States v. Carson, 702 F.2d 351, 361 (2d Cir.1983); United States v. Losada, 674 F.2d 167, 173 (2d Cir.), cert. denied, 457 U.S. 1125, 102 S.Ct. 2945, 73 L.Ed.2d 1341 (1982). Our inquiry is

whether the jury, drawing reasonable inferences from the evidence, may fairly and logically have concluded that the defendant was guilty beyond a reasonable doubt.... In making this determination, we must view the evidence in the light most favorable to the government, ... and construe all permissible inferences in its favor, ...

Carson, 702 F.2d at 361 (citations omitted).

Applying this standard of review to the facts in this case we are left with the firm conviction that, with the exception of counts five and eight of the indictment, the government presented sufficient evidence upon which a reasonable jury could find the existence of a scheme to defraud and use of the wires in furtherance thereof beyond a reasonable doubt as to all three defendants.

A

The Evidence Against DeFiore

Based on the entire record presented here, in particular the telling testimony of Cox describing the raison d’etre for the Brooklyn bank account, the specially designed pipe truck with the false compartment, and the destruction of the North Carolina tax stamps at the time cigarettes were sold to DeFiore, coupled with other testimony showing that untaxed cigarettes were unloaded and sold in New York City, DeFiore’s claim of insufficiency as to the scheme to defraud is untenable. See, e.g., United States v. Von Barta, 635 F.2d 999, 1005-06 n. 14 (2d Cir.1980) (“Government need not show that the scheme’s victims were in fact defrauded ... [only] that some actual harm or injury was at least contemplated”), cert. denied, 450 U.S. 998, 101 S.Ct. 1703, 68 L.Ed.2d 199 (1981); United States v. Curtis, 537 F.2d 1091, 1095 (10th Cir.) (“it is not necessary to show that any person was in fact defrauded”), cert. denied, 429 U.S. 962, 97 S.Ct. 389, 50 L.Ed.2d 330 (1976); United States v. Reicin, 497 F.2d 563 (7th Cir.), cert. denied, 419 U.S. 996, 95 S.Ct. 309, 42 L.Ed.2d 269 (1974). See also United States v. Tramunti, 500 F.2d 1334, 1338 (2d Cir.) (“the evidence ... must be viewed in light of the totality of the Government’s case, since one fact may gain color from others”), cert. denied, 419 U.S. 1079, 95 S.Ct. 667, 42 L.Ed.2d 673 (1974).

DeFiore’s contention that the government failed to prove the content of the telephone calls by sufficient evidence must fail. Given the devastating testimony of Cox that he called the bank regularly to verify that DeFiore had made the cash deposits, together with the telephone toll records, bank deposit slips, and testimony of bank tellers who took DeFiore’s deposits, a strong link was established between the scheme to defraud and the eight transmissions by wire from North Carolina to Brooklyn. There was thus proof sufficient to convict on these eight counts.

We find baseless DeFiore’s argument that the government failed in its proof simply because Cox could not recall the specific content of individual telephone calls made four to five years prior to trial. While it is true that the government has the burden of proving the contents of the telephone calls, proof of that may be established by circumstantial evidence. See, e.g., United States v. Garner, 668 F.2d 834, 838 (9th Cir.1981). And it is clear from the evidence that the government met its burden of proving that the calls from Piedmont to Brooklyn were “for the purpose of” committing wire fraud. See United States v. Tramunti, 500 F.2d at 1338. For Cox testified that he clearly remembered telephoning Brooklyn regularly to verify whether deposits had been made to the Piedmont account. In our view, this testimony, when juxtaposed with the dates of DeFiore’s bank deposits and the dates of long-distance calls to Brooklyn from Piedmont, leads to the inescapable inference that Cox telephoned Brooklyn on the eight occasions listed in the indictment in order to verify DeFiore’s deposits to Piedmont’s account.

In sum, the eight telephone transmissions from Piedmont to New York bore a sufficient connection to the realization of the scheme to be considered as made for the purpose of executing the scheme, United States v. Pollack, 534 F.2d 964, 971 (D.C. Cir.), cert. denied, 429 U.S. 924, 97 S.Ct. 324, 50 L.Ed.2d 292 (1976), and to support conviction on separate counts. Id. at 971-72; Melvin, 544 F.2d at 770-77 & n. 5. The jury could permissibly infer from the telephone and bank records and from Cox’ total testimony that the calls from Piedmont to New York listed in the indictment were made to verify the bank deposits.

By contrast, we agree with DeFiore’s contention insofar as counts five and eight of the indictment are concerned. Those two counts are based on collect calls from a telephone number in Garden City, New York to Piedmont. However, no nexus was shown between those two calls and the scheme to defraud. In fact, there was no evidence linking those calls to any of the defendants, either in connection with verifying a deposit to Piedmont’s Brooklyn bank account or with placing a cigarette order. Indeed, it was not even shown that the telephone number in question was listed in any of defendants’ names. Accordingly, the convictions of DeFiore and Galler on counts five and eight of the indictment are reversed.

B

The Evidence Against Coppola

The proof of Coppola’s knowing participation in the illicit scheme is also sufficient to sustain his conviction. His basic contention is that inasmuch as the cigarettes were packaged in plain brown cardboard cartons he cannot be charged with knowledge that he was transporting untaxed cigarettes.

On this record we find ample evidence from which a jury could reasonably infer that Coppola was aware of the nature , of the goods concealed within the truck. For one thing, Coppola was present when the pipe truck was loaded in North Carolina with cigarettes into the secret compartment. He was seen driving the pipe truck on April 6,1978. Moreover, he continued to drive to North Carolina after that date, as evidenced by six signed motel registrations dated from April 25, 1978 to October 30, 1978. Further, Coppola was the registered owner of two Tri-State Plumbing trucks, one of which was the bogus pipe truck, and was also the registered owner of Tri-State Plumbing Company.

To be an aider and abettor under 18 U.S.C: § 2, it was not necessary that Coppola know all the details of the criminal venture to be considered a participant in its criminal purpose, cf. United States v. Gar-guilo, 310 F.2d 249, 253 (2d Cir.1962). For on the basis of the evidence detailed above, a jury was entitled to infer that Coppola, frequently the driver of the truck with the concealed compartment, would have known its contents and had knowledge of the criminal venture when he signed the vehicle registration and the certificate of doing business for Tri-State Plumbing. Thus, it is clear that Coppola satisfies the requirements this court has established for the offense of aiding and abetting: “ ‘that he in some sort associate himself with the venture, that he participate in it as in something that he wishes to bring about, that he seek by his action to make it succeed.’ ” United States v. Bommarito, 524 F.2d 140, 145 (2d Cir.1975) (quoting United States v. Peoni, 100 F.2d 401, 402 (2d Cir.1938)).

We turn next to DeFiore’s claim of trial errors.

IV

The Alleged Trial Defects

DeFiore assigns as reversible error a supplemental charge given in response to a jury question, the admission into evidence of similar acts predating the statute of limitations, the use of leading questions by the Assistant United States Attorney during his direct examination, and prejudicial summation.

In the supplemental charge the trial judge further defined the wire fraud law. The only objection to it was that the judge did not fully explain how that charge related to the ten counts of the indictment— which he then immediately did. In none of this do we see any error, much less plain error.

DeFiore’s second alleged trial error is equally without merit. He contends that it was improper for the trial court to permit the introduction into evidence of acts and transactions prior to the five-year statute of limitations period. This contention is easily disposed of. Rule 404(b) of the Federal Rules of Evidence provides:

(b) Other crimes, wrongs, or acts. Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show that he acted in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity or absence of mistake or accident.

Clearly, the prior act evidence adduced here went directly to establishing DeFiore’s intent, as well as the preparations and plans that went into the scheme to defraud, see Corey, 566 F.2d at 431 & n. 4, and such evidence is admissible even though it antedates the limitations period. United States v. Ashdown, 509 F.2d 793, 798 (5th Cir.), cert. denied, 423 U.S. 829, 96 S.Ct. 48, 46 L.Ed.2d 47 (1975); United States v. Blosser, 440 F.2d 697, 699 (10th Cir.1971).

DeFiore’s final contention regarding prosecutorial misconduct is likewise unavailing. Fed.R.Evid. 611(c) states that “[ljeading questions should not be used on the direct examination of a witness except as may be necessary to develop his testimony.” (Emphasis added). These are words of suggestion, not command. In addition, as indicated in the Advisory Committee’s Note to this rule, “[a]n almost total unwillingness to reverse for infractions has been manifested by appellate courts.” As for allegedly prejudicial summation by the government attorney, the absence of a contemporaneous objection or even a request for a cautionary instruction obviates our need for considering DeFiore’s bare claim of prejudice. See Malley v. Manson, 547 F.2d 25, 28 (2d Cir.1976), cert. denied, 430 U.S. 918, 97 S.Ct. 1335, 51 L.Ed.2d 598 (1977).

V

Jury Voir Dire by the Magistrate

We address finally Coppola’s argument that the voir dire of prospective jurors in this case was improperly delegated to the federal magistrate contrary to 28 U.S.C. § 636 (1976) and Article III of the Constitution. Local court rule 25 of the Eastern District of New York authorizes magistrates to conduct voir dire of petit jurors. Coppola argues, however, that the delegation of certain duties to a magistrate in felony cases extends only to pretrial matters under the Magistrates Act, and that the selection of a jury is not a pretrial matter. See The Virgin Islands v. George, 680 F.2d 13, 15 (3d Cir.1982).

However, no contemporaneous objection was made to the jury selection process. We, therefore, see no reason to consider this objection for the first time on appeal. See United States v. Lieberman, 608 F.2d 889, 900 (1st Cir.1979), cert. denied, 444 U.S. 1019, 100 S.Ct. 673, 62 L.Ed.2d 649 (1980). What is more, since a defendant may waive his right to be present during the period of often routine voir dire questioning, see The Virgin Islands v. George, 680 F.2d at 15; The Virgin Islands v. Brown, 507 F.2d 186, 189 (3d Cir.1975), we believe it would be anomalous to hold that a defendant could not also waive any defect relating to the judicial officer who presided over the voir dire of petit jurors.

VI

For the foregoing reasons, the judgments of conviction of defendants DeFiore and Galler are reversed as to counts five and eight. In all other respects, the judgments of conviction are affirmed.

1 . 18 U.S.C. § 1343 provides:

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined not more than $1,000 or imprisoned not more than five years, or both.

Defendants were also indicted under 18 U.S.C. § 2 which provides in part:

Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.

2 . When Congress enacted the Jenkins Act, 15 U.S.C. §§ 375-378 (1976) — which requires cigarette distributors to file reports to appropriate state authorities — it voiced no objection to prosecutions under the wire or mail fraud statutes in connection with state cigarette tax evasion. See S.Rep. No. 1147, 84th Cong., 1st Sess. (1955), reprinted in 1955 U.S.Code Cong. & Ad.News 2883-85.

Nor did Congress voice such objection in 1978 when it passed 18 U.S.C. §§ 2341-2346 (Supp. IV 1980), entitled “Trafficking in Contraband Cigarettes”. See S.Rep. No. 962, 95th Cong., 2d Sess. (1978), and H.R.Rep. No. 1629, 95th Cong., 2d Sess. (1978), reprinted in 1978 U.S.Code Cong. & Ad.News 5518-35. In fact, Congress expressed no preference for which federal laws should be employed to curb the bootlegging of cigarettes. Congress did make it clear, however, that by passage of this statute it was increasing the avenues available to federal law enforcement personnel by which they could counteract the rapidly growing illegal cigarette trade. Id. See also United States v. Melvin, 544 F.2d 767, 774 & n. 14 (5th Cir. 1977); United States v. Brewer, 528 F.2d 492 (4th Cir. 1975).