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UNITED STATES v. BERTOLI

March 30, 1994

UNITED STATES OF AMERICA, Plaintiff
v.
RICHARD O. BERTOLI, Defendant.


LECHNER


[EDITOR'S NOTE: PART 1 OF 3. THIS DOCUMENT HAS BEEN SPLIT INTO MULTIPLE PARTS ON LEXIS TO ACCOMMODATE ITS LARGE SIZE. EACH PART CONTAINS THE SAME LEXIS CITE.]

TABLE OF CONTENTS

Facts

 Discussion

 A. Renewed Motion to Dismiss Counts One and Two of the Redacted Second

 Superseding Indictment

 1. The Decision in Reves

 2. Statute of Limitations

 3. Charges of Frontrunning

 B. Objections to the First Set of Cayman Islands Depositions Testimony and Documents

 1. Bertoli's Objections to the First Set of Cayman Islands Depositions in Their Entirety

 2. Bertoli's Objections to Specific Testimony From the First Set of Cayman Islands Depositions

 a. Deposition of Coleman

 b. Deposition of Rodney Bond

 c. Deposition of Gillooly

 d. Deposition of Duggan

 e. Deposition of Sheree Ebanks

 f. Depositions of Chan-A-Sue and Bechard

 g. Deposition of Meyeroff

 3. government's Objections to Specific Testimony From the First Set of Cayman Islands Depositions

 a. Deposition of Coleman

 b. Deposition of Rodney Bond

 c. Deposition of Duggen

 d. Deposition of Lundie

 4. Bertoli's Objections to Documents From the First Set of Cayman Islands Depositions

 a. Documents of Greenshields

 b. Documents from the Coleman Deposition

 c. Documents of Euro Bank

 5. Government's Objections to Documents from the first Set of Cayman Islands Depositions

 C. Objections to the Second Set of Cayman Islands Depositions Testimony and Documents

 1. Bertoli's Objections to Specific Testimony From the Second Set of Cayman Islands Depositions--Deposition of Ebanks

 a. Deposition of Enbanks

 b. Deposition of Burgess

 c. Deposition of Rodney Bond

 D. Pre-Trial and Trial Motions and Objections by Bertoli

 1. Motion to Sequester Government Witnesses

 2. Motion to Suppress use of Cayman Islands Documents By the Government Pursuant to 18 U.S.C. § 3505

 3. Motion to Turn Over Personnel Files of Government Witnesses and Agents

 4. Motion to Suppress or, in the Alternative, to Obtain Letters of Request to Take the Testimony of Euro Bank Personnel Ebanks and Burgess

 5. Objection to Reading of Redacted Second Superseding Indictment to Jury

 6. Motion to Question Eisenberg Regarding Charges Pending Against Him

 When He Pleaded Guilty

 7. Motion for a Mistrial

 8. Objection to Admission of Cayman Islands Documents After Beginning of Trial

 9. Objections to the Government's Use of Summary Charts and Demonstrative Charts

 a. Summary Charts

 b. Demonstrative Charts

 c. Admission of Charts

 10. Objections to Evidence of Other Acts: Rule 4049(b)

 a. The 1977 Suit by Executive Securities Against Bertoli and Bertoli's Filing for Bankruptcy

 b. The SEC Investigation and the SEC Action

 c. The SEC's 1979 Bar of Bertoli from Association with Broker-Dealers

 d. Other 404(b) Evidence

 i. Unindicted Stock Manipulation Schemes

 ii. The Government's Chart Evidence

 iii. Berco Trust Financial Statements and Corporate Records

 iv. The Swiss Bank Documents

 11. Objection to Special Verdict Sheet

 12. Objection to Hard Copy of Jury Charges and Hard Copy of Trail Transcript Being Submitted to Deliberating Jury

 13. Objection to Submission of Jury Books to Jury

 14. Objection to Subsequent Charges to Jury

 E. Pre-Trial and Trail Motions and Objections by Government

 1. Motion to Preclude Bertoli From Presenting a Defense Based on Selective

 or Vindictive Prosecution or Governmental Misconduct

 2. Motion to Quash Bertoli's Subpoena of Government's Case Agent

 3. Motion to Preclude Bertoli From Presentin Any evidence That Charges Were Dismissed in This Case

 4. Motion to Preclude Bertoli From Introducing Evidence That Certain Government Witnesses Used Narcotics or Alcohol

 F. Post-Trail Proceedings

 1. Bertoli's Motions for a New Trial Based on allegations of Juror Misconduct During Trail

 a. Jury Misconduct as a Basis for Granting a New Trail

 b. Right of Defendants to Be Present During Court's Interview of Juror for Misconduct

 i. Fifth Amendment Right to be Present

 ii. Right to be Present Pursuant to Rule 43

 iii. Right to Have Counsel Present

 c. The Riepe Letter

 2. Bertoli's Motion for New Trial Based on Allegations of Juror Misconduct During Voir Dire

 a. Voir Dire

 b. The Lawsuit against Juror Six

 c. Motion for a New Trail Based on Answers to Jury Voir Dire

 3. Bertoli's Motion to Recuse Court from Sentencing

 a. Background

 b. 28 U.S.C. § 455(a)

 c. Bertoli's Plan to Force recusal

 d. Statements and Rulings of the Court

 4. Sentencing

 a. Facts

 i. Bertoli's Activities at Executive Securities

 ii. The Stock Manipulation Schemes

 iii. Obstruction of Justice

 b. Sentencing Computation

 i. Applicable Guidelines

 ii. Grouping the Offenses

 iii. Calculating the Offense Level

  Group One

  Sections 2J1.2 and 2X3.1

  Sections 2F1.1

  Sections 2J1.7 and 3B1.1

  Group Two

  Group Three

  The Total Offense Level

  iv. Criminal History Category

  v. Monetary Penalties

  Ability to Pay

  5. Bertoli's Motion for Bail Pending Appeal

  a. Background

  b. 18 U.S.C. § 3143(b)

  i. The Risk of Flight

  ii. Danger to the Community

  iii. Substantial Question of Law or Fact

  Conclusion

  Appendix A:* List of Pleadings and Related Documents

  Appendix B: Transcripts of Depositions and Proceedings in Cayman Islands

  Appendix C: Transcripts of Trail Testimony

  Appendix D: Objections to Specific Testimony From the First Set of Cayman Islands Depositions

  Appendix E: Objections to specific Testimony From the Second Set of Cayman Islands Depositions

  LECHNER, DISTRICT JUDGE

  This is a criminal action which originated on 16 June 1989 when an indictment (the "Indictment") was returned against defendants Richard O. Bertoli ("Bertoli"), Richard S. Cannistraro ("Cannistraro") and Leo M. Eisenberg ("Eisenberg"). *fn1" On 29 September 1989, a six count superseding indictment (the "Superseding Indictment") *fn2" was returned. On 21 January 1992, the Government returned an eight count second superseding indictment (the "Second Superseding Indictment") against Bertoli and Cannistraro (collectively the "Defendants"). *fn3" Eisenberg is not a defendant in the Second Superseding Indictment although he is listed as a co-conspirator. *fn4"

  Following a conviction on two counts of the Redacted Second Superseding Indictment, Bertoli filed numerous post-trial motions, including one for bail pending appeal of his conviction. In moving for bail pending appeal, Bertoli has raised several contentions of error and other issues regarding the trial and pre-trial proceedings. The following opinion addresses these issues and Bertoli's other post-trial motions and is intended to facilitate the appeal. *fn5"

  Facts

  The facts of this case have been set forth at length in other opinions, most recently in Cannistraro, 800 F. Supp. 30; see also United States v. Cannistraro, 799 F. Supp. 410 (D.N.J. 1992); United States v. Cannistraro, 794 F. Supp. 1313 (D.N.J. 1992); United States v. Eisenberg, 773 F. Supp. 662 (D.N.J. 1991); United States v. Eisenberg, 734 F. Supp. 1137 (D.N.J. 1990). *fn6"

  A. The Redacted Second Superseding Indictment

  Count One ("Count One") of the Redacted Second Superseding Indictment charged Bertoli and Cannistraro with racketeering activities in violation of the Racketeer Influenced and Corrupt Organization Act ("RICO"), 18 U.S.C. § 1961, et seq. Count One described the pattern of racketeering engaged in by the Defendants and others, including Eisenberg, as consisting of predicate acts of mail fraud, wire fraud, interstate transportation of money taken by fraud, securities fraud and obstruction of justice. Count One, P 9.

  Specifically, the Redacted Second Superseding Indictment alleged Monarch Funding Corp. ("Monarch"), the enterprise, was a securities brokerage firm in New York City, New York, which was engaged in the business of underwriting, purchasing and selling securities primarily traded in the over-the-counter markets. Id., P 2. Count One alleged Bertoli was the former president of a brokerage firm *fn7" and controlled and had a beneficial interest in several nominee brokerage accounts *fn8" maintained at Monarch. Id., P 3. These nominee brokerage accounts included accounts in the names of Bertoli family members and various Cayman Islands individuals and entities. Id.

  Count One further alleged Cannistraro was a securities research analyst with Wood Gundy, Inc. ("Wood Gundy"), a brokerage firm located in New York City, New York. Id., P 4. It alleged Cannistraro controlled and had a beneficial interest in nominee brokerage accounts maintained at Monarch. Id. These nominee brokerage accounts included accounts in the names of Cannistraro relatives and various individuals and entities located in the Cayman Islands. Id.

  With regard to Eisenberg, Count One alleged Eisenberg was the owner and president of Monarch. Id., P 5. It alleged Eisenberg controlled and had a beneficial interest in nominee brokerage accounts maintained at Monarch, which included accounts in the names of various Cayman Islands individuals and entities. Id.

  Count One charged that, from about January 1982 to the present, in the District of New Jersey and elsewhere, Bertoli, Cannistraro and Eisenberg 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 . . . [and] Eisenberg." Id., PP 7-8. It identified the victims of the racketeering activity as the purchasers and sellers of securities recommended and traded by the Defendants and Eisenberg. Id., P 8. It alleged the means and methods used by the Defendants to conduct conspiracy included "attempts to conceal and cover-up their fraudulent activities." Id., P 9.

  Count One charged the Defendants with engaging in racketeering activity through the execution of four separate fraudulent trading or concealment schemes involving the following three securities: Liquidation Control, Inc. ("LCI"), Toxic Waste Containment, Inc. ("Toxic Waste") and High Technology Capital Corp. ("High Tech"). *fn9" Id.

  With respect to the scheme involving LCI securities (the "LCI Scheme"), Count One charged that, between approximately October 1982 and November 1983, the Defendants and others, including Eisenberg, devised a scheme to defraud and obtain money "by means of false and fraudulent pretenses, representations, and promises" with respect to LCI *fn10" securities. Id., P 11. Count One described the LCI Scheme as one in which the Defendants and Eisenberg rigged and manipulated the market in order to raise and control the price of LCI securities and to create a greater demand for the same. Id., PP 12-13.

  Count One charged Bertoli with causing Monarch to underwrite the initial public offering ("IPO") *fn11" of LCI securities (the "LCI IPO"). Id., P 14. It alleged Bertoli arranged for the LCI IPO to be sold in units; a unit consisted of one share of common stock and two warrants. Id., P 15. It alleged the Defendants and others, including Eisenberg, caused "virtually all of the securities in the LCI IPO to be sold to individuals and entities who were controlled by them, or who were under the control of individuals who had understandings with them concerning the manner in which these securities would be traded." Id., P 16. It alleged that, as a result, the Defendants and Eisenberg controlled the LCI securities traded in the market and enhanced their own ability to fraudulently manipulate the price of the LCI securities. Id.

  Count One alleged that, during the LCI IPO and the first few days of aftermarket trading, the Defendants and Eisenberg purchased substantial amounts of LCI securities at minimal cost through nominee brokerage accounts, such as the brokerage account for Euro Bank Corp. ("Euro Bank") *fn12" at Monarch. Id., P 17. It further alleged Defendants and Eisenberg controlled pricing by, prior to the close of the LCI IPO, making arrangements with brokers and traders for the LCI securities to be traded according to the directions of Defendants and Eisenberg. It alleged these individuals bought and sold LCI securities at times and prices determined by the Defendants and Eisenberg, rather than by market forces. Id., P 18.

  Count One alleged Defendants and Eisenberg bribed portfolio managers and research analysts of the M&I Growth Fund (the "M&I Fund") *fn13" and Aggressive Growth Shares, Inc. (the "Bullock Fund"). *fn14" It alleged the Defendants and Eisenberg opened nominee brokerage accounts at Monarch for the benefit of the M&I Fund and Bullock Fund managers and research analysts. These accounts were used to generate large sums of money through fraudulent trading of LCI securities. Id., P 19. The managers in turn bought large blocks of LCI securities for their respective funds. The research analysts caused Halswell Corp. ("Halswell") *fn15" to open an account at Monarch. Id.

  Count One alleged Cannistraro wrote a research report to be circulated prior to the close of the LCI IPO which recommended the purchase of LCI securities (the "LCI Report"). Id., P 20. It alleged the Defendants caused a broker from G.K. Scott & Co., a securities brokerage firm, ("G.K. Scott") to claim authorship of and publish the LCI Report on G.K. Scott letterhead because Cannistraro was an officer and director and the largest shareholder of LCI. Id. It further alleged that, as part of the LCI Scheme, the Defendants and Eisenberg caused the LCI Report to be disseminated without disclosing that Cannistraro had actually authored it, or disclosing that the Defendants and Eisenberg were engaged in a scheme to manipulate the market and that the LCI Report was part of the scheme. Id., P 21.

  Count One alleged that, during the first five days of aftermarket trading, the Defendants and Eisenberg caused the price of LCI securities to rise from the IPO unit price of twenty-five cents to $ 1.25 and that, by the end of February 1983, they caused the price to rise to $ 1.625 per share. Id., P 22. It alleged the Defendants and Eisenberg sold their LCI securities "without disclosing this fraudulent trading scheme" and "fraudulently obtained profits totalling at least $ 462,000." Id., P 23. Count One identified, by date and content, four instances of mail fraud, five instances of wire fraud and one instance of securities fraud in violation of Section 10(b) ("Section 10(b)") of the Securities Exchange Act of 1934 (the "Securities Exchange Act"), 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5 ("Rule 10b-5"), all perpetrated by the Defendants and others, including Eisenberg, in executing the LCI Scheme. Id., PP 24-26.

  Count One further charged that, between approximately December 1982 and October 1983, the Defendants and others, including Eisenberg, engaged in a scheme concerning Toxic Waste *fn16" securities (the "Toxic Waste Scheme"). Id., PP 27-28. Count One described the Toxic Waste Scheme as one in which the Defendants and Eisenberg rigged and manipulated the market in order to raise and to control the price of Toxic Waste securities and to create a greater demand for the same, in order to ensure they could sell their Toxic Waste securities at a substantial profit. Id., PP 28-29.

  Count One alleged Bertoli caused Monarch to underwrite the IPO of Toxic Waste securities (the "Toxic Waste IPO"). Id., P 30. It alleged Bertoli caused the securities in the Toxic Waste IPO to be sold in units, each consisting of one share of common stock and two warrants. Id., P 31. It alleged the Defendants and others, including Eisenberg, caused "the securities in the Toxic Waste IPO to be sold to individuals and entities who were controlled by them, or who were under the control of individuals who had understandings with them concerning the manner in which these securities would be traded." Id., P 32. It alleged that, as a result, the Defendants and Eisenberg controlled the Toxic Waste securities being traded in the market and enhanced their ability to fraudulently manipulate the price of the Toxic Waste securities. Id.

  Count One alleged that, during the Toxic Waste IPO and first days of aftermarket trading, the Defendants and Eisenberg purchased substantial amounts of Toxic Waste securities at minimal cost through nominee brokerage accounts in the names of Parsico Ltd. ("Parsico") *fn17" and Venture Partners "A" ("Venture Partners") *fn18" maintained at Monarch. Id., 33. It further alleged Defendants and Eisenberg controlled pricing by, prior to the close of the Toxic Waste IPO, making arrangements with brokers and traders for the Toxic Waste securities to be traded according to the directions of Defendants and Eisenberg. It alleged these individuals bought and sold Toxic Waste securities at times and prices determined by the Defendants and Eisenberg, rather than by the market forces. Id., P 34.

  Count One alleged that, in furtherance of the Toxic Waste Scheme, Defendants and Eisenberg opened nominee brokerage accounts at Monarch for the benefit of the managers and research analysts of the M&I Fund and the Bullock Fund. Id., P 35. It alleged the Defendants and Eisenberg bribed the managers of the M&I Fund and Bullock Fund to buy large blocks of Toxic Waste securities for their respective funds. Research analysts at the M&I Fund and Bullock Fund caused the Halswell brokerage account at Monarch to purchase large blocks of Toxic Waste securities. Id.

  Count One alleged that, as part of the fraudulent scheme to inflate the price of Toxic Waste securities, Cannistraro wrote four research reports (the "Toxic Waste Reports") to be circulated prior to the close of the Toxic Waste IPO. These reports recommended the purchase of the Toxic Waste securities. Id., P 36. Count One alleged Cannistraro caused Wood Gundy to disseminate the Toxic Waste Reports to the investing public. Id. It alleged the Defendants and Eisenberg caused the Toxic Waste Reports to be disseminated without disclosing that the Defendants and Eisenberg were engaged in a scheme to manipulate the market and that the reports were part of the scheme. Id., P 37. Count One alleged that, as part of the Toxic Waste Scheme, in or about March or April 1983, Bertoli and Eisenberg caused Monarch to disseminate to brokers, research analysts, securities newsletters and Monarch customers eighteen thousand copies of one of the Toxic Waste Reports. Id., P 38.

  Count One alleged that, in or about March or April 1983, Cannistraro caused to be prepared and disseminated to the investing public articles in the "Portfolio Letter," dated 14 March 1983, and the securities investment newsletter "Ground Floor," dated 22 April 1983. Id., P 39. It alleged these articles discussed the Toxic Waste Reports and continued to recommend the purchase of Toxic Waste securities without disclosing the existence of the Toxic Waste Scheme. Id.

  Count One alleged that, during the first three days of aftermarket trading, the Defendants and Eisenberg caused the price of Toxic Waste securities to rise from the IPO unit price of twenty-five cents to $ 1.25 per share of common stock and that, between 10 March 1983 and mid-June 1983, they caused the price to rise further to $ 4.50 per share. Id., P 40. Count One alleged the Defendants and Eisenberg sold their Toxic Waste securities "without disclosing this fraudulent trading scheme" and "fraudulently obtained profits totalling at least $ 4,240,000." Id., P 41. It identified, by date and content, eight 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 and others, including Eisenberg, in executing the Toxic Waste Scheme. Id., PP 42-45.

  Count One further charged that, from approximately March 1983 to November 1984, in the District of New Jersey and elsewhere, the Defendants executed a scheme to conceal the identities of the promoter and beneficial owners of High Tech (the "Beneficial Owners Concealment Scheme"). *fn19" Id., 46. It alleged that, in about March 1983, Bertoli became the promoter of High Tech, whereby he founded High Tech, appointed its officers, board of directors and advisory board, allocated the distribution of its securities and arranged for the IPO of its securities (the "High Tech IPO"), which IPO was underwritten by Monarch. Id., P 47.

  Count One further alleged that, in March 1983, prior to the High Tech IPO, the Defendants and Eisenberg caused 3,100,000 shares of High Tech restricted common stock to be placed in the names of nominees while the shares were beneficially owned by the Defendants and Eisenberg. Id., P 48. It alleged the Defendants and Eisenberg did not disclose in High Tech's registration statements and prospectus the role of Bertoli as High Tech's promoter and the Defendants' and Eisenberg's beneficial ownership of more than ten percent of High Tech's common stock and of more than ten percent of High Tech's outstanding stock. Id., P 49.

  Count One alleged that, having concealed such information, the Defendants raised $ 425,000 in capital for High Tech from the investing public and were able to direct the management and policies of High Tech to the benefit of the Defendants. Id., P 50. In addition, it alleged that, from approximately February 1984 to July 1984, the Defendants caused 3,100,000 shares of High Tech common stock beneficially owned by them to be sold for a profit of at least $ 115,000. Id., P 51. It identified, by date and content, three instances of mail fraud, two instances of wire fraud and two instances of securities fraud in violation of section 17 of the Securities Exchange Act, 15 U.S.C. § 77g, and sections 24, 10 and Schedule A(4) and (6) of the Securities Act of 1933 (the "Securities Act"), 15 U.S.C. §§ 77x, 77j(a)(1) and 77aa(4) and (6), all perpetrated by the Defendants and others, including Eisenberg, in executing the Beneficial Owners Concealment Scheme. Id., P 52-55.

  Count One alleged Bertoli caused Monarch to underwrite the IPO of High Tech securities. Id., P 59. It alleged Bertoli caused the securities in the High Tech IPO to be sold in units, consisting of one share of common stock and two warrants. Id., P 60. It alleged the Defendants and others, including Eisenberg, caused "the securities in the High Tech IPO to be sold to individuals and entities who were controlled by them, or who were under the control of individuals who had understandings with them concerning the manner in which these securities would be traded." Id., P 61. It charged that, as a result, the Defendants and Eisenberg controlled the High Tech securities being traded in the market and enhanced their ability to fraudulently manipulate the price of the High Tech securities. Id.

  Count One alleged that, during the High Tech IPO and first few days of aftermarket trading, the Defendants and Eisenberg purchased substantial amounts of High Tech securities at minimal cost through nominee brokerage accounts maintained at Monarch in the names of Parsico, Venture Partners, VPI Ltd. ("VPI") *fn20" and Roger Rowland ("Rowland"). *fn21" Id., P 62. It further alleged Defendants and Eisenberg controlled pricing by, prior to the close of the High Tech IPO, making arrangements with brokers and traders for the High Tech securities to be traded according to the directions of Defendants and Eisenberg. It alleged this trading procedure allowed High Tech securities to be bought and sold at times and prices determined by the Defendants and Eisenberg, rather than by market forces. Id., P 63. It charged that, as part of the High Tech Scheme, the Defendants and Eisenberg bribed a research analyst (the "Research Analyst") in an attempt to cause the buying of large blocks of High Tech securities. Id., P 64.

  Count One alleged the Defendants and Eisenberg allocated securities in the High Tech IPO to the Research Analyst's nominee brokerage account at Monarch. Id. In exchange for such allocation, and in exchange for money which the Defendants and Eisenberg provided to the Research Analyst "through the trading of LCI and Toxic Waste securities in his nominee accounts at Monarch, the Research Analyst caused the Halswell brokerage account at Monarch to purchase a large block of High Tech securities." Id.

  Count One alleged that, as part of the fraudulent scheme to inflate the price of High Tech securities, Cannistraro recommended the purchase of High Tech securities to various brokers at Wood Gundy, without disclosing that the Defendants and Eisenberg were engaged in a scheme to manipulate the market and that the recommendation was part of the scheme. Id., P 65. It alleged the Defendants and Eisenberg caused the price of High Tech securities to rise in the first six days of aftermarket trading from the IPO price of $ .50 to $ 2.25 per share of common stock; between 15 June and mid-October 1983 the price further increased to $ 3.25 per common share. Id., P 66.

  Count One charged that, from about June 1983 to about February 1984, the Defendants sold their High Tech securities to the investing public, without disclosing the existence of the fraudulent trading scheme, for a profit of at least $ 1,720,000. Id., P 67. It identified, by date and content, six instances of mail fraud and one instance of securities fraud in violation of Section 10(b) and Rule 10b-5, all perpetrated by the Defendants and others, including Eisenberg, in executing the High Tech Scheme. Id., PP 68-69.

   Finally, Count One charged the Defendants obstructed justice to conceal their wrongdoing (the "Cover-Up Scheme"). Count One alleged a subpoena by a grand jury empaneled in the District of New Jersey *fn22" 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., P 71. It alleged Cannistraro instructed and directed this nominee, in return for cash payments, to conceal Cannistraro's beneficial ownership in the nominee's Monarch account. Id., P 72.

  Count One charged Bertoli engaged in conduct to obstruct justice and to cover up the fraudulent trading schemes by shredding and destroying documents in the Cayman Islands in June and November 1987, by removing documents and hiding the proceeds from the racketeering activities and by submitting false and fraudulent affidavits to the court. Id., P 73.

  Count Two of the Redacted Second Superseding Indictment ("Count Two") charged the Defendants with conspiracy to violate section 1962(c) of RICO, 18 U.S.C. § 1962(c), by agreeing with others, including Eisenberg, to conduct the affairs of Monarch through a pattern of racketeering. Count Two, P 2. It charged the conspiracy existed from about January 1982 to at least January 1989, in the District of New Jersey and elsewhere. Id. It alleged the pattern of racketeering consisted of the racketeering acts (the "Racketeering Acts") charged in Count One of the Redacted Second Superseding Indictment. Id.

  Count Three of the Redacted Second Superseding Indictment ("Count Three") charged Bertoli with conspiracy to obstruct justice, in violation of 18 U.S.C. § 371, in connection with (1) an investigation, beginning in July 1983, by the SEC of allegedly fraudulent and manipulative trading at LCI and Toxic Waste (the "SEC Investigation"), (2) a civil action brought in 1985 by the SEC against the Defendants, Eisenberg and Steven Cloyes ("Cloyes"), a securities broker at Monarch (the "SEC Action"), (3) the 1985-86 Grand Jury Investigations, (4) the prosecution of Cannistraro in 1987 (the "1987 Cannistraro Prosecution") and (5) this action. Count Three, P 14. It charged the conspiracy began as early as March 1983 and continued through the date of trial. Id.

  Count Three described the object of the conspiracy as being "to cover-up, conceal, and eventually avoid civil and criminal liability for, the illegal racketeering activities of . . . Bertoli, . . . Cannistraro and . . . Eisenberg, and to prevent evidence of their . . . beneficial ownership of money and accounts in the Cayman Islands, from being considered and used" in the civil and criminal actions against them. Id., P 15. It alleged the conspiracy was achieved by causing brokers or nominees to lie to or to conceal evidence from investigators and the grand jury. Id., PP 16-28. As a result, Cayman Islands banks did not produce documents requested pursuant to an informal agreement between the United States Department of Justice and the Cayman Islands authorities. Moreover, Defendants concealed documents at Monarch that were subpoenaed by the grand jury, destroyed documents relating to the nominee accounts at Euro Bank, filed a false financial disclosure form with the United States Probation Office, transferred funds in the Cayman Islands and submitted false affidavits during the course of this prosecution. Id.

  Count Three listed thirty-three overt acts committed by the Defendants and Eisenberg in furtherance of this conspiracy between March 1983 and the return of the Second Superseding Indictment. Although these overt acts are too numerous to set forth in full in this opinion, they included several meetings and telephone calls between the Defendants and other parties and several false and misleading statements by the Defendants and other parties. *fn23"

  Count Five of the Redacted Second Superseding Indictment ("Count Five") also charged Bertoli with obstruction of justice in violation of 18 U.S.C. §§ 1502 and 1503. Count Five, P 3. It alleged that, in or about November 1987, Bertoli shredded and destroyed documents in the Cayman Islands that were relevant to the investigations of a grand jury empaneled on 17 March 1987. Id., PP 2-3.

  Count Six of the Redacted Second Superseding Indictment ("Count Six") charged Bertoli with obstruction of justice in violation of 18 U.S.C. §§ 1502 and 1503. Count Six, P 2. Count Six alleged that, in or about April 1990, in the District of New Jersey and elsewhere, Bertoli and others, including Eisenberg, "caused the racketeering proceeds and documents relating to those racketeering proceeds to be transferred from the custody and control of [a Paget-Brown & Co. ("Paget Brown")] *fn24" employee and then caused the racketeering proceeds to be moved from the Cayman Islands to the Principality of Andorra in Europe." Id.

  Count Seven of the Redacted Second Superseding Indictment ("Count Seven") charged Bertoli with obstruction of justice in violation of 18 U.S.C. §§ 1502 and 1503. Count Seven, P 5. It alleged that, on or about 6 December 1991 Bertoli "submitted three purported "Affidavits in Contemplation of Death" by Jack Isaacson *fn25" (the "Isaacson Affidavits"), *fn26" which stated, inter alia, that Isaacson and another individual were the sole beneficial owners of the Cayman Islands bank and brokerage accounts . . . relevant to the present RICO prosecution." Id., PP 2-3 (footnotes added). Count Seven alleged the Isaacson Affidavits were false and fraudulent and Bertoli was aware of this. Id., P 4. It further alleged Bertoli was aware the Isaacson Affidavits "had been prepared for the use of . . . Bertoli and others, including . . . Cannistraro and . . . Eisenberg, in attempting to fraudulently exculpate themselves . . ." Id.

  B. History of the Cayman Islands Depositions

  On 6 November 1989, the Government filed a motion, pursuant to Fed. R. Crim. P. 15, for depositions in the Cayman Islands (the "First Set of Cayman Islands Depositions") and for the issuance of a request for foreign judicial assistance (the "Cayman Islands Discovery Motion"). *fn27" First Cayman Discovery Opinion at 7. Defendants opposed the motion. Id. at 6-9.

  On 11 December 1989, Bertoli applied ex parte to the Grand Court of the Cayman Islands (the "Cayman Grand Court") for an injunction (the "Cayman Islands Ex Parte Injunction") prohibiting the Government from applying to the Cayman Islands for the discovery described in the Cayman Islands Discovery Motion. *fn28" The Cayman Islands Ex Parte Injunction was granted on 4 January 1990. Id. at 8.

  On 4 April 1990, the Government filed a treaty request (the "MLA Treaty Request") with the Cayman Grand Court seeking evidence located in the Cayman Islands pursuant to the Treaty Between the United States and the United Kingdom of Great Britain and Northern Ireland Concerning the Cayman Islands and Relating to Mutual Legal Assistance in Criminal Matters (the "MLA Treaty"), S. Treaty Doc. No. 100-8, 100th Cong., 1st Sess. (1990). First Cayman Discovery Opinion at 3. Also on 4 April 1990, the Government filed an amended Rule 15 motion (the "Amended Cayman Islands Discovery Motion"), retaining its request to take Cayman Islands depositions but withdrawing its motion for the issuance of a request for foreign judicial assistance and advising it was proceeding under the MLA Treaty. First Cayman Discovery Opinion at 8-9.

  On 24 April 1990, an order was issued allowing the Government to take foreign depositions and to obtain documents in the Cayman Islands. See Order, filed 24 April 1990 (the "24 April 1990 Cayman Discovery Order"). Significantly, the 24 April 1990 Cayman Discovery Order stated:

  
IT FURTHER APPEARING that, for the purposes of Rule 15 only, the Defendants do not contest that the deposition testimony and documents sought in the Cayman Islands are relevant and material to the trial of this matter; and
  
IT FURTHER APPEARING that, for purposes of Rule 15 only, Defendants do not contest that due to the exceptional circumstances of this case, it is in the interest of justice that the request of the United States for leave to take foreign depositions for use at trial of this matter pursuant to an [MLA] Treaty Request be granted; and
  
IT FURTHER APPEARING that Defendants consent to the issuance of this Order, and that such consent has been given, in part, in reliance upon the [MLA] Treaty Request of 4 April 1990; and
  
IT FURTHER APPEARING that the consent of Defendants to the granting of this Order shall not act as a waiver of any right of Defendants to contest either the right of the United States to have proceeded under the [MLA] Treaty or the constitutionality of that Treaty; nor shall this consent be construed as consent of Defendants that the United States is ...

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