X United States of America CR
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Case 1:06-cr-00072-JBW Document 45 Filed 07/18/07 Page 1 of 40 PageID #: <pageID> UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------X United States of America CR–06-0072 (CPS) - against - MEMORANDUM OPINION AND ORDER John Gammarano and William Scotto, Defendants. ----------------------------------------X SIFTON, Senior Judge. Defendants John Gammarano and William Scotto were indicted on November 30, 20061 and charged with one count of racketeering, in violation of 18 U.S.C. § 1962(c),2 one count of racketeering conspiracy, in violation of 18 U.S.C. § 1962(d),3 and one count of securities fraud conspiracy, in violation of Securities and 1 The indictment was unsealed on December 12, 2006. 2 The statute reads: It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt. 18 U.S.C. § 1962(c). The predicate acts constituting the pattern of racketeering activity are described below. 3 The statute reads: “It shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section.” 18 U.S.C. § 1962(d). Case 1:06-cr-00072-JBW Document 45 Filed 07/18/07 Page 2 of 40 PageID #: <pageID> -2- Exchange Commission Rule 10b-5 (17 CFR § 240.10b-5),4 15 U.S.C. § 78j(b),5 15 U.S.C. § 78ff,6 and 18 U.S.C. § 371. Now before this Court are (1) the government’s motion for an anonymous and partially sequestered jury; (2) defendant Scotto’s motion for 4 The regulation reads: It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange, (a) To employ any device, scheme, or artifice to defraud, (b) To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. 17 CFR § 240.10b-5. 5 The statute reads, in relevant part: It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange . (b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act), any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors. 15 U.S.C. § 78j(b). 6 The statute reads, in relevant part: Any person who willfully violates any provision of this chapter . or any rule or regulation thereunder the violation of which is made unlawful or the observance of which is required under the terms of this chapter, or any person who willfully and knowingly makes, or causes to be made, any statement in any application, report, or document required to be filed under this chapter or any rule or regulation thereunder . which statement was false or misleading with respect to any material fact, shall [be guilty of a crime].” 15 U.S.C. § 78jff. Case 1:06-cr-00072-JBW Document 45 Filed 07/18/07 Page 3 of 40 PageID #: <pageID> -3- severance; and (3) both defendants’ motion for production of a bill of particulars.7 For the reasons set forth below, (1) the government’s motion for an anonymous and partially sequestered jury is granted; (2) defendant Scotto’s motion for severance is denied; and (3) both defendants’ motion for production of a bill of particulars is denied. Background The following facts are derived from the indictment and from the submissions of the parties in connection with these motions. Disputes are noted. According to the government, defendants are members of the Gambino crime family8 and between them committed five predicate 7 Additional pre-trial motions were made by the parties and decided at oral argument on July 10, 2007. Specifically, (1) I denied the government’s motion to exclude evidence about defendant Gammarano’s health, but directed defendants to make no reference to defendant’s health without first making an application to that effect; (2) I denied defendants’ motion for production of the government’s witness list, which is subject to disclosure at the Pre-trial Conference; (3) I denied defendants’ request for production of a list of recordings and trial exhibits, but ordered the government to produce draft transcripts of the recordings by July 20; (4) the government agreed to produce the results of tests, examinations and analysis, pursuant to defendants’ request; (5) the government agreed to preserve notes made by law enforcement agents pursuant to defendants’ request; and (6) I denied without prejudice both parties’ motions for leave to file additional motions. I also instructed the government that if they will seek to not disclose the identity of John Doe at the Pre-trial Conference, they make a motion to that effect, returnable on the date of that conference. 8 The structure of the Gambino criminal family has been detailed in other cases in this Circuit and in the indictment. As the Second Circuit has noted: Most of the Family's criminal activity is carried out by crews of ‘soldiers,’ often with the assistance of ‘associates,’ who are not members of the Family. Each crew is directed by a ‘captain’. The captains, in turn, report to a ‘consiglieri,’ who is the Case 1:06-cr-00072-JBW Document 45 Filed 07/18/07 Page 4 of 40 PageID #: <pageID> -4- acts of racketeering between 1982 and 2003 which underlie the three charges in the indictment.9 Racketeering Act One alleged in the indictment has two parts. The first part is defendants’ participation, between 1995 and 2003, in a securities fraud conspiracy organized by associates of the Gambino family, in violation of Rule 10b-5. As part of the conspiracy, stock was fraudulently marketed to customers by lying about the real value of the securities and by failing to disclose that the sellers were being paid illegal commissions to sell the stock. Customers who purchased stock were then prevented from selling; when the stock later dropped in value, customers lost their investments. The indictment refers to three overt acts committed in furtherance of this securities fraud conspiracy: (1) between February 2000 and March 2000, undisclosed co-conspirator #1,10 who owned over 100,000 shares of a company called GlobalNet, Inc., paid brokers undisclosed cash commissions to sell shares of GlobalNet stock in order to inflate third-ranking member of the Family, with responsibility for day-to-day operations. Family rules dictate that a member may not engage in any criminal activity without the approval of his superior. U.S. v. Gallo, 863 F.2d 185, 187-88 (2d Cir. 1988). According to the indictment, the head of the family is the ‘boss,’ and an ‘underboss’ and the ‘consiglieri’ report to him; collectively, these three individuals are referred to as the ‘administration.’ 9 Defendants participation in the securities conspiracy came to light during the testimony of Joseph Quattrochi at the 2005 trial of John A. Gotti, described in more detail below. 10 The identity of this co-conspirator is known to the Grand Jury. Case 1:06-cr-00072-JBW Document 45 Filed 07/18/07 Page 5 of 40 PageID #: <pageID> -5- the value of the stock; (2) in March 2003, Gammarano was paid $5,000 by undisclosed co-conspirator #2,11 which was a portion of the proceeds from a fraudulent securities deal involving an entity known as “Jaguar”; and (3) in June 2003, Gammarano and Scotto attended a meeting at which they discussed with co- conspirator #2 and others a dispute which had arisen among the conspirators regarding the Jaguar deal. The second part of Racketeering Act One alleges defendants’ participation in an extortion conspiracy, in violation of 18 U.S.C. § 1951(a) (interference with commerce by threats or violence). According to the indictment, in 1995 Gammarano caused threats of violence to be made to John Fiero, a stockbroker whose purchases and sales of stock were frustrating the goals of the securities fraud conspiracy, by ordering Scotto to threaten violence against Fiero, which Scotto did. Racketeering Act Two in the indictment alleges that Gammarano participated in an extortion conspiracy in 1995. According to the government, Gammarano demanded that the partners of First Hanover Securities, Inc., pay him money and threatened violence if they did not comply, in violation of 18 U.S.C. § 1951(a). This demand was the culmination of a dispute that one of the First Hanover partners had with another individual who was ‘backed’ by organized crime figures. 11 The identity of this co-conspirator is known to the Grand Jury. Case 1:06-cr-00072-JBW Document 45 Filed 07/18/07 Page 6 of 40 PageID #: <pageID> -6- Racketeering Act Three alleges that Scotto attempted to extort John Doe12 in 1994 and then assaulted John Doe after John Doe refused Scotto’s demand to pay him money, in violation of 18 U.S.C.