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UNITED STATES v. DORFMAN
December 9, 1981
UNITED STATES OF AMERICA
ALLEN M. DORFMAN, ROY L. WILLIAMS, JOSEPH LOMBARDO, THOMAS F. O'MALLEY, AND ANDREW G. MASSA, ALSO KNOWN AS AMOS MASSA, DEFENDANTS.
The opinion of the court was delivered by: Marshall, District Judge.
Defendants in this case are charged in an eleven count
indictment with conspiring to commit bribery, travel in
interstate commerce with intent to commit bribery, and wire
fraud. Count I charges the defendants with conspiring to bribe
United States Senator Howard Cannon in order to obtain a
favorable disposition on pending legislation involving
deregulation of the trucking industry by securing for him the
right to purchase certain property owned by the Central States,
Southeast and Southwest Areas Pension Fund ("Fund") of the
International Brotherhood of Teamsters, Chauffeurs,
Warehousemen, and Helpers of America. Count II charges the
defendants with attempting to carry out that scheme. Counts III
through XI charge defendants with nine separate wire fraud
violations for attempting to defraud the Pension Fund of the
loyal services of two of the defendants, and attempting to
obtain money and property by false pretenses.
Defendants have filed numerous motions to dismiss all or part
of the charges against them. They claim in various motions,
apparently missing the irony of their position, that the
indictment fails to state any claim against them; that it is
too vague to permit them to understand the nature of the
charges; that it states two claims in each of nine counts and
is thereby "duplicitous"; and that it states the same claim in
a number of different counts and is thereby "multiplicious".
The government filed one consolidated response to these four
motions. We treat each of them separately in this opinion.
Defendants claim that paragraph 2(a) of Counts III through XI
of the indictment fails to state an offense under the wire
fraud statute, 18 U.S.C. § 1343 (1976). The indictment charges
that defendants engaged in a "scheme and artifice" designed to
deny the Fund and its pensioners of their right to the
conscientious, loyal and faithful services of defendants Thomas
F. O'Malley ("O'Malley") and Amos Massa ("Massa"). Both parties
agree, and the law is clear, that in order to state a wire
fraud offense of this type the government must allege four
elements: (1) the existence of a fiduciary duty; (2) a scheme
or plan to breach that duty; (3) a specific intent to defraud
the party to whom the duty is owed; and (4) use of the wires in
furtherance of that scheme. Defendants' Joint Memorandum in
Support at 3; Government's Consolidated Response at 11.
It is well settled, and defendants admit, that a scheme
designed to cause the loss of intangible rights or benefits,
including the loyal service of an employee, is actionable under
the wire fraud statute. See United States v. Von Barta,
635 F.2d 999 (2d Cir. 1980); United States v. Bohonus,
628 F.2d 1167 (9th Cir.), cert. denied, 447 U.S. 928, 100 S.Ct. 3026, 65
L.Ed.2d 1122 (1980); United States v. Bush, 522 F.2d 641, 648
(7th Cir. 1975), cert. denied, 424 U.S. 977, 96 S.Ct. 1484, 47
L.Ed.2d 748 (1976); United States v. George, 477 F.2d 508, 510
(7th Cir.), cert. denied, 414 U.S. 827, 94 S.Ct. 49, 38 L.Ed.2d
61 (1973). Defendants contend, however, that there is no
fiduciary duty owed by defendants O'Malley and Massa to the
Fund and that, if there were, it was not breached nor was any
We are obliged, on these preliminary motions, to treat the
allegations in the indictment as true and construe all the
facts in the light most favorable to the government. Boyce
Motor Lines, Inc. v. United States, 342 U.S. 337, 343 n. 16, 72
S.Ct. 329, 332 n. 16, 96 L.Ed. 367 (1953); Glasser v. United
States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1941); Von
Barta, 635 F.2d at 1002. Given this posture, it is apparent
that the defendants' motion is not well founded.
Defendant O'Malley is a Fund trustee and as such owes a
fiduciary duty to the Fund under common law, the ERISA statute,
29 U.S.C. § 1102, 1103 (1976), and the separate agreement
between the Fund and Victor Palmieri and Co. ("Palmieri"). See
Defendants' Exhibit A. Defendants claim that the agreement with
Palmieri relieved O'Malley and Massa of any duty they had with
respect to the Fund's assets. We have examined the agreement
and find that it in no way abrogates O'Malley's duty to act in
the Fund's best interest. In fact, if the agreement has any
effect, it appears to heighten the trustee's obligation not to
interfere in the process of distribution of the Fund's assets.
The trustees, under the agreement, maintain their
responsibility for compliance with ERISA and monitoring the
performance of the investment manager. Defendants' Exhibit A at
3. It is a fallacious argument for defendants to contend that
because the Fund established an independent manager to
distribute its real estate and other holdings, the Trustees
were free to ignore their fiduciary duties to the Fund and
interfere with that manager's best efforts to accomplish its
Defendant Massa is an employee of the Fund and a former
trustee. The legal standard for determining his duty to the
Fund depends on a variety of facts establishing the nature of
his relationship with his employer. Von Barta, 635 F.2d at
1007; United States v. Brown, 540 F.2d 364, 375 (8th Cir.
1976); Bush, 522 F.2d at 652. This is a factual question
requiring evidence at trial and not resolvable on a motion to
dismiss the indictment.
The same is true of the defendants' argument that there was
no breach of the fiduciary duty. Defendants are wrong in
asserting that "absent some harm actually occurring to the
beneficiary of a trust there is no breach of trust by the
trustee" for purposes of the wire fraud statute. The alleged
plan to deprive the Fund of faithful service — the scheme to
defraud it of O'Malley's and Massa's loyalty — constitutes an
offense under the wire fraud statute regardless of whether
there was any eventual financial loss to the Fund. See United
States v. Bronston, 658 F.2d 920, 927 (2d Cir. 1981); United
States v. Keane, 522 F.2d 534, 546 (7th Cir. 1975), cert.
denied, 424 U.S. 976,96 S.Ct. 1481, 47 L.Ed.2d 746 (1976);
United States v. Bryza, 522 F.2d 414 at 422; George, 477
F.2d at 510.
Finally, defendants argue that a mere breach of fiduciary
duty, without more, does not rise to the level of a criminal
violation. See Bush, 522 F.2d at 648. The statement is true
enough; however, here the government has alleged failure to
disclose material information and affirmative conduct designed
to deprive the Fund of relevant information which makes the
breach a criminal act. See Bronston, 658 F.2d at 926; Von
Barta, 635 F.2d at 1006; Bush, 522 F.2d at 649. Specifically,
the indictment charges them with trying to purchase the
property in question for Senator Howard Cannon, causing third
parties to withdraw their bids on the property, failing to
disclose the involvement of O'Malley and Massa in each of the
above, and failure to disclose the involvement of defendant
Allen Dorfman in the proposed purchase.
Defendants argue that there is no allegation that the
information withheld was material, that Palmieri had a right to
it, or that defendants did anything wrong in withholding it.
Defendants' Memorandum in Support at 15. That interpretation is
simply incorrect. The government has clearly alleged
defendants' position giving rise to a fiduciary duty which was
breached by the actions described above. What defendants are
really asking is for this court to hold as a matter of law that
none of this information was material to Palmieri's decision of
how to dispose of the property. Again, this is a factual
question not susceptible to resolution at this time. We leave
to the government its opportunity to prove the breach of a
legal duty and the materiality of information withheld. If the
government fails to establish either the relationship it has
alleged, the materiality of the information withheld, or
defendants' actions in concealing that information, defendants
can request a verdict at that time. At this stage it is clear
that the indictment states an offense in paragraph 2(a) of
Counts III through XI.
Defendants also attack Counts III through XI of the
indictment on the ground of "vagueness". They submit that
"after a thorough reading of the indictment" they are unable
"to reasonably know or understand the precise nature and scope
of the charges against them", thereby violating their fifth and
sixth amendment rights. In addressing this argument, we treat
separately paragraphs 2(a) and 2(b) of the counts in question.
The requirement that an indictment be reasonably specific
stems from two constitutional guarantees: the fifth amendment
right to indictment by grand jury and the sixth amendment
requirement that defendants be informed of the charges against
them. United States v. Hinkle, 637 F.2d 1154, 1157 (7th Cir.
1981). "The indictment must adequately apprise a defendant of
the charges against him so that he can prepare a defense.
Furthermore, it must establish a record that shows when a
defense of double jeopardy may be available in the event future
prosecutions are brought against him." Id. See Russell v.
United States, 369 U.S. 749, 82 S.Ct. 1038, 8 L.Ed.2d 240
(1962); United States v. Cecil, 608 F.2d 1294 (9th Cir. 1979);
United States v. Wabaunsee, 528 F.2d 1 (7th Cir. 1975). In
general, an indictment is sufficient if it tracks the language
of the statute which creates the offense, provided that the
of the statute set forth all of the elements necessary to
constitute the crime. Hamling v. United States, 418 U.S. 87,
117, 94 S.Ct. 2887, 2907, 41 L.Ed.2d 590 (1974). See also
United States v. Bailey, 444 U.S. 394, 100 S.Ct. 624, 636, 62
L.Ed.2d 575 (1980); United States v. Hinkle, supra; United
States v. Minick, 636 F.2d 181, 184 (7th Cir. 1980).
Defendants are charged in Counts III through XI with
violating the federal wire fraud statute, 18 U.S.C. § 1343
(1976), and each of the nine counts alleges a different
specific wire transmission as a separate offense. But the
telephone transmissions do not constitute an offense in and of
themselves; the offense is dependent on the underlying
fraudulent scheme which must also be alleged with sufficient
particularity to inform defendants of the charge made against
them. See United States v. Charnay, 537 F.2d 341, 352 (9th
Cir.), cert. denied, 429 U.S. 1000, 97 S.Ct. 527, 50 L.Ed.2d
610 (1976); United States v. Curtis, 506 F.2d 985, 989-90 (10th
Cir. 1974); United States v. Mandel, 415 F. Supp. 997, 1015-16
(D.Md. 1976), aff'd by an equally divided court, 602 F.2d 653
(4th Cir. 1979) (en banc) (per curiam), cert. denied
445 U.S. 961, 100 S.Ct. 1647, 64 L.Ed.2d 236 (1980); United States v.
DeSapio, 299 F. Supp. 436, 445-46 (S.D.N.Y. 1969).*fn1
It should be apparent from what we have said in section I of
this opinion, that paragraph 2(a), alleging a scheme to defraud
the Fund of the loyal services of O'Malley and Massa, is not
fatally vague. The indictment does far more than simply mirror
the language of the wire fraud statute prohibiting interstate
transmissions in furtherance of any "scheme or artifice to
defraud", see 18 U.S.C. § 1343; it specifically refers to the
victim of the fraud (the Fund), the nature of the scheme (to
deprive the Fund of the loyal services of two named
defendants), and the manner and means by which the fraud was to
be carried out (specific conversations with the object of
causing bids on Fund assets to be withdrawn and withholding
material information from the Fund's managers). Thus, this part
of the indictment is fundamentally different from those cases
cited by the defendants in which indictments have been
dismissed because, in merely reciting the language of the
statute, they failed to allege an essential element of the
crime, or failed to indicate the facts underlying the charge.
See e.g., United States v. Cecil; United States v. Keith,
605 F.2d 462 (9th Cir. 1979); United States v. Curtis.
Paragraph 2(b), however, presents more serious problems. It
states simply that defendants engaged in a "scheme or
artifice * * * [t]o obtain money and property by means of
fraudulent pretenses and representations." Indictment, Count
III, ¶ 2. The final paragraph of each count includes a specific
interstate wire transmission "for the purposes of executing"
the scheme. Id. It does not allege any facts detailing who the
victim of the alleged fraud was, what property is referred to,
or how the property was to be obtained. Standing alone, the
paragraph clearly would not meet the constitutional
requirements of fair notice of the facts underlying the
charge.*fn2 Russell v. United States, 369 U.S. at 765-66, 82
S.Ct. at 1047-48; see also Curtis; Mandel; DeSapio. But we do
not judge the sufficiency of the indictment by the details of
the charging paragraph alone; "in evaluating the sufficiency of
an indictment, common sense and reason prevail over
technicalities." United States v. Climatemp, Inc., 482 F. Supp. 376,
382 (N.D.Ill. 1979). The indictment must be
viewed as a whole to determine if adequate notice of the
fraudulent scheme is presented. See United States v. Strauss,
452 F.2d 375, 379 (7th Cir. 1971), cert. denied, 405 U.S. 989,
92 S.Ct. 1252, 31 L.Ed.2d 455 (1972); United States v.
Climatemp, 482 F. Supp. at 382; United States v. Dorfman,
335 F. Supp. 675, 678 (S.D.N.Y. 1971).
In construing the indictment we are mindful of the fact that
the government is not required to present a model indictment in
every case, nor must it provide all the details of the offense
in the charging papers. United States v. Conlon, 628 F.2d 150,
155-56 (D.C. Cir. 1980).
The true test of the sufficiency of an indictment
is not whether it could have been made more
definite and certain, but whether it contains the
elements of the offense intended to be charged,
["] and sufficiently apprises the defendant of
what he must be prepared to meet, and, in case any
other proceedings are taken against him for a
similar offense, whether the record shows with
accuracy to what extent he may plead a former
acquittal or conviction.["] Cochran and Sayre v.
United States, 157 U.S. 286, 290 [15 S.Ct. 628,
630, 39 L.Ed. 704], . . .; Rosen v. United States,
161 U.S. 29, 34 [16 S.Ct. 434, 435, 40 L.Ed. 606].
United States ...