Filed: Aug. 12, 2015
Latest Update: Mar. 02, 2020
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 14-2711 _ UNITED STATES OF AMERICA, Appellant v. RICHARD DRESSEL, A/K/A BUZZY _ On Appeal from the District Court for the District of New Jersey D.C. Criminal No. 2-12-cr-00702-001 District Judge: Honorable William J. Martini _ Argued: January 12, 2015 Before: MCKEE, Chief Judge, HARDIMAN, and SCIRICA, Circuit Judges (Filed: August 12, 2015) Mark E. Coyne, Esq. John F. Romano, Esq. [ARGUED] Office of the United States At
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 14-2711 _ UNITED STATES OF AMERICA, Appellant v. RICHARD DRESSEL, A/K/A BUZZY _ On Appeal from the District Court for the District of New Jersey D.C. Criminal No. 2-12-cr-00702-001 District Judge: Honorable William J. Martini _ Argued: January 12, 2015 Before: MCKEE, Chief Judge, HARDIMAN, and SCIRICA, Circuit Judges (Filed: August 12, 2015) Mark E. Coyne, Esq. John F. Romano, Esq. [ARGUED] Office of the United States Att..
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________
No. 14-2711
________________
UNITED STATES OF AMERICA,
Appellant
v.
RICHARD DRESSEL,
A/K/A BUZZY
________________
On Appeal from the District Court
for the District of New Jersey
D.C. Criminal No. 2-12-cr-00702-001
District Judge: Honorable William J. Martini
________________
Argued: January 12, 2015
Before: MCKEE, Chief Judge, HARDIMAN, and SCIRICA, Circuit Judges
(Filed: August 12, 2015)
Mark E. Coyne, Esq.
John F. Romano, Esq. [ARGUED]
Office of the United States Attorney
970 Broad Street
Room 700
Newark, NJ 07102
Counsel for Appellant
Alice M. Bergen, Esq.
Jeffrey D. Smith, Esq. [ARGUED]
DeCotiis, Fitzpatrick & Cole
500 Frank West Burr Boulevard
Glenpointe Centre West, Suite 31
Teaneck, NJ 07666
Counsel for Appellee
________________
OPINION*
________________
SCIRICA, Circuit Judge
A jury convicted Richard Dressel of embezzlement of union funds in violation of
29 U.S.C. § 501(c) and conspiracy to embezzle union funds in violation of 18 U.S.C.
§ 371. Post-trial, the District Court granted Dressel’s motion for acquittal under Federal
Rule of Criminal Procedure 29(a) on the ground that the government had not presented
sufficient evidence for conviction. We will reverse and remand.
I.
In March 2008, without soliciting bids, Dressel hired his live-in girlfriend, Kathy
Libonati, to provide in-house catering services as a salaried employee of Local 164 of the
International Brotherhood of Electrical Workers (“Local 164”). The two later married. At
the time Dressel hired Libonati, he held the highest position in Local 164 as its Business
Manager.
Local 164, an electrical workers’ union with approximately 3000 members,
sponsored the Joint Apprentice Training Fund (“JATF”), an employee welfare benefit
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
2
plan that provided Local 164 apprentices with a five-year training program consisting of
classroom instruction and on-the-job training. JATF was administered by a board of
trustees and paid apprentices a salary for attending classes four days per week. During the
times relevant to this appeal, Dressel and his alleged co-conspirator, John DeBouter, held
positions in both Local 164 and JATF. Dressel served as Local 164’s Business Manager
and as a JATF Trustee, while DeBouter served as Local 164’s President (a position below
Business Manager) and JATF’s Training Director.
In 2008, Local 164 paid Libonati $46,062 in base salary and a benefits package
worth approximately half of total compensation. It is this payment that forms the basis of
the embezzlement and conspiracy charges reviewed here. A primary justification for
Libonati’s Local 164 salary was her involvement in catering JATF’s “Captive Lunch
Program” (“Lunch Program”). In pitching the Lunch Program to the JATF Board of
Trustees (“JATF Trustees”), DeBouter represented that the Lunch Program was needed
because apprentices were coming back from lunch drunk and late for class. Prior to the
Lunch Program, apprentices either brought their own lunch or went off campus. The
JATF Trustees approved the Lunch Program pending information about its cost.
DeBouter later notified the JATF Trustees and Local 164 membership that the Lunch
Program would cost $8 per person per day. The ultimate cost of the Lunch Program was
more than $8 per person per day, but neither party disputes that the Lunch Program was
ultimately implemented by Libonati and served 25 to 45 JATF apprentices a day for four
days per week.
3
Though the Lunch Program did not begin to serve meals until mid-May 2008,
Local 164 began to pay Libonati’s salary in March 2008. Nonetheless, Dressel argued
Libonati performed a number of tasks for Local 164 outside of the Lunch Program,
including catering retiree lunches, labor walks, Local 164’s Christmas party, apprentice
orientation and graduation, and annuity dinners. Specifically, Dressel pointed to
Libonati’s catering of the Graybar trade show in May of 2008, a 1000-person, two-day
event hosted by Local 164 and JATF. Libonati also is alleged to have expanded Local
164’s charitable efforts with Hackensack University Medical Center’s children’s cancer
center.
By 2010, Local 164 was in a dire financial position. Dressel and DeBouter sought
to remedy Local 164’s financial condition by having JATF reimburse Local 164 for
$108,196.56, equaling half of Libonati’s salary from March 2008 to February 2010.
DeBouter eventually secured payment from JATF, even though JATF Trustees had yet to
approve the expenditure.
II.
A grand jury indicted Dressel and DeBouter on eight counts arising out of
unlawful payments made by Local 164 and JATF to Libonati. Counts 1 through 3 related
to payments made by Local 164 and Counts 4 through 8 to payments by JATF. Count 1
charged that Dressel conspired with DeBouter and others to embezzle funds from Local
164 via salary payments to Libonati in violation of 18 U.S.C. § 371. Counts 2 and 3
charged Dressel with embezzling Local 164 funds in violation of 29 U.S.C. § 501(c) for
4
two distinct time periods. Count 2 related to payments made from March 2008 to January
2009, while Count 3 related to payments from February 2009 to February 2010.
The government’s theory at trial was that the Lunch Program and Libonati’s salary
were unnecessary expenses placed on Local 164 and JATF simply because Dressel was
dating and living with a caterer. The jury convicted Dressel on Counts 1 and 2 and
acquitted him on Counts 3 through 8. As noted, the District Court subsequently granted
Dressel’s Rule 29 motion for acquittal on Counts 1 and 2. Accordingly, only the
embezzlement charge of Count 2 and the conspiracy charge of Count 1 are at issue in this
appeal. In granting Dressel’s motion for acquittal on the Count 2 embezzlement charge,
the trial court explained that “no rational jury could conclude that the Government met its
burden to prove beyond a reasonable doubt that Dressel acted with the fraudulent intent
necessary to sustain a conviction . . . .” Key to the court’s analysis was its finding that
Libonati’s hiring was authorized and that she provided genuine services to Local 164.
With regard to the Count 1 conspiracy charge, the court reasoned that acquittal was
required because Libonati’s Local 164 salary did not constitute a substantive crime and
there was no evidence that Dressel and DeBouter agreed to anything more nefarious than
what was achieved.
III.1
In reviewing a jury’s verdict of conviction for sufficiency of evidence, we apply a
“particularly deferential standard of review” and require the defendant to carry a heavy
1
The District Court had jurisdiction under 18 U.S.C. § 3231. Our jurisdiction is pursuant
to 18 U.S.C. § 3731. We review a district court’s grant of a motion for judgment of
acquittal under Rule 29 de novo. See, e.g., United States v. Carbo, 572 F.3d 112, 113 (3d
Cir. 2009).
5
burden. See, e.g., United States v. Dent, 149 F.3d 180, 187 (3d Cir. 1998). To prevail on
appeal, the defendant must show that—considering the evidence “in the light most
favorable to the government . . . [and] credit[ing] all available inferences in favor of the
government,” United States v. Gambone,
314 F.3d 163, 170 (3d Cir. 2003)—no “rational
trier of fact could have found proof of guilt beyond a reasonable doubt,” United States v.
Boria,
592 F.3d 476, 480 (3d Cir. 2010) (citation omitted). The essential question is thus
not whether we believe “that the evidence at the trial established guilt beyond a
reasonable doubt,” but rather whether “any rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt.” Jackson v. Virginia,
443 U.S.
307, 318-19 (1979). In evaluating whether defendant has met this burden, we “must be
ever vigilant . . . not to usurp the role of the jury by weighing credibility and assigning
weight to the evidence.” United States v. Mercado,
610 F.3d 841, 845 (3d Cir. 2010)
(citation omitted). To permit a finding of insufficiency, the jury’s verdict must be “so
insupportable as to fall below the threshold of bare rationality.” Coleman v. Johnson,
132
S. Ct. 2060, 2065 (2012).
A.
The prohibition against the embezzlement of union funds under section 501(c) is
designed to create a “broad prohibition on pilfering union funds” and punish
“unconventional chicanery” by reaching novel schemes and closing the “gaps and
crevices” from which other statutes had allowed “‘guilty men [to] . . . escape[] through
the breaches.’” United States v. Lore, 430 F.3d 190, 200, 202-03 (3d Cir. 2005) (quoting
United States v. Silverman,
430 F.2d 106, 126-27 (2d Cir. 1970)). A conviction under
6
section 501(c) requires a misuse of union funds with fraudulent intent. See Lore, 430 F.3d
at 201; United States v. Durnin,
632 F.2d 1297, 1300 (5th Cir. 1980) (“[I]t is clear that
fraudulent intent to misuse the funds is the cornerstone of [501(c) embezzlement].”).
Fraudulent intent exists where a union officer or employee takes union funds “‘knowing
that the [union] would not have wanted that to be done.’”
Lore, 430 F.3d at 201 (quoting
Silverman, 430 F.2d at 126-27).
Determining whether there was sufficient evidence for the jury to find fraudulent
intent requires an examination of the “totality of the circumstances.” United States v.
Oliva, 46 F.3d 320, 324 (3d Cir. 1995). We have rejected approaches that treat union
authorization and union benefit as absolute defenses to a finding of fraudulent intent
because considered alone they “do not adequately protect union members and their
funds.”
Id. at 323. Instead, under our analysis, union authorization and benefit are
“merely factors that may be considered as bearing on intent” within the larger totality of
the circumstances analysis.
Id. at 324.
Accordingly, we look to all factors that bear on whether Dressel had a fraudulent
intent to misuse funds. See id. at 323-24. Looking to all relevant factors, we find that a
rational jury could have found beyond a reasonable doubt that Dressel took the property
of Local 164 “‘knowing that [Local 164] would not have wanted that to be done.’”
Lore,
430 F.3d at 201 (quoting
Silverman, 430 F.2d at 126-27). While the constitution and
bylaws of Local 164 may have authorized Dressel to hire Libonati, the jury heard
evidence that provided grounds to rationally question the benefit Local 164 received in
return for Libonati’s salary. In addition, there was evidence that Dressel hired his live-in
7
girlfriend without soliciting bids, misrepresented the need for and cost of the Lunch
Program to JATF Trustees, and engaged in strong-arm tactics that created a culture where
dissent was not tolerated—all while Local 164 was in a dire financial condition.
Benefit
A gross disconnect between services rendered and compensation is probative of
fraudulent intent, see, e.g., United States v. Andreen, 628 F.2d 1236, 1244 (9th Cir.
1980), and the jury heard evidence that there was a gross disconnect between Libonati’s
salary and the services she provided Local 164. Specifically, while Dressel relies on
Libonati’s implementation of the Lunch Program as a major justification for her Local
164 salary, there was evidence that the program was unneeded. Assistant Training
Director David Milazzo testified that the Lunch Program “wasn’t necessary” because the
primary problem it purported to correct, apprentice lunchtime drinking, did not exist. The
provision of an unneeded service does not confer a substantial benefit. Accordingly, a
rational jury could have found that the Lunch Program provided only an incidental
benefit to Local 164.
The same is true of the Graybar trade show. While Libonati may have spent time
preparing for the trade show, it was not a Local 164 event. Rather, the event was put on
by Graybar, a large electrical supplier. Local 164 facilities may have been used, but it is
unclear why Local 164 would have paid Libonati anything to cater it. Even considering
the fees received for hosting the trade show, a rational jury could have found this benefit
to be incidental given that Local 164 would have been entitled to fees for the use of its
facilities even if an outside caterer had been used.
8
In addition, Local 164 Office Manager, Joan Farkas, testified that Libonati
“performed no service for [Local 164] in 2008.” While this statement is contradicted by
evidence that Libonati catered other small events in 2008, it is nonetheless evidence that
Libonati’s involvement at Local 164 was limited. A rational jury could have inferred
from Farkas’s testimony that if Libonati was providing services to Local 164 in
proportion to her compensation, the Office Manager would have been aware of it.
Misrepresentations
Making misrepresentations in getting an expenditure approved is probative of
fraudulent intent, see United States v. Butler, 954 F.2d 114, 119 (2d Cir. 1992) (“An
authorization obtained without disclosure of . . . material information is obviously a
nullity.”), and there was evidence that DeBouter and Dressel misrepresented both the
need for and the cost of the Lunch Program.
With regard to need, a primary justification for the Lunch Program was
DeBouter’s representation to JATF Trustees that there was a problem with apprentices
drinking during their lunch hour. But JATF’s Assistant Training Director David Milazzo
testified that the Lunch Program “wasn’t necessary” because there was no problem with
apprentices coming back from lunch intoxicated. This testimony was corroborated by (1)
another faculty member, who stated that he “never had students come back [from lunch]
that [he] thought were drinking” and that he “did not see it was a problem,” and (2) JATF
Trustees in charge of disciplining apprentices, who testified that they had not seen issues
with apprentice alcohol abuse during lunch.
9
As for cost, multiple witnesses testified that DeBouter’s pitch of the Lunch
Program to the JATF Trustees led them to believe that “total cost” included
compensating Libonati. JATF Trustee Darryl Parchment testified that the cost of the
Lunch Program was “$8.00 per student per day . . . . That’s all it was supposed to be.”
Trustee Anthony D’Anna explained that “I know [Libonati] was supposed to be paid out
of the $8.00.” Dressel responds that the total cost of the Lunch Program was
ascertainable, and thus that there was no misrepresentation, because Libonati’s Local 164
salary was disclosed in the filing of a LM-2 form that was available to the public. But
even if the JATF Trustees were aware of Local 164’s salary to Libonati, there would be
no reason for the Trustees to believe that JATF would ultimately become responsible for
half of that salary—which ultimately was the case after JATF’s 2010 reimbursement of
half of the salary paid by Local 164 to Libonati from March 2008 to February 2010.
Accordingly, a rational jury could have found that the JATF Trustees approved the
Lunch Program on the basis of misrepresentations about the need for the program and its
cost. In addition, the jury could have inferred that Dressel and DeBouter misrepresented
the need for and cost of the Lunch Program in order to get the program approved and
provide a justification for Libonati’s Local 164 salary.
Dire Financial Condition
A union’s dire financial condition is probative of fraudulent intent—as one is more
likely to know an expenditure is not in the best interest of the union where it is in a dire
financial condition. See United States v. Welch, 728 F.2d 1113, 1119-20 (8th Cir. 1984).
There was evidence that Local 164 was in a dire financial condition throughout the
10
relevant time periods, especially in 2010, when it sought reimbursement of Libonati’s
salary from JATF. A rational jury was entitled to look at Local 164’s financial difficulties
and infer that Dressel knew paying Libonati’s salary was not in Local 164’s best interest.
Strong-Arm Tactics
The use of strong-arm tactics is also probative of fraudulent intent, Butler, 954
F.2d at 119, and there was evidence that Dressel and DeBouter engaged in strong-arm
tactics that created a culture where dissent was not tolerated. In pitching the Lunch
Program to the JATF trustees, DeBouter listed all of the problems justifying the need for
the Lunch Program and asked JATF Assistant Training Director David Milazzo “[i]sn’t
that right, Dave?” Milazzo responded that he had seen issues with apprentice
drunkenness, alcoholism, and tardiness. But during his trial testimony, Milazzo testified
that his explanation to the JATF Trustees was “false” and that he “just wanted to follow
the bosses.” Milazzo’s willingness to “follow” is understandable given testimony that
Dressel and DeBouter were known to harshly punish dissent. For example, there was
evidence that DeBouter responded to a JATF instructor’s objections to the necessity of
the Lunch Program with “if you don’t like it, you can find another F’n job.” In addition,
another JATF Trustee testified that he was terminated after taking a contrary position to
Dressel and DeBouter at a JATF Trustees meeting.
There was also evidence that Dressel and DeBouter engaged in strong-arm tactics
during the reallocation of Libonati’s salary in 2010. On March 23, 2010, DeBouter first
raised the issue of JATF reimbursing Local 164 for half of Libonati’s salary from March
2008 to February 2010, totaling $108,196.56, which the JATF Trustees declined to
11
approve without a letter from JATF’s attorney. Prior to receiving approval from JATF’s
attorney, DeBouter successfully demanded that JATF Office Manager Donna McManus
hand over a check in the amount of $108,196.56. It is undisputed that DeBouter lacked
the authority to unilaterally approve the reimbursement. In addition, McManus testified
that she was “upset” over being forced to relinquish the check “because [she] felt like
[she] was doing something wrong.” The check was deposited and spent within three days.
After already taking and spending the money, on March 30, 2010, DeBouter called a
special meeting where he again asked the JATF Trustees to approve the reimbursement.
The Trustees again refused to authorize the payment without an attorney letter on the
legality of the reimbursement. In explaining why the JATF Trustees declined to approve
the reimbursement without an attorney letter, JATF Trustee Darryl Parchment testified
that “the Board didn’t feel comfortable with approving a salary that just didn’t seem
right.” Ultimately, the attorney letter was not received until April 7, 2010, with DeBouter
directing a JATF trustee to add a paragraph to the minutes for the April 13, 2010, meeting
reflecting review of that letter, even though no such review had taken place. A rational
jury could have used the above strong-arm tactics as evidence of Dressel’s intent to
defraud Local 164.
* * *
Considered under the totality of the circumstances and viewed in the light most
favorable to the government, we believe the above evidence was sufficient for a rational
jury to have found beyond a reasonable doubt that Dressel took the property of Local 164
“‘knowing that [Local 164] would not have wanted that to be done.’” Lore, 430 F.3d at
12
201 (quoting
Silverman, 430 F.2d at 126-27);
Oliva, 46 F.3d at 324. Accordingly, the
jury’s conviction under section 501(c) was not irrational and we will reverse.
B.
To convict Dressel of conspiracy in violation of 18 U.S.C. § 371, the jury was
required to find that: (1) two or more persons agreed to commit offenses against the
United States; (2) Dressel was a party to or a member of that agreement; (3) Dressel and
at least one other alleged conspirator shared a unity of purpose and the intent to achieve a
common goal or objective to commit an offense against the United States; and (4) at
some time during the existence of the agreement or conspiracy, at least one of the
members performed an overt act in order to further the objectives of the agreement. See
United States v. Rankin, 870 F.2d 109, 113 (3d Cir. 1989); 3d Cir. Crim. Model Jury
Instructions § 6.18.371A.
There was evidence of an agreement between Dressel and DeBouter to embezzle
Local 164 funds. According to Milazzo’s testimony, DeBouter said that the reallocation
of half of Libonati’s salary to JATF in 2010 “wasn’t part of the deal.” Milazzo explained
that he understood DeBouter’s statement to mean that JATF would be responsible solely
for paying Libonati’s catering company, and not any Local 164 salary. Consistent with
Milazzo’s testimony, Local 164’s current Business Manager testified that Dressel’s and
DeBouter’s positions with Local 164 and JATF made them uniquely knowledgeable
about how Libonati was being compensated from both entities. Viewed in the light most
favorable to the government, a rational jury could interpret DeBouter’s statement as
indicating an agreement between Dressel and DeBouter to provide Libonati with a
13
salaried position at Local 164 through creation of the Lunch Program so long as JATF
was not responsible for Libonati’s actual salary.
There was also evidence of multiple overt acts in furtherance of the agreement and
an intent to achieve the agreement. Dressel and DeBouter worked together in
misrepresenting the need for and cost of the Lunch Program and in creating an
atmosphere where dissent was not tolerated. When Dressel needed funds for Local 164 in
2010, there was evidence that DeBouter carried out the scheme by demanding and
acquiring a check from JATF for half of Libonati’s salary from 2008 to 2010, even
though the transaction had yet to be approved by JATF Trustees.
Viewed in the light most favorable to the government, the above evidence was
sufficient for a rational jury to have found beyond a reasonable doubt that Dressel and
DeBouter conspired to embezzle Local 164 funds in violation of 18 U.S.C. § 371.
Accordingly, the jury’s conviction under section 371 was not irrational and we will
reverse.
IV.
For the foregoing reasons, we find that the jury’s verdict was not irrational, as
there was sufficient evidence to convict Dressel of embezzling union funds in violation of
29 U.S.C. § 501(c) and conspiring to embezzle union funds in violation of 18 U.S.C. §
371. We will reverse the grant of Dressel’s motion for acquittal and remand for
reinstatement of the jury’s verdict.
14
