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United States v. Scalzo

decided*fn*: September 1, 1983.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
DOM SCALZO, JAMES SCALZO AND GARY SCALZO, DEFENDANTS-APPELLANTS



Appeal from the United States District Court for the Western District of Wisconsin. No. 82-CR-9 -- Barbara B. Crabb, Judge.

Cudahy and Eschbach, Circuit Judges, and Gray, Senior District Judge.*fn**

Author: Cudahy

CUDAHY, Circuit Judge.

Appellants, Dom Scalzo, James Scalzo and Gary Scalzo, appeal the sentences imposed upon them following a plea agreement. They charge that the presentence investigation reports prepared for each of them, and especially the use of information contained in a confidential report, violated their rights under Fed. R. Crim. P. 32(c)(3). We affirm the judgment of the district court.

I.

The appellants, Dom Scalzo, James Scalzo and Gary Scalzo, were indicted in February 1982 for violations of 18 U.S.C. § 2315 (sale or receipt of stolen goods).*fn1 On June 7, 1982, the three were charged in a superseding information with a one-count violation of 18 U.S.C. § 371, for conspiracy to violate section 2315 by agreeing to receive, store and sell merchandise involved in interstate commerce which they knew to have been stolen. They pleaded guilty.

A presentence investigation report in relation to each defendant was prepared by Probation Officer Jack R. Verhagen to assist Judge Crabb in sentencing. Mr. Verhagen made the report available to the defendants and their counsel on August 3, 1982, and they reviewed its contents on August 18. However, an additional section of the presentence report -- a section based on information obtained upon a promise of confidentiality -- was not disclosed to the defendants or their counsel, nor were they apprised of its existence before the sentencing hearing took place. The defendants, however, did submit supplementary information and objections to the presentence report as it had been disclosed to them and filed motions to strike portions which they considered to be false or based on sources which were not credible.

The Scalzos were sentenced at a hearing which took place before Judge Crabb on September 2, 1982. At the beginning of the hearing, Judge Crabb made a statement in which she disclosed the existence of the confidential report,*fn2 explained its necessity, and summarized the material contained within it upon which she had relied in sentencing:

First of all, I want to inform you that I have received the confidential report from the United States probation officer involving statements of certain individuals who provided information to the probation officer either on their own initiative or after contact with those individuals had been suggested by the resident FBI agent. The individuals who provided this information did so with the understanding that their names would not be disclosed as they expressed fear of retaliation.

The information provided reveals that at least one person has directly overheard James Scalzo discuss the receipt and resale of snowmobiles and lawn tractors which James Scalzo knew to be stolen. Another individual provided information that he had personally observed James and Gary Scalzo unloading at Scalzo Enterprises what appeared to be stolen lawn tractors.

Record at 4. Judge Crabb also discussed the information contained in the report -- both confidential and as originally disclosed -- indicating the material upon which she had relied and portions which she had disregarded:

Essentially what I looked for in the presentence report for each of the defendants is the answer to the question whether the charges to which they had pled guilty concern two isolated events or whether they represent a pattern of behavior engaged in over a period of time.

My view is that these events appear to be part of a pattern of behavior and I base this conclusion on these factors. First of all, it seems very clear that there was an additional load of hides besides the one to which they have pleaded guilty. There is quite a bit of evidence to indicate that stolen chemicals were received by the Scalzos; not Robert Scalzo, but Dom, Gary and James.

The evidence in support of this comes from the statements that are quoted in the presentence report from Terry Lee Jensen, Gary's admission that he was aware that stolen chemicals were received and Dom's admission that Bagley was a frequent visitor. There is quite a bit of evidence that the Scalzos again, not including Robert, were involved in the receipt and resale of stolen golf carts, lawn tractors and snowmobiles. The evidence in support of this is again Terry Jensen -- the incident in which stolen golf carts were discovered at a golf course after apparently the roof had fallen in at the clubhouse . . . . again Dom Scalzo's admission that Bagley was a frequent visitor and the other confidential information that I've referred to earlier that Jim and Gary Scalzo had been seen unloading carts at Scalzo Enterprises and confidential information that James Scalzo had been overheard discussing the receipt of stolen lawn tractors.

Record at 4-6.

Each defendant was then called separately for sentencing. Each admitted that he and his counsel had reviewed the presentence report. Gary Scalzo's attorney made several objections. First, he stated that he had not known of the existence of a confidential report and argued that there was an insufficient showing of the necessity for non-disclosure. Second, he challenged the judge's assertion that Gary Scalzo had made any admission in relation to the receipt of stolen chemicals. Third, he asked to be allowed to cross-examine the Probation Officer, Mr. Verhagen, about the reliability and credibility of both the confidential informants and of Terry Lee Jensen. Judge Crabb, pointing out that Officer Verhagen had interviewed all of the informants himself and that Jensen's information was offered as a declaration against penal interest and was only relied upon to the extent that it described his personal involvement in the criminal scheme, denied the request to cross-examine Verhagen.

James Scalzo's counsel requested that he be allowed to see the confidential section of the presentence report under conditions which would protect its confidentiality. The court denied this request. He also objected to the fact that the individual presentence report frequently referred to conduct and activity by "the Scalzos" and thus was a group rather than individual assessment.*fn3 Dom Scalzo's attorney endorsed the arguments made by the other two attorneys.

Gary Scalzo was sentenced to two and a half years incarceration and a $10,000 fine. James Scalzo was sentenced to three years incarceration and a $10,000 fine. Dom Scalzo was sentenced to six months incarceration, three years probation, a $10,000 fine and restitution totalling $71,711. The maximum sentence for a conviction under 18 U.S.C. § 371 is five years incarceration and a $10,000 fine. In this appeal, the Scalzos ask that we reverse the judgment and remand the case for resentencing, on grounds related to the district court's use of both the confidential report and the presentence report which was disclosed to the defendants. With respect to the confidential report, appellants charge that there was an insufficient showing that nondisclosure was necessary and they contend that the summary provided by the trial judge was inadequate. As to the presentence report which was disclosed, they challenge the judge's assertion that Gary Scalzo ever admitted receipt of stolen chemicals; they raise several general issues about the credibility of the informants and the reliability of the information upon which Officer Verhagen based the report; and they argue ...


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