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U.S. v. PRESBITERO DRYWALL COMPANY

March 21, 2003

UNITED STATES OF AMERICA, PLAINTIFF,
v.
PRESBITERO DRYWALL COMPANY, INC., DEFENDANT.



The opinion of the court was delivered by: John W. Darrah, United States District Judge

MEMORANDUM OPINION AND ORDER

Defendants, Ronald J. Presbitero ("Ronald Presbitero") and Presbitero Drywall Company, Incorporated ("Presbitero Drywall"), were charged by a thirteen-count indictment of violating 18 U.S.C. § 1027. The indictment alleged the following underlying facts. Presbitero Drywall was an employer of drywall installers and a signatory to collective bargaining agreements ("CBA") with the Chicago and Northeast Illinois District Council of Carpenters Union ("Union"). Each of the CBAs required Presbitero pay particular amounts to the Chicago District Council of Carpenters Pension, Welfare, and Apprentice and Training Program Funds ("Trust Funds") each month on behalf of employees and subcontractors covered by the CBAs. The payments were based upon the number of hours and days worked by each covered employee and subcontractor.

Each month, Presbitero Drywall was required by the CBAs to file a monthly report, the Fringe Benefits Funds Report, identifying the individual drywall installation employees and subcontractors working for Presbitero Drywall and the number of hours worked by each and to submit to the Trust Funds each month all the required contributions to the Trust Funds for these employees and subcontractors.

The Trust Funds were required to publish and file annual financial reports, known as Form 5500 Reports, with the United States Secretary of Labor pursuant to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). ERISA also required that the Trust Funds keep and maintain all documents necessary to verify, explain, clarify, and check for accuracy and completeness the annual Form 5500 Reports. The Trust Funds caused an audit to be conducted to verify the accuracy of Presbitero's monthly Fringe Benefits Funds Reports. During the audit, the Defendants concealed information that prevented the auditors from determining the actual number of hours worked by the drywall installation workers.

Four counts charged that the Defendants engaged in a mail fraud scheme to defraud the Trust Funds and the members of the Union who were participants in the Trust Funds. The indictment charged that the Defendants knowingly underreported the number of hours worked by drywall installation employees and the amount of pension and welfare benefits due to the Trust Funds. Nine counts of the indictment charged that the Defendants knowingly caused the filing of false pension and welfare benefit plan information with the United States Department of Labor and caused false information to be included in records required to be maintained by employee benefit plans. The indictment charged that the Defendants caused false information to be filed with the Department of Labor by submitting false information to an auditor for the Trust Funds and by submitting false monthly Fringe Benefit Fund Reports to the Union Trust Funds.

The case was tried before a jury in October and November 2002. Prior to the jury receiving the case, Counts I and Counts VT through XIII were dismissed. Accordingly, Counts II through V remained. Count II alleged tat the Defendants knowingly made false monthly Fringe Benefits Funds Reports for the months of July 1995 through June 1996 concerning required contributions to the Chicago District Council of Carpenters Pension Fund ("Pension Fund"). Count III alleged that the Defendants knowingly made false monthly Fringe Benefits Funds Reports for the months of July 1995 through June 1996 concerning required contributions to the Chicago District Council of Carpenters Welfare Fund ("Welfare Fund"). Count TV alleged that the Defendants knowingly made false monthly Fringe Benefits Funds Reports for the months of July 1996 through June 1997 concerning required contributions to the Pension Fund. Count V alleged that the Defendants knowingly made false monthly Fringe Benefits Funds Reports for the months of July 1996 through June 1997 concerning required contributions to the Welfare Fund.

On November 7, 2002, ajuryreturned a verdict of not guilty on the remaining counts in favor of Ronald Presbitero. Thejury returned a verdict of guilty on Counts II through V against Presbitero Drywall. Presently before the Court is Presbitero Drywall's Motion for Acquittal, Motion for Arrest of Judgment or, in the alternative, Motion for a New Trial.

Presbitero Drywall first moves for a judgment of acquittal, arguing that the credible trial evidence established that the underreported hours were attributable to subcontractors and that Presbitero Drywall did not have to report hours worked by these subcontractors.

A motion for judgment of acquittal should only be granted if there is insufficient evidence to sustain the conviction. See United States v. 0 "tIara, 301 F.3d 563, 569 (7th Cir. 2002) (0 "Hara). The evidence is viewed in the light most favorable to the prosecution, and a conviction will only be overturned if the record contains no evidence on which a rational jury could have returned a guilty verdict. See O'Hara, 301 F.3d at 569-70.

Presbitero Drywall's argument, that the subcontractors' work hours did not have to be reported, is only reached if there was no competent evidence for the jury to determine that all of the work performed for Presbitero Drywall was actually done by employees of Presbitero Drywall.

At trial, the Government introduced evidence controverting Presbitero Drywall's purported use of such contractors. Two Presbitero Drywall foremen testified that they had no knowledge of subcontractors' working on job sites. All of the locations listed as the addresses for the alleged subcontracting companies were residential locations in residential neighborhoods. All of the invoices purportedly showing billings from the subcontractors to Presbitero Drywall were ordered by Presbitero Drywall from a printing company that had done business with Presbitero Drywall for twenty years. The format of the invoices were all different but were ordered and approved by Presbitero Drywall. The invoices produced by Presbitero Drywall were not folded and showed no signs of having been prepared, mailed, and sent to Presbitero Drywall. In addition, nearly $6 million in Presbitero Drywall cheeks purporting to pay subcontracting invoices were all cashed at a currency exchange pursuant to an agreement worked out between the currency exchange owner and Ronald Presbitero, the president of Presbitero Drywall.

Based on this evidence, a rational trier of fact could have found that the alleged subcontractors did not exist and that the work done by these alleged subcontractors was actually performed by Presbitero Drywall employees and was required to be reported. Accordingly, Presbitero Drywall's Motion for Judgment of Acquittal is denied.

Assuming argumendo, that the jury may have determined that Presbitero Drywall had hired subcontractors, a rational trier of fact could have found that Presbitero Drywall was required to report the hours worked by the subcontractors to the Trust Funds.

At trial, several exhibits were introduced into evidence. These exhibits included the CBA, the Pension Trust Agreement, the Welfare Trust Agreement, and several benefit reports. The CBA provides that an employer cannot subcontract any work coming within the jurisdictional claims of the Union that is not covered by a CBA with the Union. If an employer that is bound by the CBA subcontracts any work covered by the CBA who is not a signatory to the CBA, the employer must require the subcontractor to be bound by the provisions of the CBA or the employer must maintain daily records of the subcontractors hours and be liable for payments to the Trust Funds. Furthermore, Articles Xli and XIII require the employer to furnish the Trust Funds with information, including the names of employees, employee classifications, wages and/or hours worked, and other information as may be required for the proper administration of the Trust Funds.

The individual Trust Fund agreements also provide that contributions "accrue with respect to all hours worked by any employee, including but not limited to, journeymen, foremen or apprentices or for any person doing work within the jurisdiction of the [Union] . . . ." Furthermore, the benefit reports state that the signatory certifies that the hours reported on the benefit reports are "a true and complete report of hours worked by foremen, journeymen and apprentice carpenters represented in collective bargaining . . . We hereby agree to be bound by and ratify, confirm and adopt all of the provisions of the [CBA] and the [Trust Agreements]. . ."

Based on this evidence, a rational trier of fact could have determined that Presbitero Drywall may have hired subcontractors but that Presbitero Drywall was required to report the hours they worked based on the CBA, the Pension Trust Agreement, the Welfare Trust Agreement, and the benefit reports. Accordingly, Presbitero Drywall's Motion for a Judgment of ...


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