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U.S. v. EISENBERG

July 26, 1991

UNITED STATES OF AMERICA
v.
LEO M. EISENBERG, RICHARD S. CANNISTRARO AND RICHARD O. BERTOLI, DEFENDANTS.



The opinion of the court was delivered by: Lechner, District Judge.

            OPINION

TABLE OF CONTENTS

Facts ................................................... 672
Discussion .............................................. 680
  I.  Discovery-Related and Miscellaneous Motions ....... 680
      A.  Motion for Statements of Co-Conspirators ...... 680
      B.  Motion for List of Government Witnesses ....... 683
      C.  Motion for Giglio Material ........... 684
      D.  Motions for Disclosure of Rule 404 Evidence the
          Government Intends to Admit ................... 685
      E.  Motion for Identification of Brady
          Material Among Documents Previously Produced .. 687
      F.  Motion for Production of Materials Initially
          Disclosed to the Defendants But Later
          Withdrawn ..................................... 688
      G.  Motion for a Bill of Particulars .............. 688
      H.  Motion for the Production of Enumerated
          Documents Characterized as Brady
          Material ...................................... 692
      I.  Preservation of Rough Notes and Other
          Communications ................................ 692
      J.  Motion for Transcripts and Tape Recordings .... 692
      K.  Motion for an Order Precluding the Admission
          of Any Testimony by David O'Connor, Esq.,
          or Marvin Gersten, Esq., Protected by the
          Attorney-Client Privilege ..................... 692
      L.  Motion for an Order Preserving the Right of
          Bertoli to Make Applications Under Fed.R.Crim.P.
          17(c) for Subpoenas Prior to Trial ............ 693
      M.  Motion for an Order Preserving Bertoli's Right
          to Move to Suppress Wiretap Evidence or
          Evidence Seized in Searches ................... 693
    II.   Motion for a Change of Venue as to the
          Obstruction of Justice Allegations ............ 694
    III.  Motion for Severance .......................... 695
    IV.   Motion to Strike Surplusage ................... 698
    V.    Motion to Dismiss and for Discovery Based
          on Allegations of Prosecutorial Misconduct .... 701
          A.  Motions to Dismiss and for Discovery Based
              on Specific Allegations of Prosecutorial
              Misconduct ................................ 702
              1.  Alleged Failure to Obtain Approval
                  of RICO Charges ....................... 702
              2.  Alleged Conflict of Interest .......... 703
              3.  Allegations as to Improper Sealing
                  of the Indictments..................... 706
              4.  Alleged Misconduct Relating to the
                  Grand Jury Proceedings ................ 707
                  a.  Alleged Disclosure of Bertoli
                      Nolo Contendere Plea ..... 708
                  b.  Alleged Mischaracterizations to
                      the Grand ury of Testimony Given
                      Before Previous Grand Juries ...... 709
                  c.  Alleged Use of Summaries of
                      Evidence .......................... 709
                  d.  Alleged Fed.R.Crim.P. 6(e)
                      Violations ........................ 710
                  e.  Alleged Violation of the Right to
                      Financial Privacy Act ............. 712
          B.  Motion to Dismiss and for Discovery Based
              on Alleged Cumulative Misconduct .......... 713
      VI. Motion to Dismiss Based on Prosecutorial
          Vindictiveness ................................ 714
    VII.  Motion to Dismiss Counts 1 through 3 for
          Failure to State an Offense ................... 717

    VIII. Motion to Dismiss Racketeering Acts 5(j)
          and 5(k) ...................................... 725
      IX. Constitutional Challenge to the RICO "Pattern"
          Requirement ................................... 726
      X.  Motion for Recusal ............................ 731
Conclusion .............................................. 735

Presently before the court are the pre-trial omnibus motions of defendants Leo M. Eisenberg ("Eisenberg"), Richard S. Cannistraro ("Cannistraro") and Richard O. Bertoli ("Bertoli") (collectively, the "Defendants").*fn1

Bertoli moves to dismiss Counts 1 and 2 of the Superseding Indictment, which charge the Defendants with violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) and (d), respectively, on the ground that the RICO "pattern" requirement is unconstitutionally vague.*fn2 In addition, Bertoli moves to dismiss Counts 1, 2 and 3, the last of which charges the Defendants with conspiracy to commit securities fraud in violation of 18 U.S.C. § 371, for failure to state an offense. Bertoli moves to dismiss the Superseding Indictment based on alleged prosecutorial misconduct, or in the alternative, for discovery of grand jury materials.

In addition, Bertoli moves pursuant to Fed.R.Crim.P. 16 for discovery of statements made by unindicted co-conspirators, for notice pursuant to Fed.R.Crim.P. 12(d)(2) of the Government's intention to introduce under Fed.R.Evid. 404(b) evidence of other crimes, wrongs or acts by Bertoli ("Rule 404(b) Evidence"), for a list of witnesses the Government intends to call at trial, for impeaching material with respect to Government witnesses and for exculpatory evidence under Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963) ("Brady" material). In addition, Bertoli moves for an order precluding certain testimony by David O'Connor, Esq., and Marvin Gersten, Esq., on the ground that it is protected by the attorney-client privilege, or in the alternative for identification by the Government of the anticipated testimony of David O'Connor, Esq., and Marvin Gersten, Esq., pursuant to Fed.R.Crim.P. 12(d)(2).

Bertoli also seeks an order preserving his right to make applications, as necessary under Fed.R.Crim.P. 17(c), for subpoenas prior to trial, an order preserving his right to move to suppress wiretap evidence or evidence seized in searches or the fruits thereof, an order striking purported surplusage from the Superseding Indictment, an order compelling the Government to identify the Brady material contained among documents it has thus far produced, an order compelling the Government to preserve notes of its interviews of Bertoli and an order compelling the Government to produce for inspection and copying materials previously produced by the Government but later withdrawn by the Government. Bertoli also moves for a Bill of Particulars pursuant to Fed.R.Crim.P. 7(f).

Defendant Eisenberg moves for severance of his trial from that of Cannistraro, for transfer of the charges of obstruction of justice, set forth in Counts 4, 5 and 6 of the Superseding Indictment, to the Eastern District of New York and for pre-trial disclosure of all Rule 404(b) Evidence. Defendant Cannistraro moves to dismiss the Superseding Indictment against him as violative of his due process right to be free from vindictive prosecution and for recusal of the court pursuant to 28 U.S.C. § 455.*fn3

By letter, dated 19 March 1991, Eisenberg joined in Bertoli's motions to dismiss portions of the Superseding Indictment and his motions relating to discovery *fn4 and for a Bill of Particulars. See 19 March 1991 Eisenberg Letter.*fn5 Counsel for Eisenberg reiterated at oral argument, held 3 July 1991, that Eisenberg joined in only Bertoli's motions to dismiss, for discovery and for a Bill of Particulars. 3 July 1991 Tr. at 13. By letter, dated 3 April 1991, Bertoli joined in Cannistraro's recusal motion and Eisenberg's severance motion. See 3 April 1991 Bertoli Letter.*fn6

Facts

As to Count 1, the Superseding Indictment states Monarch, the enterprise, was a securities brokerage firm which was engaged in the business of underwriting, purchasing and selling securities primarily traded in the over-the-counter markets. Superseding Indictment, Count 1, ¶ 1. It is stated in Count 1 that Eisenberg was the owner and president of Monarch and, as such, directed the trading of securities in Monarch's own brokerage account (the "Monarch Trading Account"). Id., ¶ 2. It is stated Cannistraro was a securities research analyst with Wood Gundy, Inc. ("Wood Gundy"), a brokerage firm located in New York City, New York. Id., ¶ 3. It is stated Bertoli was the former president of a brokerage firm not named in the Superseding Indictment and controlled and had a beneficial interest in several brokerage accounts maintained at Monarch. Id., ¶ 4. The pattern of racketeering engaged in by the Defendants is described as consisting of predicate acts of mail fraud, wire fraud, interstate transportation of money taken by fraud, securities fraud and obstruction of justice. Id., ¶ 9.

Count 1 charges that from about January 1982 to at least January 1989, in the District of New Jersey and elsewhere, the Defendants participated in the affairs of Monarch through a pattern of racketeering activity, the object of which was to "use Monarch as a vehicle to engage in fraudulent securities trading practices and thereby obtain money and other things of value for the [D]efendants. . . ." Id., ¶¶ 6-7. It is stated in Count 1 that the Defendants perpetrated such racketeering activity by maintaining accounts in which they had a beneficial interest and which were in the names of other persons or entities ("Nominee Brokerage Accounts"). Id., ¶ 8(a). It is stated that the Nominee Brokerage Accounts enabled the Defendants to surreptitiously engage in securities trading for their own personal benefit. Id. In addition, the Defendants are charged with engaging in such racketeering activity by preparing and distributing false and misleading research reports recommending the purchase of the securities of Astrosystems, Inc. ("Astrosystems"), Nature's Bounty, Inc. ("Nature's Bounty"), Liquidation Control, Inc. ("LCI"), Toxic Waste Containment, Inc. ("Toxic Waste"), High Technology Capital Corp. ("High Tech") and Solar Age Manufacturing Corp. ("Solar Age"). Id., ¶ 8(b).

It is further stated in Count 1 that the Defendants engaged in such racketeering activity by bribing the portfolio manager of the M & I Growth Fund (the "M & I Fund"), a trust fund, the portfolio manager of Aggressive Growth Shares, Inc. (the "Bullock Fund"), an investment company and mutual fund and the research analyst of Hallswell Corp. ("Hallswell"), a corporation which purchases and sells over-the-counter securities. Id., ¶ 8(c). It is stated Cannistraro and Eisenberg opened Nominee Brokerage Accounts at Monarch for the benefit of the M & I Fund and Bullock Fund portfolio managers and the Hallswell research analyst. These Nominee Brokerage Accounts "generate[d] large sums of money . . . through the fraudulent trading of LCI and Toxic Waste securities." Id. in exchange for such trading, the portfolio managers of the M & I Fund and Bullock Fund and the research analyst of Hallswell caused the M & I Fund and Bullock Fund and Hallswell to purchase large blocks of LCI, Toxic Waste and High Tech securities. Id.

In addition, it is stated in Count 1 that the racketeering activity of the Defendants included non-disclosure of their interest in High Tech in order to enable them to raise capital for that company, control its management and policies and profit on the sale of its securities. Id., ¶ 8(d). Finally, it is stated that Cannistraro paid a witness in grand jury proceedings to conceal Cannistraro's interest in a Nominee Brokerage Account at Monarch and Eisenberg secreted thousands of Monarch documents which were required to be produced pursuant to a grand jury subpoena. Id., ¶¶ 8(e)-(f).

Count 1 charges the Defendants with engaging in racketeering activity through the execution of seven separate schemes. As to the first scheme (the "Astrosystems Scheme"), it is stated in Count 1 that between approximately October 1982 and approximately August 1983, in the District of New Jersey and elsewhere, the Defendants established Nominee Brokerage Accounts at Monarch and elsewhere to purchase Astrosystems securities from the investing public with the knowledge that favorable research reports were to be prepared by Cannistraro and disseminated by Wood Gundy to the investing public. Id., ¶ 11. Count 1 identifies three such reports. It is charged the reports were misleading in that they did not disclose that the Defendants "had purchased Astrosystems securities based upon advance knowledge of the reports, and intended to profit on the sale of these securities once' the dissemination of the reports had caused the price of Astrosystems securities to rise." Id., ¶¶ 12-13.

Count 1 identifies by date and content six instances of mail fraud in violation of 18 U.S.C. § 1341, two instances of wire fraud in violation of 18 U.S.C. § 1343 and one instance of securities fraud in violation Section 10(b) and Rule 10b-5, all perpetrated by the Defendants in executing the Astrosystems Scheme. Id., ¶¶ 16-18.

With respect to the second scheme (the "Nature's Bounty Scheme"), Count 1 states that from approximately December 1982 to approximately March 1983 the Defendants engaged in a scheme involving the securities of Nature's Bounty. Id., ¶¶ 19-20. It states that in or about January 1983, the Defendants used nominee and other brokerage accounts at Monarch and elsewhere, including the Monarch Trading Account, to purchase Nature's Bounty securities from the investing public "with the knowledge that favorable research reports were to be prepared by [Cannistraro] and disseminated by Wood Gundy to the investing public, and with the expectation that the reports would cause the price of Nature's Bounty securities to rise." Id., ¶ 20. Count 1 identifies such reports and states they were false and misleading in that they "failed to disclose, among other things, that the [D]efendants had purchased Nature's Bounty securities based upon advance knowledge of the reports and intended to profit on the sale of these securities once the dissemination or anticipated dissemination of the reports had caused the price of Nature's Bounty securities to rise." Id., ¶ 22.

It alleges the Defendants sold their Nature's Bounty securities "to the investing public without disclosing the scheme to defraud, and thereby fraudulently obtained profits totalling at least $220,000." Id., ¶ 23. It identifies by date and content five instances of mail fraud, three instances of wire fraud and one instance of securities fraud in violation of Section 10(b) and Rule 10b-5, all perpetrated by the Defendants in executing the Nature's Bounty Scheme. Id., ¶¶ 24-26.

As to the third scheme (the "LCI Scheme"), Count 1 states that between approximately October 1982 and approximately November 1983, the Defendants engaged in a scheme concerning the securities of LCI. It alleges that in or about November and December 1982, the Defendants used nominee and other brokerage accounts at Monarch to purchase "substantial amounts of LCI securities at minimal cost during LCI's initial public offering and during the first few days of public trading." Id., ¶ 28. It states: "These purchases were made with the expectation that the price of LCI securities would rise as a result of, among other things, the issuance of a favorable research report to be prepared by [Cannistraro] but disseminated to the investing public as [the report of] G.K. Scott[, Inc.] [("G.K. Scott"), a brokerage firm] . . ., and the bribery of individuals to cause the purchase of large blocks of LCI securities." Id., ¶ 28.

Count 1 states Eisenberg and Cannistraro opened Nominee Brokerage Accounts at Monarch for the benefit of the M & I Fund and Bullock Fund portfolio managers and the Hallswell research analyst and "used these nominee accounts to generate large sums of money for the [portfolio managers] and the [research analyst] through the fraudulent trading of LCI and Toxic Waste securities." Id., ¶ 29. It states: "In exchange the M & I [Fund] and Bullock [Fund portfolio managers] caused their respective funds to purchase large blocks of LCI securities, and the [Hallswell research analyst] caused Hallswell to open a brokerage account at Monarch that purchased a large block of LCI securities." Id.

Count 1 states the Defendants sold their LCI securities to the investing public "without disclosing the scheme to defraud, and thereby fraudulently obtained profits totalling at least $690,000." Id., ¶ 32. Count 1 identifies by date and content six instances of mail fraud, five instances of wire fraud and one instance of securities fraud in violation of Section 10(b) and Rule 10b-5, all perpetrated by the Defendants in executing the LCI Scheme. Id., ¶¶ 33-35.

As to the fourth scheme (the "Toxic Waste Scheme"), Count 1 states that between approximately December 1982 and approximately October 1983, the Defendants engaged in a scheme concerning Toxic Waste securities. It states that in approximately February and March 1983, the Defendants used nominee and other accounts at Monarch and elsewhere "to purchase substantial amounts of Toxic Waste securities at minimal cost during Toxic Waste's initial public offering and during the first few days of public trading." Id., ¶ 37. It further states that the "purchases were made with the expectation that the price of Toxic Waste securities would rise as a result of, among other things, the dissemination to the investing public of favorable Wood Gundy research reports to be prepared by [Cannistraro] and the bribery of individuals to cause the purchase of large blocks of Toxic Waste securities." Id. It states that as part of the Toxic Waste Scheme, Eisenberg and Cannistraro used these nominee accounts to "generate large sums of money and securities for the [M & I Fund and Bullock Fund portfolio managers] through the trading of Toxic Waste securities." Id., ¶ 38.

In addition, Count 1 states that as part of the Toxic Waste Scheme, Cannistraro caused Wood Gundy to disseminate to the investing public certain research reports recommending the purchase of Toxic Waste securities. Id., ¶ 40. Count 1 identifies these reports by content and date, one of which it identifies as a five-page "Basic Report," dated 17 March 1983 (the "Basic Report"). Id., ¶ 40. It states these reports were false and misleading in that they did not disclose that the Defendants had purchased Toxic Waste securities based on advance knowledge of the content and dissemination of the reports and that individuals had been bribed to cause the purchase of large amounts of Toxic Waste securities. Id., ¶¶ 40-41.

In addition, Count 1 states Eisenberg caused over 18,000 copies of the Basic Report, which recommended the purchase of Toxic Waste securities, to be disseminated to brokers, research analysts, securities newsletter publishers, Monarch customers and others throughout the United States. Id., ¶ 42. It also states that in approximately March and April 1983, Cannistraro caused to be prepared and disseminated to the investing public articles in the 14 March 1983 Portfolio Letter and in the 22 April 1983 edition of "Ground Floor," a securities investment newsletter. Id., ¶ 43. It states these articles recommended the purchase of Toxic Waste securities without disclosing the scheme to defraud. Id.

Count 1 states that from about March 1983 to about October 1983, the Defendants and others sold their Toxic Waste securities to the investing public without disclosing their scheme to defraud for a profit of $4,400,000. Id., ¶ 44. It identifies by date and content eleven instances of mail fraud, two instances of wire fraud, one instance of interstate transportation of money taken by fraud in violation of 18 U.S.C. § 2314 and one instance of securities fraud in violation of Section 10(b) and Rule 10b-5, all perpetrated by the Defendants in executing the Toxic Waste Scheme. Id., ¶¶ 45-48.

Count 1 further states that prior to the public offering of the High Tech securities, the Defendants caused 3.1 million shares of High Tech common stock to be placed in the names of nominees while the shares were beneficially owned by the Defendants. Id., ¶ 51. It states the Defendants did not disclose in High Tech's registration statements and prospectus the role of Bertoli as High Tech's promoter and the Defendants' beneficial ownership of more than 10% of High Tech's common stock and more than 10% of High Tech's outstanding stock. Id., ¶ 52.

Count 1 states that having concealed such information, the Defendants raised $425,000 in capital for High Tech from the investing public. Id., ¶ 53. In addition, it states that from approximately February 1984 to approximately July 1984, the Defendants caused 3.1 million shares of High Tech common stock beneficially owned by them to be sold for a profit of at least $115,000. Id., ¶ 54. It identifies by content and date six instances of mail fraud, three instances of wire fraud and two instances of securities fraud in violation of 15 U.S.C. § 77g, 77x, 77aa(4), 77aa(6) and 77j(a)(1), all perpetrated by the Defendants in executing the Beneficial Owners Concealment Scheme. Id., ¶¶ 55-58.

As to the sixth scheme (the "High Tech Scheme"), Count 1 states the Defendants engaged in a scheme concerning High Tech securities from about March 1983 to about February 1984, in the District of New Jersey and elsewhere. It states that the Defendants used nominee and other brokerage accounts at Monarch and elsewhere to purchase High Tech securities at minimal cost during its initial public offering and during the first few days of public trading. Id., ¶ 61. It states: "These purchases were made with the expectation that the price of High Tech securities would rise as a result of, among other things, the bribery of individuals to cause the purchase of large blocks of High Tech securities, and the transfer of 200,000 shares of Solar Age common stock to High Tech." Id.

Count 1 states Eisenberg and Cannistraro allocated securities available as part of the High Tech initial public offering to the Nominee Brokerage Account of the Hallswell research analyst at Monarch. Id., ¶ 62. In exchange for such allocation, and in exchange for money which Eisenberg and Cannistraro provided to the Hallswell research analyst through their trading of LCI and Toxic Waste securities in the Hallswell nominee accounts at Monarch, the Hallswell research analyst caused Hallswell to purchase a large block of High Tech securities. Id. Count 1 states Eisenberg and Cannistraro entered into a similar arrangement with the M & I Fund portfolio manager, who agreed on similar terms to cause the M & I Fund to purchase a large block of High Tech securities under similar conditions. Id., ¶ 63.

In addition, Count 1 states Bertoli and Cannistraro agreed with the president and vice president of Solar Age that in exchange for the transfer of 200,000 shares of Solar Age common stock to High Tech, Cannistraro would prepare a favorable research report recommending the purchase of Solar Age securities. Id., ¶ 64. It states that in fact, Cannistraro prepared three such reports for dissemination by Wood Gundy and identifies such reports by date. Id., ¶ 65. It states such reports were disseminated by Wood Gundy to the investing public and were false and misleading in that they failed to disclose that the reports were prepared in exchange for the transfer of 200,000 shares of Solar Age stock to High Tech and that they were prepared in order to increase the value of High Tech's portfolio of securities. Id., ¶ 66.

Count 1 states that from about June 1983 to about February 1984, the Defendants sold their High Tech securities to the investing public without disclosing the scheme to defraud for a profit of at least $1,300,000. Id., ¶ 68. It identifies by date and content nine instances of mail fraud, three instances of wire fraud and one instance of securities fraud in violation of Section 10(b) and Rule 10b-5, all perpetrated by the Defendants in executing the High Tech Scheme.

As to the seventh and last scheme (the "Cover-Up Scheme"), Count 1 asserts Eisenberg and Cannistraro obstructed justice to conceal their wrongdoing. It states that a subpoena of a grand jury empaneled in the District of New Jersey was served on Monarch on 25 August 1985 requiring it to produce documents and to produce a records custodian to testify before the grand jury on 9 September 1985. Id., ¶¶ 72-73. It states that at Eisenberg's direction, Monarch's corporate counsel misrepresented to the Office of the United States Attorney for the District of New Jersey that the documents responsive to the subpoena had previously been sent to the Chicago Strike Force of the Organized Crime and Racketeering Section of the United States Department of Justice (the "Chicago Strike Force"). Id., ¶ 74.

In addition, Count 1 states that a subpoena of a grand jury empaneled in the District of New Jersey was served on Monarch on 14 July 1988 requiring it to produce documents and to produce a records custodian to testify before the grand jury on 2 August 1988. Id., ¶ 77. It states Eisenberg misrepresented in a letter to the Office of the United States Attorney that certain of the documents responsive to the grand jury subpoena were previously sent by Monarch to the Chicago Strike Force in response to other grand jury subpoenas. Id., ¶ 78. It states that in fact, Eisenberg had removed these documents from Monarch's offices and secreted them in a bakery in Brooklyn, New York (the "Brooklyn Bakery"). Id.

Count 1 also states that on about 26 August 1987 the Office of the United States Attorney for the District of New Jersey served a subpoena duces tecum on Monarch, requiring it to produce documents on or before 9 September 1987 relative to the then upcoming trial of Cannistraro for the 1987 Indictment. The subpoena also required Monarch to produce a records custodian to testify at the trial of Cannistraro, scheduled to commence 24 September 1987.*fn9 Id., ¶¶ 81-83. In addition, an order was entered by the United States District Court for the District of New Jersey on 10 September 1987 requiring Monarch to produce the documents responsive to the subpoena by 5:00 p.m. on 11 September 1987. Id., ¶ 83.

Count 1 states that at the direction of Eisenberg, Monarch's records custodian and corporate counsel misrepresented to the Federal Bureau of Investigation (the "FBI") and to the Office of the United States Attorney that the documents Monarch was required to produce were previously sent to the Chicago Strike Force in response to other grand jury subpoenas. Id., ¶ 85. Count 1 states that in fact, the responsive documents not produced by Monarch were hidden at the Brooklyn Bakery. Id.

Finally, Count 1 states a subpoena of a grand jury empaneled in the District of New Jersey was served on one of Cannistraro's nominees on or about 24 January 1986, requiring the nominee to produce documents and to testify before the grand jury. Id., ¶ 88. It states Cannistraro instructed and directed this nominee in return for cash payments to conceal Cannistraro's beneficial ownership in the nominee's Monarch account. Id., ¶ 89.

Count 2 of the Superseding Indictment charges the Defendants with conspiracy to violate RICO section 1962(c) by agreeing to conduct the affairs of Monarch through a pattern of racketeering in violation of RICO section 1962(d). It charges the conspiracy existed from about January 1982 to at least about January 1989 in the District of New Jersey and elsewhere. Superseding Indictment, Count 2, ¶ 2. It lists seventeen overt acts perpetrated by the Defendants in furtherance of their conspiracy, including their meeting on 17 May 1983 with the president of G.K. Scott and other G.K. Scott personnel to discuss the purchase of a "large block of the securities of a public corporation in exchange for a favorable Wood Gundy research report by Cannistraro," overt act number 1, false and misleading testimony by Eisenberg to the SEC on 26 March 1984 and 9 August 1984, overt act numbers 2 and 3, and 1987 and 1988 deliveries by Eisenberg of several boxes and file cabinets containing Monarch documents to the Brooklyn Bakery, overt act numbers 15 and 16.

Count 3 charges the Defendants with conspiracy in violation of 18 U.S.C. § 371 to violate Section 10(b) and Rule 10b-5 in connection with the purchase and sale of Solar Age securities. Superseding Indictment, Count 3, ¶ 2. Count 3 states the conspiracy existed between about May 1983 and about October 1985 in the District of New Jersey and elsewhere. Id. It states that as part of this conspiracy, Bertoli and Cannistraro agreed with the president and vice president of Solar Age that in exchange for the transfer of 200,000 shares of Solar Age common stock to High Tech, Cannistraro would prepare a favorable research report recommending the purchase of Solar Age securities for dissemination to the investing public by Wood Gundy. Id., ¶ 3. It states that it was additionally part of the agreement that Bertoli and High Tech, in exchange for the Solar Age common stock, would obtain additional financing for Solar Age by means of a secondary public offering of securities. Id.

Count 3 states that in or about June 1983, the Defendants used Nominee Brokerage Accounts to purchase Solar Age securities with the advance knowledge of the favorable research reports to be disseminated by Wood Gundy and with the expectation that the price of Solar Age securities would rise as a result of such reports. Id., ¶ 5. It states Cannistraro prepared and caused Wood Gundy to disseminate to the investing public research reports recommending the purchase of Solar Age securities. Id. It states these research reports were false and misleading in that they failed to disclose that they were prepared by Cannistraro in exchange for the transfer of 200,000 shares of Solar Age common stock to High Tech. In addition, it states the Defendants had purchased Solar Age securities based on advance knowledge of the reports and intended to profit on the sale of the Solar Age securities after the dissemination of the reports caused the price of the securities to rise. Id.

Count 3 states that between about June 1983 and about December 1983, the Defendants sold their Solar Age securities to the investing public, without disclosing their scheme to defraud, for a profit of at least $265,000. Id., ¶ 6. Count 3 further states that the secondary public offering of Solar Age securities arranged by Bertoli raised over $990,000 for Solar Age. Id., ¶ 7.

Count 3 lists sixteen overt acts committed by the Defendants between June 1983 and September 1985 in furtherance of this conspiracy. These overt acts are too numerous to set forth in full. However, they include a 6 June 1983 meeting attended by Bertoli, Cannistraro and the executive vice president of Solar Age in New York City, New York, overt act numbers 1 and 2, various telephone calls and correspondence made on 6 June 1983 and 20 June 1983 by Solar Age personnel at the prompting of Bertoli and Cannistraro, overt act numbers 4, 5 and 6, the 28 June 1983 wire transmission by Wood Gundy, made at the prompting of Cannistraro, of a research report recommending the purchase of Solar Age securities, overt act number 9, and the August and September 1985 mailing of the Solar Age prospectus in connection with the secondary offering of Solar Age securities, overt act number 15.

Finally, Counts 4, 5 and 6 charge Eisenberg alone with obstruction of justice in violation of 18 U.S.C. § 1503. These counts incorporate by reference the factual allegations relating to the Cover-Up Scheme described in Count 1. Count 4 charges that from about August 1985 to about September 1985, in the District of New Jersey and elsewhere, Eisenberg secreted Monarch documents which were required to be produced pursuant to a grand jury subpoena duces tecum. Superseding Indictment, Count 4, ¶¶ 1-2. The grand jury had been empaneled by the United States District Court for the District of New Jersey on or about 18 March 1985. Id. Count 4 states Eisenberg prevented Monarch from producing documents responsive to a subpoena served on Monarch on 25 August 1985 by directing Monarch's records custodian to misrepresent to the Office of the United States Attorney for the District of New Jersey that the documents were previously sent to the Chicago Strike Force. Id. Count 5 charges that from about July 1988 to about September 1988, in the District of New Jersey and elsewhere, Eisenberg concealed various Monarch documents which were required to be produced pursuant to the subpoena of a grand jury empaneled in the District of New Jersey on 17 March 1987 and caused false and misleading sworn testimony to be provided to the grand jury. Superseding Indictment, Count 5, ¶¶ 1-2. It states that in response to the subpoena, which was served on Monarch on 14 July 1988 and which required Monarch to produce documents and a records custodian to testify on 2 August 1988 before the grand jury, Eisenberg misrepresented in a letter to the Office of the United States Attorney that certain of these documents were previously sent to the Chicago Strike Force in response to other grand jury subpoenas. Id. It states that in fact, Eisenberg had previously secreted such documents in the Brooklyn Bakery. Id. In addition, Count 5 states that at the direction of Eisenberg, Monarch's records custodian testified under oath before the grand jury that documents responsive to the grand jury subpoena and not produced had previously been sent by Monarch to the Chicago Strike Force in response to other grand jury subpoenas. Id.

Finally, Count 6 states that from about August 1987 to about September 1987, Eisenberg secreted Monarch documents which were required to be produced pursuant to a trial subpoena duces tecum and an order of the United States District Court for the District of New Jersey. Superseding Indictment, Count 6, ¶¶ 1-2. It states that a trial subpoena duces tecum was served on Monarch on or about 26 August 1987 in connection with the trial of Cannistraro for the crimes charged in the 1987 Indictment. It states this subpoena required Monarch to produce documents to the Office of the United States Attorney on or before 9 September 1987 and to produce a records custodian to testify at trial, then scheduled for 24 September 1987. Id. It further states that on or about 10 September 1987, the United States District Court for the District of New Jersey issued an order requiring Monarch to produce the documents responsive to the subpoena. Id. It states that Monarch's records custodian, at Eisenberg's direction, misrepresented to the Office of the United States Attorney and to the FBI that such documents were previously sent to the Chicago Strike Force in response to other grand jury subpoenas, when in fact they were secreted by Eisenberg at the Brooklyn Bakery. Id.

Discussion

I. Discovery-Related and Miscellaneous Motions

A. Motion for Statements of Co-Conspirators

Bertoli, joined by Eisenberg, moves for disclosure by the Government of the statements of unindicted co-conspirators. Bertoli argues such statements are discoverable as his own statements under Fed.R.Crim.P. 16(a)(1)(A).*fn10 Bertoli Discovery Brief at 16. In addition, Bertoli argues such statements are discoverable under Fed.R.Crim.P. 16(a)(1)(C). Id. at 16-17 (citing United States v. Enright, 579 F.2d 980 (6th Cir. 1978); Government of Virgin Islands v. Ruiz, 495 F.2d 1175 (3d Cir. 1974); United States v. Smith, 65 F.R.D. 464, 473 (N.D.Ga. 1974); United States v. McMillen, 489 F.2d 229 (7th Cir. 1972), cert. denied, 410 U.S. 955, 93 S.Ct. 1420, 35 L.Ed.2d 687 (1973); United States v. Bloom, 78 F.R.D. 591 (E.D.Pa. 1977)).*fn11

Some courts have held that on a broad reading of Rule 16(a)(1)(A), it is possible to regard the statements of co-conspirators made during the course of and in furtherance of a conspiracy as the statements of the defendant and discoverable as such. 2 C. Wright, Federal Practice and Procedure, § 253 n. 17 (1982 & Supp. 1987); United States v. Jackson, 757 F.2d 1486, 1491 (4th Cir.) (statements of a co-conspirator may be imputed to a defendant under Federal Rule of Evidence 801(d)(2)(E) and are discoverable under Federal Rule of Criminal Procedure 16(a)(1)(A)), cert. denied, 474 U.S. 994, 106 S.Ct. 407, 88 L.Ed.2d 358 (1985); United States v. Konefal, 566 F. Supp. 698, 705-07 (N.D.N.Y. 1983).

Even under this broad interpretation of Rule 16(a)(1)(A), however, discovery of the statements of co-conspirators may only be permitted on a Rule 16 motion if the Government does not intend to call such co-conspirators as witnesses at trial. Jackson, 757 F.2d at 1491; Konefal, 566 F. Supp. at 706. If the Government intends to call such co-conspirators as witnesses, the Jencks Act, 18 U.S.C. § 3500, expressly makes statements of Government witnesses, including co-conspirators, not discoverable until such time as the witness testifies. 18 U.S.C. § 3500(a).*fn12

This broad interpretation of Rule 16(a)(1)(A) is not adopted. The weight of authority does not support extending Rule 16(a)(1)(A) beyond its literal mandate requiring disclosure of a defendant's own statements. See, e.g., United States v. Mayberry, 896 F.2d 1117, 1122 (8th Cir. 1990); Tarantino, 846 F.2d at 1418 (holding Rule 16(a)(1)(A) does not include statements made by co-conspirators even if those statements can be attributed to the defendant for purposes of the rule against hearsay); Orr, 825 F.2d at 1541 (Rule 16(a)(1)(A) does not apply to co-conspirators' statements); United States v. Roberts, 811 F.2d 257 (4th Cir. 1987) (en banc) (plain language of Rule 16(a)(1)(A) does not mention and is not intended to apply to statements made by co-conspirators; such statements are more properly governed by the Jencks Act); Percevault, 490 F.2d at 130-32 (Rule 16(a) does not encompass statements made by co-conspirators who are potential government witnesses and the Jencks Act does not permit their disclosure). See also In re United States, 834 F.2d 283, 284-86 (2d Cir. 1987) (in which the Second Circuit cited with favor its previous decision in Percevault, 490 F.2d at 126); United States v. Fischbach & Moore, Inc., 576 F. Supp. 1384, 1390 (W.D.Pa. 1983) (rejecting broad interpretation of Rule 16 and expressing the view that co-conspirators' statements are within the purview of the Jencks Act and not within the reach of Rule 16).

To the extent the statements of co-conspirators encompass exculpatory information, the Government has pledged to comply with its obligations under Brady. Government Brief at 71. In addition, as mentioned, the statements of co-conspirators may be discoverable under the Jencks Act, if the co-conspirators testify at trial. Roberts, 811 F.2d at 259; Fischbach & Moore, Inc., 576 F. Supp. at 1390; United States v. Wolczik, 480 F. Supp. 1205, 1209 (W.D.Pa. 1979); see Fed.R.Crim.P. 16(a)(2) (citing 18 U.S.C. § 3500).

Under the Jencks Act and Rule 26.2 of the Federal Rules of Criminal Procedure, which incorporates the substance of the Jencks Act, a defendant may request the pretrial statements of a Government witness that relate to his testimony once the witness has finished testifying on direct examination. The Jencks Act states: "[N]o statement or report in the possession of the United States which was made by a Government witness . . . shall be the subject of subpena [sic], discovery, or inspection until said witness has testified on direct examination in the trial of the case." 18 U.S.C. § 3500(a). As the Third Circuit explained in United States v. Murphy, 569 F.2d 771 (3d Cir.), cert. denied, 435 U.S. 955, 98 S.Ct. 1588, 55 L.Ed.2d 807 (1978): "The blunt command of the statute together with the unequivocal legislative history has led to unbroken precedent in the Courts of Appeals denying to district courts the power to compel production of the statements of government witnesses until conclusion of direct examination at the trial." Id. at 773. In the instant case, the Government has indicated it will disclose any Jencks Act material the day before the witness testifies, Government Brief at 61 n. 30, although it is not required to do so.

The request by Bertoli, joined by Eisenberg, under Rule 16 for statements of co-conspirators is denied.

B. Motion for List of Government Witnesses

Bertoli, joined by Eisenberg, seeks an order compelling disclosure by the Government of the witnesses it will call at trial. He argues such disclosure is warranted, inter alia, in light of the complexity of this case and in light of the lack of showing by the Government of any risk that witness intimidation would result from disclosure. This motion is baseless.

A defendant in a noncapital case does not have a right to discover a list of prospective Government witnesses. Weatherford v. Bursey, 429 U.S. 545, 559, 97 S.Ct. 837, 845, 51 L.Ed.2d 30 (1977) (due process does not require Government to provide names of witnesses unfavorable to defendant); Government of the Virgin Islands v. Martinez, 847 F.2d 125, 128 (3d Cir. 1988) ("[T]he government is not automatically required to disclose the name[s] of . . . witness[es] in a non-capital criminal case."); United States v. Di Pasquale, 740 F.2d 1282, 1294 (3d Cir. 1984) (Government is not required to divulge the identity of its witnesses in a non-capital case), cert. denied, 469 U.S. 1228, 105 S.Ct. 1226, 84 L.Ed.2d 364 (1985); United States v. Addonizio, 451 F.2d 49, 62 (3d Cir. 1971) ("[I]n no event is the Government required to divulge the identity of its witnesses in a non-capital case."), cert. denied, 405 U.S. 936, 92 S.Ct. 949, 30 L.Ed.2d 812, reh'g denied, 405 U.S. 1048, 92 S.Ct. 1309, 31 L.Ed.2d 591 (1972).

It is within the discretion of a court to "order such disclosure to ensure the effective administration of the criminal justice system." United States v. Higgs, 713 F.2d 39, 44 n. 6 (3d Cir. 1983), cert. denied sub nom., 464 U.S. 1048, 104 S.Ct. 725, 79 L.Ed.2d 185 (1984). However, it is likewise within the discretion of a court to refuse to compel such disclosure where such disclosure may endanger the witnesses. Martinez, 847 F.2d at 128. A request to compel disclosure has been denied where no compelling justification for such disclosure was offered. See United States v. Zolp, 659 F. Supp. 692, 704 (D.N.J. 1987) ("The Third Circuit does not require that the Government divulge its trial witnesses and defendants herein have presented no compelling justification for departing from this settled principle."). In addition, disclosure has been denied even in complex cases. See, e.g., Zolp, 659 F. Supp. at 704; United States v. Vastola, 670 F. Supp. 1244, 1268 (D.N.J. 1987).

Bertoli does not contend he is entitled to the list of Government witnesses he seeks. Rather, he argues this court has discretionary power to order such disclosure and that it is warranted in this case because the need of the defense for the disclosure of prospective witnesses outweighs the Government's interest in not divulging the identities of the witnesses or the content of its case in advance of trial. Bertoli, however, has not presented any justification, much more compelling justification, for such sweeping discovery in this case.

In addition, compelling reasons exist to refuse such disclosure. The Government submitted the affidavit of FBI Special Agent Michael J. Cahill ("Cahill") to support its contention that Eisenberg and Bertoli have attempted to buy the silence of Cannistraro. Cahill asserted: "My investigation has revealed evidence that Richard Bertoli and Leo Eisenberg have promised Richard Cannistraro one million dollars for every year he spent in jail in return for Cannistraro's silence about the illegal activities of the Monarch RICO enterprises." Cahill Aff., ¶ 2.*fn13

In addition, the Superseding Indictment charges Eisenberg with obstructing justice by directing the Monarch records custodian to misrepresent to the Office of the United States Attorney, and to do so under oath during grand jury proceedings, that subpoenaed documents had previously been sent to the Chicago Task Force. It also charges that Eisenberg obstructed justice by secreting certain subpoenaed documents in the Brooklyn Bakery. Moreover, Cannistraro pleaded guilty to the 1987 Indictment which charged him with obstructing justice by providing money to a grand jury witness in an effort to have the witness lie under oath to the grand jury about the witness' stock nominee relationship with Cannistraro. See Cannistraro, 694 F. Supp. at 65.

Although not required to do so, the Government has agreed to provide the Defendants with a list of unindicted co-conspirators and co-racketeers. Government Brief at 57 n. 26 and 74 n. 33. Bertoli's motion for an order compelling the Government to disclose its witness list is denied.

C. Motion for Giglio Material

Bertoli, joined by Eisenberg, additionally seeks impeaching materials possessed by the Government as to its witnesses. Such material is discoverable pursuant to Giglio v. United States, 405 U.S. 150, 92 S.Ct. 763, 31 L.Ed.2d 104 (1972).

In Giglio, the Supreme Court extended the rule set forth in Brady, 373 U.S. at 83, 83 S.Ct. at 1194, requiring the Government to disclose to the defendant exculpatory material in its possession, to encompass information that might be used to impeach the credibility of Government witnesses when the reliability of those witnesses could be determinative of guilt or innocence. Id. 405 U.S. at 154, 92 S.Ct. at 766.*fn14 Evidence that might be used to impeach Government witnesses by showing bias or interest has been deemed to fall within the purview of Giglio. United States v. Bagley, 473 U.S. 667, 676, 105 S.Ct. 3375, 3380, 87 L.Ed.2d 481 (1985); Higgs, 713 F.2d at 42.

In Higgs, the Third Circuit held a defendant's due process right to a fair trial is satisfied when information relating to the credibility of Government witnesses is disclosed the day the witnesses are scheduled to testify. Higgs, 713 F.2d at 44. The Circuit explained the requirements of due process depend upon what information has been requested and how that information will be used by the defendant. Id. at 43-44.

In Higgs, the defendant made a specific request for the names and addresses of Government witnesses who were granted immunity or leniency and for the substance of any agreements between those witnesses and the Government. Id. at 42. The Circuit stated:

  The Brady material in this case was information
  that appellees could use on cross-examination to
  challenge the credibility of government witnesses.
  For that type of material, we think appellee's
  right to a fair trial will be fairly protected if
  disclosure is made the day that the witness
  testifies. Disclosure at that time will fully allow
  appellees to effectively use that information to
  challenge the veracity of the government's
  witnesses.

Id. at 44 (emphasis added).

The Higgs court held it was an abuse of discretion for the trial court to order disclosure of the material a week prior to trial. In so holding, the court observed the purpose of requiring disclosure of impeachment information is not to assist the defense in a general pretrial investigation, but only to give the defense an opportunity to effectively cross-examine the Government's witnesses at trial. See id. at 44-45.

Here, the Government has indicated it will disclose any Giglio material in its possession the day before the witness testifies. Government Brief at 61. In addition, the same reasons set forth above for denying Bertoli's motion for disclosure of the Government's witnesses also weigh against ordering disclosure of Giglio material at this time. Bertoli's motion for early disclosure of Giglio material is denied.*fn15

  D.  Motions for Disclosure of Rule 404(b) Evidence the
      Government Intends to Admit

Bertoli and Eisenberg*fn16 seek disclosure of Rule 404(b) Evidence the Government intends to admit concerning other crimes, wrongs or acts by Bertoli and Eisenberg in order to prove motive, opportunity, intent, preparation, plan, knowledge, identity or absence of mistake or accident with respect to the offenses charged. Bertoli Discovery Brief at 14; Eisenberg Brief at 11-13.

Bertoli argues: "The importance of disclosure of evidence of other crimes, wrongs, or acts is apparent. . . . [P]re-trial disclosure of the Government's intention to use such evidence would enable the court to make a carefully reasoned judgment with respect to the admissibility of such evidence." Id. at 15. Eisenberg argues pre-trial disclosure of such evidence "would minimize any improper prejudicial effect of this evidence." Eisenberg Brief at 12.

Questions as to the admissibility of prior bad acts under Rule 404(b) are properly asserted during trial, not at the pretrial stage. Vastola, 670 F. Supp. at 1268 (it would be "unduly speculative" to rule on the admissibility of "other acts" evidence before hearing the factual context at trial); see United States v. Matos-Peralta, 691 F. Supp. 780, 791 (S.D.N.Y. 1988) (disclosure of Rule 404(b) material not subject to minimum time limit because relevance will change as "the proof and possible defenses crystallize").

Federal Rules of Criminal Procedure 12(d)(2) requires the Government to give notice of its intention to use evidence at the request of the defendant. This rule, however, is limited to evidence needed for a defendant's motion to suppress and to evidence discoverable under Fed.R.Crim.P. 16. Although a defendant's prior criminal record is discoverable under Rule 16, evidence of prior bad acts is not. See Fischbach & Moore, Inc., 576 F. Supp. at 1384; United States v. Ramirez, 602 F. Supp. 783 (S.D.N.Y. 1985) (defendant's request for pretrial hearing to determine admissibility of alleged prior or subsequent similar act denied; defendant instructed to seek ruling during course of trial).

Prior to the Supreme Court's decision in Huddleston v. United States, 485 U.S. 681, 687, 108 S.Ct. 1496, 1500, 99 L.Ed.2d 771 (1988), courts encouraged pretrial disclosure by the Government of its intention to introduce evidence of prior bad acts. See United States v. Foskey, 636 F.2d 517, 525-26 (D.C. Cir. 1980); Fischbach & Moore, Inc., 576 F. Supp. at 1397-98. This early disclosure has been encouraged in order to facilitate the court's determination as to the admissibility of evidence under Rule 404(b). In order for bad acts evidence to be admissible, the Government must establish the relevancy of the evidence to a material issue other than character, such as motive, opportunity, intent, identity or absence of mistake or accident. See Huddleston, 485 U.S. at 687, 108 S.Ct. at 1500; Foskey, 636 F.2d at 523. In Huddleston, the Court explained that "[i]n the Rule 404(b) context, similar act evidence is relevant only if the jury can reasonably conclude that the act occurred and that the defendant was the actor." Huddleston, 485 U.S. at 689, 108 S.Ct. at 1501.

After the threshold determination is made that the evidence is probative of one of the issues listed in Rule 404(b), the court must determine "whether the danger of undue prejudice outweighs the probative value of the evidence in view of the availability of other means of proof and other factors appropriate for making decisions of this kind under Rule 403."*fn17 Huddleston, 485 U.S. at 688, 108 S.Ct. at 1500 (quoting Fed.R.Evid. 404(b) advisory committee note); Foskey, 636 F.2d at 523. In Huddleston, the Court indicated that "the strength of the evidence establishing the similar act is one of the factors the court may consider when conducting the Rule 403 balancing." Huddleston, 485 U.S. at 689 n. 6, 108 S.Ct. at 1501 n. 6.

In Foskey, the D.C. Circuit suggested that the Government should exercise its discretion under Fed.R.Crim.P. 12(d)(1)*fn18 and notify the defense before trial of its intention to introduce any evidence of prior bad acts. Foskey, 636 F.2d at 526 n. 8. The court indicated further that if the defense raised a motion to suppress, the Government should then supply the district court with a written analysis of the logical inferences justifying admission of the evidence. Given the complexity of these questions, the court reasoned such a procedure would obviate the need for speculation regarding the Government's theory of the relevance of the evidence to the issues listed in Rule 404(b). Id. The Foskey court explained:

    Rules 403 and 404(b) are not obstacles to be
  cleared at all costs, even by cutting around
  corners whenever it is possible to do so. These
  rules were designed to ensure a defendant a fair
  and just trial based upon the evidence presented,
  not upon impermissible inferences of criminal
  predisposition or by confusion of the issues. The
  district court, required to make on-the-spot
  decisions, does not have the luxury of engaging in
  the type of careful balancing we have undertaken
  here. . . . There is a large measure of
  responsibility in the prosecutor to weigh the
  evidence independently: if its relevance is
  outweighed by the danger of unfairly prejudicing,
  confusing, or misleading the jury, it should not
  be introduced. The assistant United States
  attorney must step back from his or her partisan
  role and make these determinations

  in an objective and fair-minded fashion before
  proffering the evidence.

Id. at 525-26.

Similarly, the district court in Fischbach encouraged the Government to exercise its discretion and disclose to the defense bad acts which it intended to introduce at trial. Fischbach & Moore, Inc., 576 F. Supp. at 1397-98 (quoting Foskey, 636 F.2d at 525-26). The court pointed out, however, that "[w]hile we believe this early disclosure is to be encouraged, we know of no authority requiring the government to disclose such information." Id. at 1398.

Although the Foskey decision offered various reasons for early disclosure and the Fischbach decision encouraged such disclosure, it is significant that in Huddleston, a unanimous decision, the Supreme Court did not mandate or even address the timing of such disclosure. In light of the holdings of Foskey and Fischbach, as well as of other cases, it appears that the Supreme Court was aware of such pretrial discovery requests concerning Rule 404(b) Evidence but chose to continue the procedure of allowing the Government to determine when such pretrial disclosure will be made.

In the instant case, the Government asserts: "Should the United States seek to offer any evidence pursuant to Rule 404(b), it will notify the [c]ourt and the [D]efendants prior to the introduction of such evidence. This will afford the [D]efendants adequate notice, and the [c]ourt adequate time, to weigh the probative value of the evidence against its possible prejudicial impact." Government Brief at 64. The motions of Bertoli and Eisenberg for pre-trial disclosure of Rule 404(b) Evidence are denied.

  E.  Motion for Identification of Brady Material Among
      Documents Previously Produced

Bertoli, joined by Eisenberg, seeks an order compelling the Government to identify the specific documents among the materials thus far produced which constitute Brady material. Bertoli Discovery Brief at 37. In response, the Government asserts it has no obligation to identify Brady material among documents produced, but has an obligation only to make available to the Defendants Brady material in its possession to which the Defendants do not have access or to which the Defendants could not obtain access through the exercise of reasonable diligence. Government Brief at 66. The Government argues the identification of Brady material is information which the Defendants could ascertain through the exercise of reasonable diligence. Id. at 67. The Government asserts its records indicate that between 10 November 1989 and 9 February 1990, representatives of the Defendants spent over 100 hours reviewing these documents and deciding which documents it would seek to have copied. Id. at 65.

Brady is "designed to `assure that the defendant will not be denied access to exculpatory evidence only known to the Government.'" United States v. Grossman, 843 F.2d 78, 85 (2d Cir. 1988) (quoting United States v. LeRoy, 687 F.2d 610, 619 (2d Cir. 1982), cert. denied, 459 U.S. 1174, 103 S.Ct. 823, 74 L.Ed.2d 1019 (1983)) (emphasis added), cert. denied, 488 U.S. 1040, 109 S.Ct. 864, 102 L.Ed.2d 988, reh'g denied, 490 U.S. 1059, 109 S.Ct. 1974, 104 L.Ed.2d 442 (1989). As the Third Circuit has stated, "`the [G]overnment is not obliged under Brady to furnish a defendant with information which he already has or, with any reasonable diligence, he can obtain himself.'" United States v. Starusko, 729 F.2d 256, 262 (3d Cir. 1984) (quoting United States v. Campagnuolo, 592 F.2d 852, 861 (5th Cir. 1979)). See also United States v. Wilson, 901 F.2d 378, 381 (4th Cir. 1990); United States v. Meros, 866 F.2d 1304, 1309 (11th Cir.), cert. denied, 493 U.S. 932, 110 S.Ct. 322, 107 L.Ed.2d 312 (1989); United States v. Newman, 849 F.2d 156, 161 (5th Cir. 1988).

  F.  Motion for Production of Materials Initially Disclosed to
      the Defendants But Later Withdrawn

Bertoli, joined by Eisenberg, moves for production of evidence which was initially produced in November 1989 for inspection and copying. Counsel for Bertoli states that after the material had been reviewed and marked for copying by Bertoli, and after the copying process was completed, the Government first informed counsel for Bertoli that certain items had been withdrawn and would not be copied for Bertoli. Bertoli now moves for production of these items for inspection and copying or, in the alternative, for a detailed explanation of these items in order to determine whether they are discoverable under Fed.R.Crim.P. 16. Bertoli Discovery Brief at 33. Bertoli argues: "In light of the fact that the Government has already produced the grand jury transcripts and the audio cassette tapes, it should be compelled to copy and provide them to defendant Bertoli." Id. at 35.

H. Richard Chattman ("Chattman"), an attorney for Bertoli, states that on 6 November 1989, at the arraignment of Bertoli, the Government offered to make available a substantial amount of evidence in this case for inspection and copying by the Defendants. Subsequently, the Government produced documents and tapes for the Defendants. Chattman Aff., ¶ 2. The produced materials included twenty-four transcripts of grand jury testimony in the matter of United States v. Richard Roe, dated May, 1980, venued in the Southern District of New York (the "Roe Transcripts"). Id., ¶ 4. In addition, seventeen audio cassette tape recordings were marked for copying. Id. On 11 April 1990, after the materials marked for copying by the Defendants were reproduced, Chattman was told by David Rosenfield ("Rosenfield"), Special Assistant United States Attorney, that the Roe Transcripts were removed from the copied materials and would not be turned over. Id., ¶ 5. Rosenfield informed Chattman these materials did not relate to activities charged in the Superseding Indictment and the tapes were not recordings of conversations of any of the Defendants. Id., ¶ 5.

Bertoli cites no authority for the proposition that a defendant is entitled as a matter of right to materials inadvertently disclosed by the Government. The Government represents it "is well aware of, and has complied with, its obligations under Rule 16 and this [c]ourt's discovery order." Government Brief at 46. It represents that shortly after the Defendants' arraignment on 6 November 1989, it made discovery material available to the Defendants for review and copying, including a substantial amount of material it was not required to produce at that time. See infra at 689-691. In addition, the Government states it has complied with its obligation to produce Brady material and will continue to comply with it should any exculpatory material come into its possession. Id. at 691-692. The Government additionally represents it will produce Giglio and Jencks Act material concerning a witness the day before the witness testifies. Id. at 693. The Defendants are entitled to no more. The motion of Bertoli and Eisenberg for discovery of materials previously produced inadvertently by the Government is denied.

G. Motion for a Bill of Particulars

Bertoli, joined by Eisenberg, moves pursuant to Fed.R.Crim.P. 7(f) for a Bill of Particulars. The Bill of Particulars submitted by Bertoli is thirty-three pages in length and includes seventy questions relative to Count 1, seven questions relative to Count 2, fifteen questions relative to Count 3 and seven questions relative to the forfeiture allegations of the Superseding Indictment. Many of these questions contain multiple subparts.

The Bill of Particulars submitted by Bertoli is too lengthy and detailed to set forth in full or to describe comprehensively. The questions include requests for specifics as to the identities of the alleged Nominee Brokerage Accounts, the identities of persons coming under the rubric of "others" set forth in the Superseding Indictment, specific places within the District of New Jersey referred to in the Superseding Indictment, specifics as to how various documents referred to in the Superseding Indictment were fraudulent, the subject documents of the charged instances of mail fraud perpetrated by Bertoli, how such instances related to the execution of the charged scheme and specifics as to transactions executed by the M & I Fund and Bullock Fund portfolio managers, inter alia.

Serving a function analogous to an indictment, a Bill of Particulars provides the defendant with notice of the charges against him. It is designed "`to identify with sufficient particularity the nature of the charge[s] pending against [the defendant], thereby enabling [him] to prepare for trial, to prevent surprise, and to interpose a plea of double jeopardy should he be prosecuted a second time for the same offense.'" United States v. Davidoff, 845 F.2d 1151, 1154 (2d Cir. 1988) (quoting United States v. Bortnovsky, 820 F.2d 572, 574 (2d Cir. 1987) (per curiam)); see United States v. Rosa, 891 F.2d 1063, 1066 (3d Cir. 1989); United States v. Adams, 759 F.2d 1099, 1113 (3d Cir.), cert. denied sub nom., 474 U.S. 971, 106 S.Ct. 336, 88 L.Ed.2d 321 (1985). A Bill of Particulars should be granted when, in the trial court's discretion, it appears the indictment is too vague to inform the defendant of the nature of the charges against him. Rosa, 891 F.2d at 1067; Addonizio, 451 F.2d at 63-64; Zolp, 659 F. Supp. at 706.

Although Rule 7(f) is construed liberally, it does not permit a defendant to receive wholesale discovery of the Government's evidence. Rosa, 891 F.2d at 1066; Addonizio, 451 F.2d at 64. Nonetheless, if the defendant seeks legitimate information, his request for a Bill of Particulars cannot be denied merely because providing the information would divulge details of the Government's evidence. Addonizio, 451 F.2d at 64 n. 16. The Third Circuit has stated:

  [T]rial judges must be allowed to exercise broad
  discretion in order to strike a prudent balance
  between the defendant's legitimate interest in
  securing information concerning the government's
  case and numerous countervailing considerations
  ranging from the personal security of witnesses to
  the unfairness that can result from forcing the
  government to commit itself to a specific version
  of the facts before it is in a position to do so.

Rosa, 891 F.2d at 1066.

In order to determine whether a Bill of Particulars is appropriate in this case, it is necessary to examine the discovery already produced by the Government in addition to the allegations of the indictment. United States v. Boffa, 513 F. Supp. 444, 485 (D.Del. 1980). As to the discovery produced in the instant case, the Government represents it has complied with its obligations under Fed.R.Crim.P. 16*fn19 and this court's discovery order, filed 23 May 1990 (the "23 May 1990 Order"),*fn20 as well as its obligations under Brady. Government Brief at 46-47. In addition, the Government represents it has made documents and other discovery materials available to the Defendants for review and copying. It states:

  These materials included, not only that which
  would then have been discoverable under Rule 16
  and the [c]ourt's probable discovery order, but
  also many documents that would not have been
  discoverable until thirty days before trial

  and many documents that fell beyond the scope of
  the discovery rules. Moreover, the [D]efendants
  have received two lengthy and detailed affidavits
  outlining evidence that connects the [D]efendants
  to various Cayman Islands bank accounts and
  [N]ominee [B]rokerage [A]ccounts*fn21 and have
  had access to numerous relevant documents and
  testimony from [the] 1987 [Cannistraro] criminal
  prosecution and the related SEC civil case.

Government Brief at 46.*fn22 The Government also asserts:

  [T]he [D]efendants are also defendants in the
  related SEC civil case concerning LCI and Toxic
  Waste currently pending in the Southern District
  of New York,*fn23 and, as a result, have had
  access to voluminous SEC records and to numerous
  transcripts of witness testimony before the SEC
  that are relevant to the charges in the
  Superseding Indictment. Moreover, prior to the
  issuance of the stay of discovery in that case,
  Bertoli, acting pro se, and Eisenberg's counsel
  attended several depositions and were able to
  question these witnesses. Even subsequent to the
  issuance of the stay, Bertoli, along with
  Eisenberg's counsel, were able to depose at great
  length SEC investigator Fred Florschutz.

Government Brief at 80 (citation omitted). The Defendants do not dispute these representations of the Government.*fn24

In addition, the Superseding Indictment is a seventy-nine page document which describes the alleged illegal conduct in detail too exhaustive to set forth in full. To describe a few of its allegations, as to the violation of RICO section 1962(c) charged in Count 1, the Superseding Indictment identifies the RICO enterprise as Monarch, states the period of time during which the racketeering schemes took place and states these schemes took place in New Jersey. While Bertoli's Bill of Particulars requests information as to the substance of the alleged fraud and specifics as to the instances of mail fraud, the Superseding Indictment identifies several reports and articles which were allegedly fraudulent, states several ways in which they were fraudulent and identifies by date and content several instances of mail and wire fraud which constitute the predicate acts of racketeering. The Superseding Indictment exhaustively describes the racketeering schemes and their objects and identifies additional participants in the scheme as the M & I Fund and Bullock Fund portfolio managers and the Hallswell research analyst.

As to Count 2, charging conspiracy to violate RICO section 1962(c) in violation of RICO section 1962(d), the Superseding Indictment states the period of the duration of the conspiracy and lists seventeen overt acts perpetrated in furtherance of the conspiracy. As to Count 3, charging conspiracy to violate Section 10(b) and Rule 10b-5 in violation of 18 U.S.C. ยง 371, the Superseding Indictment states the period during which the conspiracy took place, that it existed in New Jersey and describes the schemes as to which the Defendants conspired, involving the securities of Solar Age and High Tech and the use of Nominee Brokerage Accounts. All that is required of an indictment is that it ...


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