State v. Cerilli, P1/94-1154a (1998)

Citation: Not availableDocket: P1/94-1154A

Court: Superior Court of Rhode Island; September 23, 1998; Rhode Island; State Appellate Court

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Defendant Benedetto A. Cerilli, Jr. filed a motion to dismiss Count 3 of the indictment, which alleges he obtained over $500 from Moneta Corporation and Wallace Corporation through false pretenses, in violation of Rhode Island General Laws. Cerilli, along with Steven R. Salvatore, incorporated Jefferson Financial Group, Inc. in 1987, which subsequently chartered Jefferson Loan and Investment Bank. The indictment claims that from late 1987 to February 1990, Cerilli and others operated as a "criminal enterprise" using Jefferson Bank for personal gain. Cerilli was arraigned on May 4, 1994, and his motions to dismiss for failure to state an offense and for alleged perjury before the grand jury were filed in 1995 and 1996, respectively. The court granted his request to sever his trial from that of his co-defendants. The state’s allegations indicate that Cerilli, as an officer of Jefferson Group and vice-president of Newport Offshore Ltd. Inc., sought additional capital for Jefferson Bank following a 1989 examination by the Department of Business Regulations, which raised concerns about documentation and financial viability related to the bank’s loans.

Arnold Kilberg, president of Moneta Capital Corporation in 1989, and Lloyd Granoff, president of Wallace Capital Corporation at the same time, were involved in a scheme related to a loan to Newport Offshore. Both Moneta and Wallace were federally licensed small business investment companies (SBICs) that provided loans to small businesses. Due to federal SBIC regulations, they could not lend to banks, and loans were often packaged with one SBIC acting as "Lead Lender," which in this case was Wallace. Kilberg had discussions with Cerilli regarding the loan, aware that Jefferson Bank was financially troubled but believed the loan was for Newport Offshore. He previously issued a "going concern opinion" for Jefferson Bank, indicating its precarious financial state.

Angela Cressman, controller at Jefferson Loan Investment Bank, testified that Kilberg sought information on the bank's loans and was a potential purchaser of the bank. The state alleges Cerilli created a scheme to bypass SBIC regulations, resulting in $300,000 borrowed by Newport Offshore being deposited into Jefferson Bank without Moneta's or Wallace's knowledge. The funds were actually deposited into Cerilli's personal account before being transferred to Jefferson Bank to meet a capital requirement imposed by the Department of Business Regulation (DBR). Cerilli contends that the indictment against him is flawed on three grounds: it lacks essential elements, fails to state an offense, and cannot be fairly prosecuted due to potential perjury in the accusations.

The indictment against Benedetto A. Cerilli, Jr. is argued to be facially defective because it does not include the essential element of "intent to cheat or defraud," as required under R.I.G.L. 1956 § 11-41-4. The law mandates that an indictment must clearly inform the defendant of the nature and cause of the accusation (R.I. Const. Art. I, 10). The indictment accuses Cerilli of obtaining money under false pretenses from Moneta Capital Corporation and Wallace Capital Corporation, claiming he misrepresented the purpose of a loan. 

Cerilli contends that the lack of a stated intent to defraud warrants dismissal of the indictment. While the state argues that obtaining property under false pretenses is recognized as a common law offense, recent case law clarifies that this crime is exclusively statutory, thus undermining the state's position. The court notes that an indictment must inform the accused of the offense's elements, which include intent. Although the indictment refers to the statute, it fails to specify the necessary intent, yet it still serves to inform Cerilli of the charge against him. Ultimately, the court denies Cerilli's motion to dismiss the indictment, asserting that the prosecution must prove both the act of obtaining money by false pretenses and the intent to cheat or defraud.

Cerilli contends that the Indictment is constitutionally deficient because it combines charges of theft and obtaining property by false pretenses, which results in ambiguity regarding the State's burden of proof. He argues that this "accusatory hermaphrodite" nature of the charge infringes on his right to notice, as it does not clarify whether the State must prove intent to permanently deprive the victim (required for larceny under statute 11-41-1) or merely intent to deceive (required for obtaining by false pretenses under statute 11-41-4). Cerilli cites State v. Smith, asserting that only the general assembly can define the elements of crimes, suggesting the State's attempt to merge these distinct offenses improperly oversteps its authority. He emphasizes that proceeding to trial under the current indictment would leave him uncertain about the specific intent he must defend against, potentially violating his rights.

Additionally, Cerilli argues that the State's failure to clarify its claims in the bill of particulars limits its ability to introduce evidence related to the theft charge at trial. He urges the court to dismiss the indictment due to alleged perjury by Kilberg before the grand jury. Cerilli sought exculpatory evidence following his arraignment, leading to a state motion revealing a report suggesting Kilberg may have engaged in questionable financial practices. Although the State has not admitted to Kilberg's untruthfulness, it has decided not to call him as a witness, further supporting Cerilli's claims of prejudice stemming from potentially false testimony.

Cerilli requests the court to dismiss the indictment and require the state to present evidence to a new grand jury, arguing that the current proceedings may involve perjured testimony from Kilberg. Unlike the case of Udziela, there has been no admission or judicial finding regarding the falsehood of Kilberg's testimony. Cerilli also suggests that the court conduct an independent review of the grand jury evidence to assess probable cause without Kilberg's testimony. The Supreme Court's standard, as established in United States v. Costello, indicates that a valid indictment from a properly constituted grand jury is sufficient to warrant a trial. In United States v. Basurto, the court mandated that if a witness admits to perjury on material facts, the prosecutor has an obligation to inform the court and the defense, and if the perjury is significant, to notify the grand jury. However, this ruling has not been adopted by other federal circuits. In United States v. Adamo, the court acknowledged the need for prosecutors to avoid using perjured testimony but did not endorse the alternatives proposed by Cerilli. Similarly, in United States v. Flores-Rivera, the court ruled that a federal district court cannot dismiss an indictment based on grand jury errors unless they prejudice the defendant. Consequently, without either the state's dismissal of the indictment, a judicial determination of Kilberg's false testimony, or an admission of such by Kilberg, the court denies Cerilli's motion to dismiss the indictment.

Salvatore was acquitted of charges related to racketeering and false pretenses but convicted of accepting a bribe as an agent of Jefferson Bank and for filing a false document. Harrop was acquitted of the same charges as Salvatore. Nevola was acquitted of racketeering and bribery charges but convicted of perjury before the grand jury. Cerilli faced charges of racketeering in a criminal enterprise with Salvatore, Harrop, and Nevola; however, following their acquittals, the state dismissed the charges against Cerilli on October 29, 1997. Cerilli contends that the ten documents in question lack specific factual misrepresentation. The court is currently unable to resolve factual disputes, emphasizing that the purpose of a bill of particulars is to prevent judicial surprise at trial, as established in previous Rhode Island rulings.