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U.S. v. GHILARDUCCI

October 12, 2004.

UNITED STATES OF AMERICA Plaintiff,
v.
AUGUST C. GHILARDUCCI and RONALD J. RICHARDSON Defendant.



The opinion of the court was delivered by: DAVID COAR, District Judge

MEMORANDUM OPINION AND ORDER

August C. Ghilarducci ("Ghilarducci") and Ronald J. Richardson ("Richardson") (collectively, "Defendants") have been variously charged in a forty-two count third superseding indictment (hereinafter, "the indictment") with racketeering, wire fraud, money laundering, tax evasion and making false statements on a tax return. The indictment alleges that Defendant Ghilarducci was the president and owner of Westchester Financial Associates, Inc. (hereinafter, "WFA"), an Illinois corporation holding itself out as a financial planning and consulting business. (See Indictment, Count One, ¶ 1). According to the indictment, Defendant Richardson acted as a business broker, and obtained clients for WFA. (Id. at ¶ 2). The Government alleges that at all times material to the indictment, Richardson did business under the name "Westchester Financial Associates of Georgia." Id. In addition, the Government alleges that the actual purpose of the WFA enterprise was to engage in: (1) wire fraud; (2) money laundering; (3) monetary transactions in criminally derived property; (4) interstate transportation of property taken by fraud; and (5) tax-related offenses. Id. at ¶ 4.

Defendant Richardson has filed several pre-trial motions in an attempt to resolve certain evidentiary disputes prior to the October 20, 2004 trial. Specifically, Richardson has filed: (1) an objection to the Government's Rule 404(b) materials; (3) a renewed request for severance of the trial from his co-Defendant, August C. Ghilarducci; and (4) a motion for a bill of particulars regarding the counts of the indictment charging Defendant with tax evasion. For the reasons set forth below, Richardson's objections to the Government's Rule 404(b) materials, which is taken as a motion to exclude these 404(b) materials, is DENIED; Richardson's renewed request for severance is DENIED; and Richardson's motion for a bill of particulars regarding the counts of the indictment charging defendant with tax evasion is DENIED.

  I. Defendant Richardson's Objection to the Government's Rule 404(b) Materials

  In his motion, Defendant Richardson notes that the Government has indicated that it intends to introduce testimony regarding Richardson's contact with a person named Dr. John Glavinovich ("Glavinovich") as uncharged misconduct pursuant to Rule 404(b) of the Federal Rules of Evidence ("Rule 404(b)"). Richardson objects to the introduction of this uncharged conduct, as Richardson contends that it does not meet the requirements of Rule 404(b). Consequently, Richardson argues, this testimony should be excluded from trial.

  The Government states that on September 2, 2004, it provided Defendants with notice that at trial, the Government intended to introduce evidence of Richardson's financial transactions with Glavinovich in 1992 and 1993. The Government believes that the Glavinovich transaction was a confirmed funds/leased funds type of transaction, and was similar to the transactions that are the subject of the indictment. The Government contends that the evidence will show that in November 1992, Glavinovich entered into an agreement brokered by Richardson, and the structure of that agreement was virtually identical to the alleged fraudulent transactions charged in the indictment.

  Specifically, the Government contends that in Richardson's transactions with Glavinovich, Richardson informed Glavinovich that he represented an investment company by the name of Myco Investment Group ("MIG"). The Government alleges that Richardson advised Glavinovich that for a fee of $150,000, Richardson could arrange for Glavinovich to obtain the rights to prima bank guarantees or letters of credit totaling 500 million dollars. Glavinovich agreed to this transaction. The Government also asserts that Richardson, using the bank guarantees as collateral, advised Glavinovich that Richardson and his associates at MIG could then buy and sell bank instruments in the form of a trading program. According to the Government, Richardson advised Glavinovich that he had completed these types of transactions in the past, with profits that could rise to the millions of dollars. It is based upon these representations, the Government contends, that Glavinovich wired $175,000 to Richardson and others affiliated with MIG. Ultimately, because of delays and problems, the transaction fell through; however, Glavinovich's money, which was being held in escrow, had already been released by the escrow attorney. According to the Government, Richardson convinced Glavinovich to invest two more times; $71,000 in January 1993 and $35,000 in March 1993. All three transactions ultimately fell through, and subsequently, several individuals faced federal indictments for their roles with MIG. The Government believes that Richardson received 16 percent of the fraudulently obtained deposits received from individuals and companies, and subsequently, Richardson was identified by the Government as an unindicted co-conspirator in the scheme.

  The Government states that it will present evidence that in these transactions, which occurred from 1993 through 1997, Glavinovich actively sought to have Richardson repay the principal Glavinovich invested with Richardson. According to the Government, after several individuals were indicted and subsequently sentenced for their roles with MIG, Richardson informed Glavinovich that he would repay part of Glavinovich's money. However, the Government contends, Richardson has not repaid the money. Finally, on August 3, 1996, Glavinovich met with Richardson, and Richardson told Glavinovich that Richardson would have $50,000 available within twenty days. Subsequently, on August 20, 1996, Richardson received a letter from Ghilarducci representing that Richardson was to be paid $92,093.75 for his services related to COF and railroad bond transactions for WFA. The Government argues that Richardson's interactions with Glavinovich show that as Richardson and Ghilarducci were setting up WFA and beginning to the conduct the business that is the subject of the indictment, Richardson was receiving frequent correspondence from another investor about Richardson's alleged activities in a similar scheme, in that investor's attempt to recover his losses from the first alleged scheme. The Government believes that any attempt by Richardson to repay Glavinovich would have been with funds received from the WFA transactions.

  B. Is This Evidence "Inextricably Intertwined" With the Charged Offenses?

  The Government contends that the evidence that it seeks to admit is directly related to, and consequently, "inextricably intertwined," with the charged offense. The Seventh Circuit "has a well-established line of precedent which allows evidence of uncharged acts to be introduced if the evidence is `intricately related' to the acts charged in the indictment." United States v. Spaeni, 60 F.3d 313, 316 (7th Cir. 1995) (citing United States v. Ramirez, 45 F.3d 1096, 1102 (7th Cir. 1995)). Pursuant to the "inextricably related" doctrine, "evidence of uncharged criminal activity that is found to be `intricately related to the facts of the case' is deemed relevant and admissible, provided that it satisfies the balancing test of Rule 403.'" United States v. Gibson, 170 F.3d 673, 680 (7th Cir. 1999) (citing United States v. Ramirez, 45 F.3d 1096, 1102-03; United States v. Hargrove, 929 F.3d 316, 320 (7th Cir. 1991)). "Under the "inextricably related" standard, the admissibility of evidence turns on":
[W]hether the evidence is properly admitted to provide the jury with a "complete story of the crime [on] trial . . ." whether its absence would create a "chronological or conceptual void' in the story of the crime . . ." whether it is "so blended or connected" that it incidentally involves, explains the circumstances or tends to prove any elements of, the charged crime.
Gibson, 170 F.3d at 681 (internal citations omitted). Consequently, evidence deemed "inextricably related" must arise from the same transaction or transactions as the charged crimes. Id.

  The Government contends that the proffered evidence, which concerns Richardson's transactions with Glavinovich, is highly instructive to the jury's understanding of the chronology and circumstances surrounding the charged crimes. The Government notes that the Glavinovich transactions took place between November 1992 and March 1993. However, the Government contends, as late as October 1997, Glavinovich was corresponding with Richardson in an attempt to recoup the principal he lost to the scheme in which Richardson was involved. The Government notes that on August 3, 1996, Glavinovich met with Richardson, and Richardson told Glavinovich that Richardson would have $50,000 available within 20 days. On August 20, 1996, Richardson received a letter from Ghilarducci, representing that Richardson was to be paid $92,093.75 for his services related to COF and railroad bond transactions for WFA. According to the Government, it appears that Richardson may have intended to pay Glavinovich from money received from WFA in 1996. As such, the Government contends, the Glavinovich transaction is inextricably intertwined with the charged WFA transactions.

  The Court finds that Richardson's alleged transactions with Glavinovich are inextricably related to the charges set forth in the indictment. Specifically, Glavinovich's attempt in 1997 to recoup money lost in an alleged racketeering scheme shows that the chronology of the interactions between Richardson and Glavinovich are intertwined with the allegations that comprise the indictment against Richardson. In addition, this evidence is instructive on whether Richardson may have engaged in the alleged WFA transactions to pay back Glavinovich, a bondholder who contended that his investment was worthless. This is particularly relevant given certain allegations in the indictment. Specifically, in paragraph 25 of Count One of the indictment, the Government alleges that part of the scheme was that defendant Ghilarducci used proceeds obtained from selling COF letters to repay some railroad bondholders who had complained about the money lost on their allegedly worthless investment. Consequently, Richardson's transactions with Glavinovich are "inextricably related" with the allegations as set forth in the indictment.

  In addition, because the Court has determined that this evidence is inextricably related to the charges set forth in the indictment, the Court must ensure that the evidence satisfies the balancing test of Fed.R. Evid. 403. See Spaeni, 60 F.3d at 316 (internal citations omitted). In pertinent part, Fed.R.Evid. 403 states, "Although relevant, evidence may be excluded if its probative value is substantially outweighed by unfair prejudice . . ." Evidence that Richardson handled Glavinovich's investment funds in a similar manner as alleged in the indictment is highly probative evidence, especially if Richardson attempted to repay Glavinovich with funds obtained from the alleged racketeering scheme as set forth in the indictment. This evidence is highly relevant and probative, and that probative value outweighs any purported prejudicial impact this evidence may have on Richardson. Consequently, evidence of Glavinovich's interactions with Richardson is admitted as inextricably related to the allegations set forth.*fn1 II. Richardson's Renewal for a Request for Severance

  On May 5, 2004, Defendant Richardson moved for severance of the Defendants, or in the alternative, severance of the counts in the indictment. At a June 16, 2004 hearing, this Court denied Richardson's motion. Richardson has renewed his motion for severance of the trial, as he notes that the Government has indicated that it intends to introduce a great deal of information regarding uncharged conduct allegedly committed by co-Defendant Ghilarducci. Richardson contends that this information will unfairly prejudice him. Further, Richardson contends that a jury instruction at the time of the introduction of such evidence stating that the ...


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