United States District Court, D. New Jersey
For RICHARD DRESSEL, also known as BUZZY, Defendant: JEFFREY D. SMITH, LEAD ATTORNEY, DECOTIIS, FITZPATRICK, GLUCK, HAYDEN & COLE, LLP, TEANECK, NJ; ALICE M. PENNA, DECOTIIS FITZPATRICK & COLE LLP, TEANECK, NJ.
For JOHN DEBOUTER, Defendant: CARLOS FRANCISCO ORTIZ, LEAD ATTORNEY, MAYLING C. BLANCO, Edwards Wildman Palmer LLP, Madison, NJ.
For USA, Plaintiff: THOMAS S. KEARNEY, LEAD ATTORNEY, OFFICE OF THE U.S. ATTORNEY, DISTRICT OF NEW JERSEY, NEWARK, NJ; V. GRADY O'MALLEY, LEAD ATTORNEY, UNITED STATES ATTORNEY'S OFFICE, NEWARK, NJ.
WILLIAM J. MARTINI, United States District Judge.
On October 22, 2012, a grand jury returned an eight-count indictment charging Richard Dressel and John DeBouter with embezzlement and conspiracy to embezzle from a union and a union benefit plan. The case proceeded to trial on November 13, 2013. At the close of the Government's case, and then again at the close of his case, Dressel moved pursuant to Federal Rule of Criminal Procedure 29(a) for a judgment of acquittal on all counts. The Court reserved on both motions. A jury subsequently returned a verdict of not guilty on Counts 3-8 and a verdict of guilty on Counts 1-2. Dressel then renewed his Rule 29(a) motions on Counts 1 and 2. After reviewing written submissions from both parties, the Court heard oral argument on February 4, 2014. For the reasons set forth below, Dressel's Rule 29(a) motion is GRANTED.
The International Brotherhood of Electrical Workers Local 164 (the " Local 164" or the " Union" ) has roughly 3,000 members. The Joint Apprentice Training Fund (" JATF" ) is a Taft-Hartley ERISA benefit plan with close ties to the Union. The JATF provides Union apprentices with a five year training program that includes classroom instruction and on-the-job training. During the relevant time period in this case, Richard Dressel and John DeBouter held positions in both the Union and the JATF. Dressel was the Union's Business Manager, and DeBouter was the Union's President (a position below Business Manager). Dressel was also a JATF Trustee, and DeBouter was also the JATF Training Director.
On October 22, 2012, a federal grand jury returned an eight-count indictment against Dressel and DeBouter. ECF No. 1. The indictment revolved around salary payments that the Union and the JATF provided to Kathleen Libonati while Libonati was dating Dressel, and subsequently while Libonati was married to Dressel. The indictment can be broken down into two parts: Counts 1-3 and Counts 4-8.
Counts 4-8 concern the JATF. Count 5, brought under 18 U.S.C. § 664 and 18 U.S.C. § 2, charges that Dressel and DeBouter attempted to cover up Libonati's Union salary payments by taking JATF money and depositing it into a Union account. Counts 6-8, also brought under 18 U.S.C. § 664 and 18 U.S.C. § 2, charge that Dressel and DeBouter embezzled the salary payments made by the JATF to Libonati in 2010, 2011, and 2012. Finally, Count 4 charges conspiracy to embezzle from the JATF from March 1, 2010 through October 2012, in violation of 18 U.S.C. § 371. The jury returned a verdict of not guilty on Counts 4-8.
Counts 1-3 concern the Union. Count 1 is a conspiracy count, brought pursuant to 18 U.S.C. § 371. Count 1 charges that from January 2008 through March 2010, Dressel and DeBouter conspired to give Libonati an " unauthorized" Union job and pay Libonati a Union salary and benefits for " office staff duties which she failed to perform, and for which she provided no legitimate benefit to the union or its members." The jury returned a guilty verdict on Count 1.
Counts 2 and 3 are embezzlement counts, both brought under 29 U.S.C. § 501(c) (" Section 501(c)" ) and 18 U.S.C. § 2. Essentially, the two counts differ only in the time period (March 2008-January 2009 or February 2009-February 2010). Both Count 2 and Count 3 charge that Libonati " performed no genuine service to Local 164 or its members" but was still provided with a Union salary and fringe benefit package. To convict Dressel on Counts 2 and 3, the Government had to prove beyond a reasonable doubt that Dressel took Union money with a fraudulent intent. United States v. Welch, 728 F.2d 1113, 1118 (8th Cir. 1984). Fraudulent intent " cannot be demonstrated solely upon proof of an objective criterion." Id. As such, the Government had to " demonstrate on the basis of all the evidence that [Dressel] acted knowing that [his] conduct was wrong under the circumstances." Id. The Third Circuit refers to this test as a " totality of the circumstances" test. United States v. Oliva, 46 F.3d 320, 324 (3d Cir. 1995).
To determine fraudulent intent based on the totality of the circumstances, no one factor is dispositive. So, for example, while a jury is free to consider whether the expenditure of union money actually benefited the union, s ee United States v. Lore, 430 F.3d 190, 202 (3d Cir. 2005) (citing Oliva, 46 F.3d at 324), the absence of a union benefit " is an inadequate basis on which the jury may find fraudulent intent." Welch, 728 F.2d at 1119 (internal citation and quotation omitted). Besides from a union benefit, a jury might also evaluate intent by considering whether the expenditure of union money paid for services that were actually rendered, see United States v. Bane, 583 F.2d 832 (6th Cir. 1978), whether the expenditure of union money was authorized, see Lore, 430 F.3d at 202, and whether the expenditure of union money was disclosed, see United States v. Butler, 954 F.2d 114 (2d Cir. 1992). In the instant case, the jury returned a guilty verdict on the first Section 501(c) charge, Count 2, yet it returned a not guilty verdict on the second Section 501(c) charge, Count 3.
II. EVIDENCE ADMITTED AT TRIAL
In this section, the Court reviews the evidence admitted at trial. The Court begins with the evidence admitted in the Government's case and then turns to the evidence admitted in Dressel's case.
A. The Government's Case
Twelve witnesses testified during the Government's case: David Milazzo (JATF Assistant Training Director and Instructor); Daniel Gumble (currently the Union's Business Manager); Daniel Solleder (JATF Instructor); Charles Mattson (formerly the Union's Treasurer); Michael
Fitzmaurice (formerly a Union apprentice); Darryl Parchment (Union member and former JATF Trustee); Donna McManus (formerly the JATF Office Manager); Robert Oliwa (Union accountant); Ernest Badaracco (JATF Trustee); Joan Farkas (Union Office Manager); Anthony D'Anna (JATF Trustee); and Denise Gerardi (Special Agent, United States Department of Labor, Office of the Inspector General). This section recounts the testimonial and documentary evidence presented in the Government's case.
1. The Union and the JATF
The Union's membership includes apprentices who train in the JATF apprenticeship program, graduates of the apprenticeship program known as journeymen, and office staff who support the activities of the Union and the JATF. Trial Transcript (" Tr." ), Nov. 13, 2013, at 108:13-24. Among the latter group are " BA members," which include people who work in the Union office. Id. In 2008, BA member Joan Farkas, the Union's office manager, earned a salary of $111,670. Government's Exhibit 6. In 2008, office staff members Nancy Demarco, Joan Koehler, and Barbara Dolcemascolo received respective salaries of $65,600.00, $59,622.00, and $47,494.00. Id. All BA members receive the same benefits package, which was valued at roughly 50% of salary in 2008. Tr., Nov. 20, 2013, at 17:16-23, 107:17-23.
The Union has several elected officers who sit on an Executive Board (the " Executive Board" ), which meets monthly to review Union expenditures. Tr., Nov. 13, 2013, at 67:23-68:4. These officers serve in a fiduciary capacity, meaning that they have an obligation to act in the best interests of the Union. Tr., Nov. 18, 2013, at 96:3-5. The Union is governed by the IBEW Constitution (the " Constitution" ) and by Local 164 Bylaws (the " Bylaws" ). Tr., Nov. 13, 2013, at 111:7-15. Neither the Constitution nor the Bylaws prohibit the Union from entering into no-bid contracts, and neither the Constitution nor the Bylaws prohibit conflicts of interest when it comes to hiring. Tr., Nov. 18, 2013, at 7:16-21, 47:18-48:10. Indeed, the evidence established that nepotism was prevalent in the Union. See, e.g., Tr., Nov. 13, 2013, at 75:19-25.
As noted earlier, the JATF is an ERISA benefit plan. Its annual budget runs between three and a half and four million dollars. Tr., Nov. 18, 2013, at 14:22-23. The JATF operates out of a multi-million dollar training facility located across the parking lot from the Union building. Id. at 16:8-9, 38:8-10. Apprentices are enrolled in the JATF's apprenticeship program for a five-year period. Apprentices spend one day per week in the classroom and four days per week out in the field. Id. Regardless of whether they are in the classroom or in the field, apprentices are paid a salary and benefit package.
During the relevant time period, DeBouter served as the JATF's Training Director. Tr., Nov. 13, 2013, at 70:11-15. In that capacity, DeBouter ran JATF Board meetings but did not have a vote. As the Union's Business Manager, Dressel was automatically entitled to a seat on the JATF's Board. Both Dressel and DeBouter were fiduciaries for the JATF. Id. at 81:16-18.
2. Libonati Provides Services to the Union in ...