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RESOLUTION TRUST CORP. v. SPAGNOLI

January 4, 1993

RESOLUTION TRUST CORPORATION as Receiver of CITY SAVINGS, F.S.B., Plaintiff,
v.
WILLIAM J. SPAGNOLI, BEVERLY SPAGNOLI a/k/a BEVERLY LONGO, BARRY SPAGNOLI, JOANNE SPAGNOLI, and ANNETTE SPAGNOLI, NICHOLAS SPAGNOLI, WILLIAM C. SPAGNOLI, CHRISTOPHER D. SPAGNOLI, PAUL LONGO and CHARLES BALLISTER, Defendants.



The opinion of the court was delivered by: MARYANNE TRUMP BARRY

 BARRY, District Judge

 INTRODUCTION

 The procedural history of this matter is accurately and comprehensively set forth in the brief of plaintiff Resolution Trust Corporation ("RTC") and will be adopted and herein set forth in full.

 "On January 30, 1992, the [RTC] as Receiver of City Savings, F.S.B. filed a Verified Complaint pursuant to 12 U.S.C. §§ 1821(d) (17), (18), and (19), and other applicable law, seeking injunctive relief, the appointment of a trustee, the establishment of a constructive trust, and the avoidance of fraudulent transfers. Named as defendants were William Spagnoli ("Spagnoli"), his wife Beverly Spagnoli, his brother Barry Spagnoli, his sister-in-law Joanne Spagnoli and his mother Annette Spagnoli. The injunctive relief sought by the RTC at the time was directed only to four assets that were transferred by William Spagnoli to the other defendant family members. In addition to the filing of its Verified complaint, the RTC also sought and obtained the entry of an Order to Show Cause With Temporary Restraints Freezing Certain Assets and Ordering Discovery and An Accounting (the "Order to Show Cause"). On April 22, 1992, the return date of the Order to Show Cause, the Court entered a preliminary injunction restraining defendants from transferring or disposing of the transferred assets and ordering discovery and an accounting.

 On June 21, 1992, the RTC filed a Verified Amended Complaint directed at additional assets that were transferred by Spagnoli and his wife Beverly to five additional family members -- Spagnoli's brother Nicholas Spagnoli, Spagnoli's sons William C. and Christopher, his wife's uncle Charles Ballister and his father-in-law Paul Longo. Again, in addition to the filing of its Verified Amended Complaint, the RTC also sought and obtained an Order to Show Cause with Temporary Restraints Freezing Certain Assets. On October 22, 1992, defendants consented to the entry of a preliminary injunction freezing the additional assets as well.

 On October 21, 1992, the RTC filed a motion for partial summary judgment on its claims that certain transfers were fraudulent. In particular, summary judgment was sought on the following transfers;

 A. By Deed dated December 26, 1989, Spagnoli's interest in 6 Cobblestone Court, Holmdel Township, Monmouth County Lot 203, Block 21 was transferred from Spagnoli to his wife Beverly, for no consideration;

 B. On or about August 10, 1990, Spagnoli transferred $ 84,346.55 in monies he received in bribes and kickbacks to Barry and Joanne Spagnoli, and said sum was used as a down payment for the purchase of the property now owned by Barry an Joanne at 3 Larch Road, Cedar Knolls, New Jersey.

 C. On or about August 17, 1990, Spagnoli transferred $ 30,000 of the monies he received as bribes and kickbacks to Barry Spagnoli in a form of a certified check drawn on his wife's Merrill Lynch account;

 D. On or about December 7, 1990, Spagnoli transferred $ 45,000 of monies he received as bribes and kickbacks to his brother Nicholas Spagnoli in the form of a certified check drawn on his wife's Merrill Lynch account;

 E. On or about December 21, 1990, Spagnoli transferred $ 45,000 of the monies he received as bribes and kickbacks to his son, William C. Spagnoli, in the form of a wire transfer from his wife's Merrill Lynch account to his son's account at the First National Bank of Atlanta, Georgia; and

 F. From 1989 through 1991, Spagnoli transferred $ 30,000 of the monies he received as bribes and kickbacks to his sons, William C. Spagnoli and Christopher D. Spagnoli in the forms of gifts to each child.

 The motion was made returnable on November 12, 1992, the date that this matter was set for trial. On that date, the Court heard argument on the partial summary judgment motion, adopted and incorporated the RTC's statement of facts in its brief, and granted the motion in full. In particular, the Court held that:

 [All the subject transfers] were made after William Spagnoli was advised that he was the subject of a criminal investigation, were made to hinder, delay and defraud . . . City Federal and [the] RTC successor, and thus were fraudulent [in] that none of them were given for value.

 The RTC is permitted, therefore, to avoid these transfers and to recover either the judgment or a judgment for the value of the property.

 (Transcript of Proceedings of November 12, 1992, TR. at 6:24-7:6.)

 A. On or about December 26, 1989, Spagnoli and his wife transferred to Barry Spagnoli, Spagnoli's brother, certain real property located at 14 Seven Oaks Drive, Holmdel Township, Monmouth County, New Jersey, Lot 10, Block 20.2;

 B. On or about August 17, 1990, Spagnoli transferred $ 35,000 of the monies he received as bribes and kickbacks to his brother, Nicholas Spagnoli, in the form of a certified check drawn on his wife's Merrill Lynch account;

 C. On or about August 24, 1990, Spagnoli transferred $ 91,000 of the monies he received as bribes and kickbacks to his mother Annette Spagnoli, in the form of a certified check drawn on his wife's Merrill Lynch account;

 D. On or about August 24, 1990, Spagnoli transferred $ 64,000 of the monies he received as bribes and kickbacks to his father-in-law, Paul Longo, in the form of a certified check drawn on his wife's Merrill Lynch account;

 E. On or about August 24, 1990, Spagnoli transferred $ 30,000 of the monies he received as bribes and kickbacks to his wife's uncle, Charles D. Ballister, in the form of a certified check drawn on his wife's Merrill Lynch account;

 The RTC [with the consent of the defendants] submitted its case through the record created in Spagnoli's criminal proceeding, the deposition testimony of the defendants in this case and documents properly identified in those depositions. The defendants presented Beverly Spagnoli, Barry Spagnoli, Nick Spagnoli, Charles Ballister and Paul Longo as witnesses . . . ."

 Based on all that is before the court, the court's Findings of Fact and Conclusions of Law follow. Parenthetically, the bulk of the facts as found by the court are not in dispute and the battle has been waged over who is to be believed and the legal conclusions to be reached depending upon whose version of the few disputed facts is believed. It is crystal clear that RTC has won the battle - and the war.

 FINDINGS OF FACT

 1. It is undisputed that on September 16, 1991, William Spagnoli ("Spagnoli") pled guilty to five counts of a thirty-count indictment, those counts charging him with violations of 18 U.S.C. §§ 215(a)(2) and 371 (conspiracy to solicit payment to bank officer) and 26 U.S.C. § 7201 (tax evasion). It is similarly undisputed that at his Rule 11 hearing, Spagnoli admitted (1) that he was employed at City Federal Savings Bank ("City Federal") from approximately 1977 to approximately October 1989; (2) that he agreed with various borrowers of City Federal on one or more occasions that as a reward for helping them in connection with his administration of their loans he would receive payments from them; (3) that he accepted these payments with the intention of being rewarded in connection with his administration of the City Federal loans to the borrowers; and (4) that those payments "clearly exceed[ed] one million dollars." Spagnoli was sentenced on March 10, 1992, the court finding that:

 The approval process was corrupt. Spagnoli told the developers what they had to do and how to do it and signed off on the loans which thereafter went to the loan committees for approval. He was the gate keeper through whose gate one had to pass. It defies any concept of commercial reality to argue that with the approval or the disapproval of the bank officer who was at all times, first, in charge of City Federal's residential development loans in the State of New Jersey, then responsible for all residential development loans in the Northeast United States, and ultimately in charge of virtually all residential development loans in the United States, that the loan committees, whose meetings Spagnoli attended, would thereafter put a microscope to those loans, and there is no member of any committee who says that they did. Indeed, it appears that at least two of the developers would have testified that Spagnoli told them that he would block their loans if they did not pay the kickbacks he commanded.

 * * *

 The developers are not bathed in glory. While unhappy to pay kickbacks, they paid and got the loans they wanted, just as Spagnoli got the cash and other things of value he wanted and of course, Spagnoli saw to it that the loan proceeds were inflated to cover his insatiable demands and the collateral as a result was diminished.

 (P3, Tr. 4:02-19, 5:18-20 (emphasis added). Based, in part, upon those findings, the Court upward departed, sentencing Spagnoli to imprisonment for a term of seven years and a three-year term of supervised release. The Court also ordered Spagnoli to make restitution to the RTC in the amount of $ 2,540,717.00, the amount of the ...


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