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UNITED STATES v. GERACE

December 15, 1983

UNITED STATES OF AMERICA, Plaintiff,
v.
FRANK GERACE, ROBERT LO CICERO, DONALD MARTINELLI and TORO CONSTRUCTION COMPANY, INC., Defendants



The opinion of the court was delivered by: GERRY

 In May and June of 1982, defendant Frank Gerace was compelled by the New Jersey Casino Control Commission to give testimony by way of deposition under a grant of immunity from that Commission. (Exhibits K-107-K-112, DK-1.) He was subsequently indicted on April 6, 1983 in two counts of a four count indictment charging him with violating 18 U.S.C. § 371 (conspiracy) and 29 U.S.C. § 501(c) (embezzlement from a labor union).

 It is alleged in the indictment, among other things, that the defendants, Robert LoCicero and Donald Martinelli, committed these crimes in connection with renovation work done by Toro Construction Company, Inc., ("Toro"), of which LoCicero and Martinelli were officers, on the union hall of Local 54 of the Hotel and Restaurant Employees and Bartenders International Union ("Local 54"); on the apartment of Robert Lumio, a former Local 54 official; and on the defendant Gerace's residence. The Government and defense counsel stipulated that a portion of the defendant's deposition testimony pertained to matters that are the subject of the indictment. (Tr. 10/31/83, 50:17-51:7.)

 It is well settled that testimony compelled under a grant of immunity may not subsequently be used, either directly or indirectly against the testifier in any criminal prosecution. Murphy v. Waterfront Commission, 378 U.S. 52, 12 L. Ed. 2d 678, 84 S. Ct. 1594 (1960); Kastigar v. United States, 406 U.S. 441, 32 L. Ed. 2d 212, 92 S. Ct. 1653 (1972). Once it is established that a defendant previously gave testimony under a grant of immunity to matters related to the federal prosecution, the burden shifts to the Government not only to negate the possibility that the immunized testimony has tainted the prosecution but to prove affirmatively "that the evidence it proposes to use at trial is derived from a legitimate source wholly independent of the compelled testimony." Kastigar, 406 U.S. at 460. The Government's burden is a heavy one. Id. at 461-62; United States v. Pantone, 634 F.2d 716, 723 (3d Cir. 1980). It must show that it did not use the compelled testimony or its fruits against the defendant in any manner1 in connection with the prosecution. Murphy, 378 U.S. at 79. In fact, the witness and the Government must be "in substantially the same position as if the witness had claimed his privilege [to remain silent] in the absence of a state grant of immunity." The Pillsbury Co. v. Conboy, 459 U.S. 248, 103 S. Ct. 608, 613, 74 L. Ed. 2d 430 (1983); Kastigar, 406 U.S. at 458-59; Murphy, 378 U.S. at 79.

 In the present case, where it was stipulated that defendant's deposition testimony covered matters which are the subject of this federal prosecution, this court was required to hold an evidentiary hearing during which the Government could attempt to sustain its burden of proof. The court chose to hold the hearing prior to the trial for the reasons stated on the record on November 1, 1983. (Tr. 15:9-25 -- 27:25.) The hearing having been completed, the court is now prepared to make its findings of fact and conclusions of law.

 Based on the evidence presented at the hearing on defendant's Kastigar motion, the court finds that the Government has met its heavy burden in establishing that its investigation, and the upcoming trial, of the defendant is in no way tainted, directly or indirectly, by the defendant's immunized testimony and that its proposed evidence is derived from legitimate sources independent of the immunized testimony.

 The court would also add that at the close of the hearing (see Tr. 11/7/83, 10:11-21) and in defendant's proposed findings of fact and conclusions of law, it has been represented to the court that defendant does not dispute that the Government has adequately established legitimate, independent sources for the evidence it proposes to use at trial, nor that the attorney and agents involved in this case have no knowledge of the contents of the defendant's deposition.

 A. Legitimate, Independent Sources of Proposed Evidence.

 At the hearing, the Government presented what it expects its evidence at trial will be and the sources of that evidence primarily through the testimony of Special Attorney George Wilson, United States Department of Justice (Tr. 11/2/83) and Special Agent Ronald Chance, United States Department of Labor (Tr. 11/3/83, 39:23 -- 136:1). The defense counsel had an ample opportunity to cross-examine the witnesses. Most of the exhibits which the Government will seek to introduce at trial had been obtained prior to May 28, 1982, the date of the commencement of the defendant's deposition. These records consist of:

 (a) Records of Local 54 pertaining to the renovation of the union hall (Exhibits K-1 -- K-22, K-100, 101, 102), which were obtained from Local 54 by subpoena in April of 1981. (Tr. 11/2/83, 39:15 -- 40:8; Exhibit K-114; Tr. 11/3/83, 60:17 -- 61:4.)

 (c) Records of George P. Sparks, Electrical Contractor (Exhibits K-76-K-79, K-80-1 -- K-80-29), which were obtained from that company during the summer of 1981. (Tr. 11/2/83, 43:10-19; K-119, Tr. 11/3/83, 60:17 -- 61:4.)

 (d) Records of Daniel Falasca Plumbing, Heating and Cooling, Inc. (Exhibits K-81 -- K-85), which were received from that company in the summer of 1981). (Tr. 11/2/83, 44:17 -- 45:11; Exhibit K-118; Tr. 11/3/83, 60:17 -- 61:4.)

 (e) Signature cards (K-86), copies of Treasurer's checks (K-87-1 -- 87-7), withdrawal slips (K-88-1 -- 88-7), a bank statement (K-99), pertaining to the Local 54 Building Fund, which were obtained from the Guarantee Bank prior to May 28, 1982. (Tr. 11/2/81, 46:16-25; Exhibit K-121; Tr. 11/3/83, 60:17 -- 61:4.)

 The remaining exhibits that the Government will seek to introduce at trial were received after May 28, 1982. The judgment that these exhibits might be useful to the Government's investigation was based on information independent of the defendant's deposition and, in many instances, had been made prior to May 28, 1982. Specifically, in February of 1982, Special Agent Chance had examined the records received from Toro Construction and Local 54 and had noted several significant items, including:

 (a) The identities of all subcontractors that had purportedly worked for Toro on the Local 54 renovation job.

 (b) The names of the Toro employees who had been employed by the company during the period of the Local 54 project; and

 (c) The fact that there were discrepancies between what Toro represented to Local 54 it had paid to the subcontractors and what Toro's records showed was actually paid. (Tr. 11/3/83, 63:18 -- 64:17.)

 The records obtained after May 28, 1982, their source, and the basis for the decision to ...


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