UNITED STATES of America, Appellee, v. Frank J. Sacco, a/k/a “St. Francis Sacco,” Frank Armento III, a/k/a “Robert Simone,” and Lewis NOVOD, Defendants, Lewis Novod, Defendant-Appellant.
No. 1179, Docket 90-1002.
United States Court of Appeals, Second Circuit.
Argued May 3, 1990. Decided Jan. 17, 1991.
Rehearing Granted March 11, 1991.
923 F.2d 970
Anthony J. Ferrara, New York City (Polstein & Ferrara, New York City, Robert Polstein, and Joseph Bilotta, of counsel), for defendant-appellant.
LUMBARD, Circuit Judge:
Lewis Novod appeals his conviction on seven counts of perjury, six counts of mail fraud, seven counts of wire fraud, and one count of conspiracy following a December 1989 jury trial in the District Court for the Southern District of New York. He was acquitted of three counts of mail fraud and one count of perjury. Judge Vincent L. Broderick imposed concurrent sentences of ten months’ imprisonment followed by three years’ supervised release. We affirm the perjury and conspiracy counts, and reverse the conviction on the wire and mail fraud counts.
Novod was indicted and tried for his part in assisting Frank Sacco and his nephew, Frank Armento, in their fraudulent attempt to obtain a permit to operate a waste dumpsite in New York State. Sacco and Armento owned and operated five such dumpsites throughout the State in the 1980s. In 1987, the State‘s Department of Environmental Conservation (“NYSDEC“) closed three of those sites, located in Ramapo, Cornwall, and Tuxedo, for violations of New York environmental law. NYSDEC also required Sacco to post a $4.5 million bond for the cleanup at the Tuxedo site. In 1988, NYSDEC closed the other two sites, located in Kent and Patterson, New York.
In 1988, Sacco and Armento agreed to purchase a nineteen-acre dumpsite in Montgomery, New York for $1 million. The purchase agreement was contingent upon the transfer of the site‘s current dumping permit—under which its owners were allowed to dispose of construction and demolition debris at the property—to Sacco and Armento. Aware of their reputation with State officials because of their history of dumpsite violations, Sacco and Armento formed the Disposal Enterprise Corporation (“DEC“) to conduct the purchase and thereby conceal their identities. They also enlisted Stanley Dulman and Samuel Miller to serve as “front men,” and later hired Novod as their attorney. Novod had previously represented Armento in matters related to violations at the Kent and Patterson sites.
At a meeting in July, Ferry told Novod that Armento and Sacco had recently been found in violation of the environmental laws. She advised Novod that NYSDEC would require Miller, on DEC‘s behalf, to sign an affidavit stating that neither he nor DEC had any relationship with Armento or Athena I. Although, after reading the proposed affidavit, Miller was concerned about its inclusion of a statement that he had no business relationship with Armento, Novod instructed him to sign anyway. According to Miller, Novod “told me that I had no business dealing with Frank Armento, [that] I hadn‘t had one; and that it was no problem, to just sign [the affidavit] and mail it back to him.” As submitted to NYSDEC, Miller‘s affidavit was notarized by Novod‘s signature and notary stamp.
In September 1988, Novod testified, under subpoena, before the grand jury investigating Sacco‘s possible environmental violations and repeatedly denied knowledge of Sacco‘s and Armento‘s ties to DEC. For example, he stated, in response to a question, that Sacco has “no hidden interest” in DEC. He also denied that Armento had “anything to do with” DEC.
On October 7, 1988, the grand jury returned a sixteen-count indictment against Novod, Sacco and Armento. Novod was named in three of the counts, alleging mail fraud in violation of
Before the court decided Novod‘s motion, the grand jury found a twenty-seven-count superseding indictment against Novod on April 19.1 Count One alleged a conspiracy to defraud the United States in violation of
In an August 25 memorandum and order, Chief Judge Brieant dismissed two of the perjury counts but denied the motion as to the others. Addressing Novod‘s argument on the fraud counts, the court concluded that the indictment alleged that the scheme sought to obtain sufficiently tangible property to satisfy McNally.
At trial, pursuant to
Novod raises four substantive challenges to his conviction: first, that the object of the alleged conspiracy was not “property” under the fraud statutes; second, that evidence was erroneously admitted evidence relating to his co-conspirators’ past environmental violations; third, that he was denied a fair trial; and fourth, that the impaneling of a juror who resided outside the Southern District violated his sixth amendment rights.
I.
Novod contends that the district court erred by instructing the jury that it could convict solely on a finding that the scheme sought to obtain the dumping permit and by not requiring a finding that the scheme sought to cause a pecuniary loss to the State. The author of this opinion and Judge Winter disagree, but nevertheless reverse Novod‘s conviction as to the mail and wire fraud counts because we feel bound by United States v. Schwartz, 924 F.2d 410, 416-18 (2nd Cir.1991), which held that a permit to export goods was not “property” within the meaning of the
The mail fraud statute prohibits, in pertinent part, the use of the mails in furtherance of “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.”
Clarifying that holding the next term in Carpenter v. United States, 484 U.S. 19, 108 S.Ct. 316, 98 L.Ed. 2d 275 (1987), the Court held that a scheme to purloin confidential information from The Wall Street Journal was properly prosecuted under the mail and wire fraud statutes. The “intangible nature” of the information did not “make it any less ‘property’ protected by the mail and wire fraud statutes,” the Court reasoned, and it concluded, ”McNally did not limit the scope of
Novod argues that NYSDEC‘s interest in the dumping permit, which it issues in an effort to control environmental waste, is similarly “ancillary to regulation.” We believe, however, that the permit satisfies the requisites of “property” under the statutes. Unlike in Evans and Corcoran, Novod and his co-conspirators sought to obtain something tangible from the State. The defendants in those cases sought arms for international sale and insurance monies, and although the Government strictly regulated those fields, the property fraudulently obtained did not belong to the Government. Rather, the property belonged to private parties; the Government‘s interest was solely in controlling the use of the property by those private parties and by others. In contrast, the dumping permit originates with NYSDEC; the decision whether to grant it to an applicant rests solely with the agency. By submitting to that application procedure, moreover, the applicant implies that it wants something that only NYSDEC has and can give. Without the agency‘s assent, the permit remains with the agency. The process is tantamount to a contractual transaction where a buyer and seller agree on a mutually satisfactory exchange of consideration. Here, NYSDEC‘s offer to “sell” the permit to Novod and his co-conspirators was contingent on its first extracting from the “buyers” certain promises affecting how the permit would be used. The bargained-for exchange, in essence, would have been permit for promise.
Thus construed, the permit constitutes property within the reach of the fraud statutes. Novod would have us believe that
In reaching this conclusion, we reject Novod‘s implicit contention that a government has no property interest in the various forms of largess it bestows. The recipient of such largess has an undeniable property interest, see, e.g., Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970); the state‘s interest prior to conferring it is equally compelling. In United States v. Turoff, 701 F.Supp. 981 (E.D.N.Y. 1988), for example, the court held that New York City taxi medallions—licenses to operate taxicabs in the City—were “property” under the fraud statutes. Responding to the assertion that the medallions, as a form of public licensure, had no value in the government‘s hands, the court stated:
The sovereign can buy and sell and manufacture and derive proceeds ... only by virtue of the power it possesses as sovereign—namely its police power, its power to tax, etc.... To rob the sovereign of the due exercise of that power by schemes or artifices to defraud, is to rob it of “property” as surely as the goods or chattels or money obtained from a private person by similar schemes or artifices.
Id. at 989. As the court noted, the fact that certain rights—there, the right to operate a taxicab; here, the right to operate a dumpsite—become vested in the licensee upon conveyance by the government does not prevent the corollary conclusion that the license “originate[s] in the state” and is public property prior to being granted to a private party. Id. at 990; see also United States v. Martinez, 905 F.2d 709, 712-715 (3d Cir.1990); United States v. Paccione, 738 F.Supp. 691 (S.D.N.Y.1990). See generally Reich, The New Property, 73 Yale L.J. 733 (1964).
We realize that our decision is at odds with the law in several other circuits, see, e.g., United States v. Granberry, 908 F.2d 278, 280 (8th Cir.1990) (school bus operator permit is not “property” under the wire or fraud statutes); United States v. Kato, 878 F.2d 267, 268-69 (9th Cir.1989) (federal pilot licenses not property before government issuance); Toulabi v. United States, 875 F.2d 122, 125 (7th Cir.1989) (taxi drivers’ license, in city government‘s hands, “is a promise not to interfere rather than a sliver of property“); United States v. Murphy, 836 F.2d 248, 254 (6th Cir.) (“unissued certificate of registration [to conduct bingo games] is not property of the State of Tennessee“), cert. denied, 488 U.S. 924, 109 S.Ct. 307, 102 L.Ed.2d 325 (1988); but see United States v. Martinez, 905 F.2d 709, 713-15 (3d Cir.1990) (state issued license to practice medicine held to constitute “property“). In our view, the contrary decisions misconstrue McNally and its repudiation of the “intangible rights” doctrine. Prior to that case, prosecutors regularly used the fraud statutes to combat
II.
Novod contends that the district court erroneously allowed Ferry, the NYSDEC attorney and a central Government witness, to testify to Sacco‘s and Armento‘s prior violations of environmental law. Specifically, he objects to her testimony that in 1987 and 1988, NYSDEC forced Sacco to cease operations at several dumpsites in New York because of violations and that the cleanup of the Tuxedo site would cost $4.5 million. Novod objected to the testimony, arguing that it created a “prejudicial atmosphere of guilt by innuendo.” The objections were overruled. We agree with the Government that the court‘s rulings were proper.
First, insofar as other evidence demonstrated Novod‘s awareness of the prior violations, Ferry‘s testimony established his motive for helping Sacco and Armento obtain the permit surreptitiously. During Armento‘s testimony, for example, the following exchange took place:
Q. Did you have a conversation with the defendant about the [Montgomery, New York] site?
A. Yes, I did mention it to him.
Q. When was that?
A. That was sometime shortly after the other sites had been closed down, and I guess it was early April.
Q. What did you tell him?
A. I told him that I had this site, and [Sacco] and I were looking to purchase it; ... and that we were having a little bit of a problem getting the permit transferred....
Q. Did you tell him what your problem was?
A. Well, I told him that the problem was going to be if [NYSDEC] knew that either myself or Frank Sacco were involved ... the permit wouldn‘t be issued to us ... because we had both by this time been blackballed by [NYSDEC].
Other testimony revealed that Novod had represented Sacco and Armento in matters relating to several of the dumpsites closed by NYSDEC because of those prior violations. Additionally, Ferry testified that she informed Novod that Sacco and Armento had operated certain dumpsites that “had to be closed for violations” and that any involvement by them with the present application could cause it to be disapproved.
“[E]vidence of prior crimes, wrongs, or acts is admissible for any purpose other than to show a defendant‘s criminal propensity,” as long as it is “relevant to some disputed issue in the trial” and satisfies the probative-prejudice balancing test of
Fed.R.Evid. 403 .... “Other crimes” evidence may be admitted to complete the story of the crimes charged.
United States v. Diaz, 878 F.2d 608, 615 (2d Cir.), cert. denied, 493 U.S. 993, 110 S.Ct. 543, 107 L.Ed.2d 540 (1989) (citations omitted). Moreover, where such evidence concerns the prior acts of co-conspirators, there is little danger of the prejudice envisioned by
Second, Ferry‘s testimony was admissible for the additional purpose of proving that New York would have suffered a pecuniary loss had DEC been granted the permit. As noted, the superseding indictment alleged three possible theories of “property” of which the conspirators sought to defraud the State, one of which was the clean-up costs and litigation expenses incident to the operation of the dumpsite. By seeking admission of the disputed evidence, the Government sought to prove that Sacco and Armento had previously operated such dumps unlawfully and that they would cause the State to incur the alleged costs were they to operate the Montgomery dump in a similar fashion. Although we agree with Novod that the Government‘s proof of this contention was insufficient, we nonetheless find that the admission of the testimony, as the Government attempted to make sufficient proof, was proper. At the time, the court had not yet decided not to charge the jury on this theory. The court did not inform the parties that it would so charge until its ruling on Novod‘s
Third, we do not believe Novod was prejudiced by admission of the disputed evidence. He argues that the testimony was “inflammatory” and “highly prejudicial” but does not convincingly demonstrate how. The evidence was relevant to show the nature and background of the activities of the conspiracy. Further, the district court was careful to strike testimony involving Sacco‘s other prior misdeeds that were clearly of no relevance to Novod, such as his failure to file tax returns.
Still, as Novod contends, not all of the admitted testimony concerned environmental violations of which Novod was directly aware; much of it related to his general awareness of Sacco and Armento‘s prior violations but did not indicate that he was aware of the specific dumpsites for which they were cited. Evidence about specific events that Novod knew nothing about is of questionable relevance to Novod‘s motivation either for participating in the scheme to obtain the permit fraudulently or for covering up his clients’ ties to DEC before the grand jury. Nonetheless, we are satisfied that the court did not abuse its wide discretion in allowing the testimony. “‘[D]eterminations of relevance are entrusted to the sound discretion of the trial judge, and his decision will not be overturned unless he has acted arbitrarily or irrationally.‘” Diaz, 878 F.2d at 614 (citations omitted). And although the court did not give a limiting instruction, the record indicates that Novod did not seek one, despite his previous objections to the testimony. “The established rule is that if a party objects but does not request a limiting instruction, he cannot complain of failure to give the instruction on review.” 21 C. Wright & K. Graham, Federal Prac-
III.
In response to questioning during voir dire, one potential juror stated that she resided in Ulster County, which, until 1978, had been in the Southern District but since then has been part of the Northern District.6 Neither party objected to her service, and she was impaneled and served as a juror. At the close of trial, after Judge Broderick had completed most of his jury instructions, a Government case agent informed the court during a colloquy that Ulster County was outside the Southern District. Although the colloquy dealt with the venue of the defendant‘s criminal acts, not with the jurors’ residences, neither party objected to the juror‘s impanelment or requested that she be disqualified from participating in deliberations. Following the verdict, however, Novod moved for a new trial, contending that the impanelment of the juror violated his sixth amendment right to a trial “by an impartial jury of the State and district wherein the crime shall have been committed.” The court, noting that Novod failed to make a timely objection before the jury commenced its deliberations, denied the motion.
Novod now contends that his failure to object was not a knowing and voluntary waiver of his constitutional right because his trial counsel did not realize the true boundaries of the Southern District. We agree with the district court‘s conclusion that the right to challenge the juror was waived. Novod did not object when the juror first identified her county of residence; nor did he do so once he became aware of the actual boundaries of the Southern District during the colloquy. Had timely objection been made prior to the jury‘s deliberations, the court could have substituted an alternate juror. There is no claim that the juror was not otherwise qualified to serve. Absent some such showing of prejudice, the failure of Novod‘s counsel to recognize the residence issue and make a timely objection prevents Novod from raising the issue after trial and a jury verdict. See generally Davis v. United States, 411 U.S. 233, 93 S.Ct. 1577, 36 L.Ed.2d 216 (1973); United States v. Levasseur, 816 F.2d 37, 45 (2d Cir.1987).
IV.
Novod‘s contentions that he was denied a fair trial because the Government filed the superseding indictment solely to defeat his pending motion to dismiss, and that Judge Broderick violated the law of the case by disregarding a prior ruling of Chief Judge Brieant concerning that essential element do not merit discussion.
The mail and wire fraud counts are reversed, and the perjury and conspiracy counts are affirmed.
FEINBERG, Circuit Judge, concurring:
I join in the majority‘s opinion except for Part I, in which the majority explains why it disagrees with this court‘s decision in United States v. Schwartz, 924 F.2d 410. As to Part I, I concur only in the result; unlike the majority, I agree with the analysis in Schwartz of