United States v. Salvitti

451 F. Supp. 195
CourtDistrict Court, E.D. Pennsylvania
DecidedMay 5, 1978
DocketCrim. 77-467
StatusPublished
Cited by19 cases

This text of 451 F. Supp. 195 (United States v. Salvitti) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Salvitti, 451 F. Supp. 195 (E.D. Pa. 1978).

Opinion

MEMORANDUM AND ORDER

FULLAM, District Judge.

The defendant, Augustine A. Salvitti, Executive Director of the Redevelopment Authority of the City of Philadelphia, has been found guilty by a jury of accepting a $27,-500 bribe in connection with his official duties. He stands convicted of one count of conducting the affairs of an enterprise through a pattern of racketeering activity (the “RICO” statute), 18 U.S.C. § 1962; three counts of mail fraud, 18 U.S.C. § 1341; and one count of extortionate interference with interstate commerce (the “Hobbs Act”), 18 U.S.C. § 1951. The defendant now seeks a judgment of acquittal, or a new trial.

I. THE FACTS

The evidence in support of the jury’s verdict disclosed the following facts. Pen-rose Industries, a closely-held corporation controlled by one William Sylk, entered into a long-term lease with the Redevelopment Authority for a tract of land near the Phila *197 delphia Airport, and built a large warehouse on the property. The lease included an option to purchase the tract upon favorable terras. Penrose Industries suffered financial reverses, and was unable to pay the rent. Eventually, the Redevelopment Authority terminated the lease and successfully pressed litigation in the state courts to evict Penrose and terminate its interests in the property. While an appeal from this decision was pending, 1 the then Mayor, James H. J. Tate, during the concluding weeks of his term of office, authorized a new contractual arrangement with the Pen-rose interests; the general effect of this document would have been to waive the earlier defaults, reinstate Penrose as a tenant, and reinstate the original option agreement. The execution of this new agreement by the parties named therein was under way when the new Mayor, Frank L. Rizzo, took office in January 1972, but it had not yet been signed by Philadelphia Industrial Development Corporation (PIDC) which was a mortgagee of the property and a named party in both sets of agreements. PIDC refused to sign the new arrangement and it was promptly repudiated both by Mayor Rizzo and by the City Council. Thus, at that point, the City had won at least the first round of an eviction proceeding, and had obtained a very large judgment against Penrose Industries for unpaid rent and failure to maintain the property; Penrose Industries had at least some lingering rights to assert equitable defenses to the original foreclosure action and, if the “Tate agreement” were upheld as valid and enforceable, Penrose Industries had a long-term lease with option to purchase (at a price which did not reflect the substantial increases in land values which had occurred in the interim). Meanwhile, the property was vacant, was producing no current income, and was providing no jobs for city residents.

Moreover, the pendency of these unresolved issues prevented the City agencies from disposing of the property elsewhere. And they were aware that one Jerome Heilweil, owner of an enterprise known as Star Metals, Inc., was very anxious to acquire and occupy the tract; and that his firm, which was a substantial employer of local labor, would probably be forced to relocate outside of Philadelphia unless the Penrose tract could be made available to him.

It is clear that, during 1972 and 1973, efforts were being made at various levels to dispose of the Sylk/Penrose Industries claims through settlement. But there is sharp conflict in the testimony of various witnesses called by the Government, concerning who was in favor of, and who opposed to, a settlement of these claims. It is clear that Lynne Abraham, Esq. (now a judge of the Municipal Court of Philadelphia) selected by Mayor Rizzo to serve as Executive Director of the Redevelopment Authority, and who occupied the post of Executive Director from August 1972 to November 1973, was strongly opposed to making any payment to the Sylks, and that Isador Gottlieb, Esq., the RDA lawyer who had been handling the transaction throughout the entire period, and James Crawford, Esq., Ms. Abraham’s choice as general counsel to the RDA, were of the view that the Sylk/Penrose claims were utterly lacking in merit. Eventually, these three individuals came to the view that, in order to extricate the Authority promptly from the legal snarl perhaps a settlement in the range of $100,-000 to $200,000 should be negotiated.

Judge Abraham testified that, throughout this period, she was constantly being pressured by Philip Carroll, the Deputy Mayor, to settle with the Sylk interests for between $400,000 and $800,000. She testified that Mr. Carroll told her that the Sylks were valued contributors to the Democratic Party,' friendly to the Mayor; and that the Mayor contemplated running for Governor of the State, and needed all the friends he could get. She testified further that, when she complained to the Mayor about Mr. Carroll’s pressure, and advised him that the proposed payment to the Sylks would be totally improper and probably illegal, the Mayor chided her for not being a “team *198 player,” and intimated that she should follow Mr. Carroll’s suggestions with respect to the Sylk transaction. Both Mayor Rizzo and Deputy Mayor Carroll testified that no such pressure was exerted, and generally denied Judge Abraham’s testimony and its implications. They both testified that May- or Rizzo was at all times opposed to any settlement with the Sylks. Among other things, they pointed to the undisputed fact that, when the Mayor first learned that the Redevelopment Authority did settle with the Sylks in the fall of 1973, the Mayor issued blanket orders prohibiting the carrying out of the proposed settlement.

These conflicts in the testimony with respect to the correctness, desirability, and sponsorship of the settlement proposal have only marginal bearing upon the central issue in this case, namely, Mr. Salvitti’s involvement in the alleged kickback scheme. Mr. Salvitti became a member of the Board of the Redevelopment Authority some time in 1973, apparently in about September of that year. He became Executive Director of the Redevelopment Authority in December of 1973. There is some evidence that he had been in communication with Mr. Heilweil and had visited his plant before becoming Executive Director, but he denied any such earlier contacts. Be that as it may, when Mr. Salvitti became Executive Director, all of the issues surrounding the Penrose property remained unresolved. The Government’s theory of the case is that the defendant soon formed a plan to achieve a resolution of the impasse in a manner favorable to himself. Judge Abraham had been fired as Executive Director in November 1973, and Mr. Crawford, the general counsel, had announced his intention to resign in the near future (he actually departed in the spring of 1974). Mr. Gottlieb, the remaining principal obstacle to a generous settlement of the Sylk/Penrose claims, was in ill health. The defendant brought in a new lawyer, Peter Galante, Esq., to be “co-counsel” with Mr. Gottlieb in the Sylk transaction, preliminarily to naming Mr. Galante general counsel to the RDA. Shortly before Mr.

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Bluebook (online)
451 F. Supp. 195, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-salvitti-paed-1978.