United States v. Mario Biaggi and Meade Esposito

Citations: 853 F.2d 89; 1988 U.S. App. LEXIS 10578Docket: 918

Court: Court of Appeals for the Second Circuit; August 1, 1988; Federal Appellate Court

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Mario Biaggi and Meade Esposito appeal their convictions following a jury trial in the U.S. District Court for the Eastern District of New York. Biaggi was found guilty of accepting gratuities for official acts, using interstate facilities for unlawful purposes (Travel Act violations), and obstruction of justice. He received concurrent sentences of 2.5 years for obstruction and a year and a day for the other counts, along with $500,000 in fines. Esposito was convicted of giving gratuities and aiding Biaggi's Travel Act violation, receiving two years' probation, 500 hours of community service, and a $500,000 fine.

On appeal, the defendants argue that there was inadequate probable cause for the electronic surveillance that produced key evidence, improper exclusion of Italian-Americans from the jury, that Biaggi's actions did not constitute 'official acts' as defined by the law, and challenges to the Travel Act convictions on statutory and constitutional bases. They also claim insufficient evidence for the obstruction of justice conviction and contest certain evidentiary rulings made by the trial court. The appellate court, however, rejected all arguments and affirmed the convictions.

Biaggi, a long-serving congressman, and Esposito, a Democratic committee leader and insurance broker, were indicted based on Biaggi’s dealings with Coastal Dry Dock and Repair Corporation during 1984-1986, which included vacation payments arranged by Esposito.

The indictment outlined several charges against the defendants, including conspiracy to arrange vacations as part of a fraud against the United States (count 1), vacations as bribes received by Biaggi from Esposito (counts 2 and 3), and vacations as unlawful gratuities linked to Biaggi's official actions (counts 4 and 5). Additionally, Biaggi's use of interstate facilities for receiving bribes or gratuities violated the Travel Act, with Esposito aiding that violation (count 6). Following FBI questioning about his vacations, Biaggi attempted to obstruct a grand jury investigation (count 7). Both defendants were acquitted on counts 1, 2, and 3. Biaggi was convicted on counts 5, 6, and 7, while Esposito was convicted on counts 4 and 6.

The trial evidence, viewed favorably for the government, revealed that Coastal, located in the Brooklyn Navy Yard and a significant client of SVR, was struggling financially due to high operating costs and increased utility rates. Esposito engaged with BNYDC officials and the City’s deputy mayor regarding Coastal's financial troubles, which included a significant debt. In March 1984, Esposito provided Biaggi with a vacation package to St. Maarten, which included other associates. Following this, Coastal's executive vice-president urged Biaggi to assist in resolving a dispute with BNYDC. Biaggi subsequently contacted Deputy Mayor Lipper and wrote letters to Mayor Koch advocating for Coastal's interests, emphasizing the need for assistance in maintaining Navy contracts due to high utility costs.

Coastal faced ongoing financial difficulties, leading to a $110,000 loan from SVR in October 1984 to cover overdue insurance premiums. In mid-1984, Biaggi and Barbara Barlow planned a Christmas vacation at the Bonaventure Spa, requiring sponsorship which Biaggi arranged through attorney James LaRossa. Their spa expenses of $3,228 were charged to LaRossa's account and reimbursed by Beaumont. Biaggi's airfare was funded by the House Committee on Aging.

In July 1985, Deputy Mayor Alair Townsend warned Coastal of impending utility disconnection due to unpaid rent, prompting Biaggi to express concerns to her. Coastal's financial troubles worsened with an FBI investigation, leading to stringent scrutiny of Navy compensation claims and further exacerbating cash flow issues. This resulted in Coastal canceling significant insurance policies in November 1985.

In response to these challenges, Biaggi actively sought assistance for Coastal, contacting Senator Alphonse D'Amato to discuss the company’s unfair treatment by the Navy. Biaggi met with both Esposito and Coastal's chairman, Charles Montanti, to strategize and participated in a meeting at D'Amato's office where efforts to reach the Secretary of the Navy were initiated.

Throughout 1985, Barlow urged Biaggi to arrange another vacation at the spa. On December 17, Biaggi coordinated with Esposito for her stay and his own arrival. Following these arrangements, Biaggi assured Esposito of his continued efforts to support Coastal's financial recovery, confirming he was actively advocating on both city and federal levels. Esposito then confirmed arrangements with LaRossa for their spa stay to be charged to Beaumont, while Biaggi continued to communicate with D'Amato and Townsend regarding Coastal's situation.

On December 19, 1985, Esposito confirmed spa arrangements for Biaggi, with air fare covered by the House Committee on Aging. The following day, Esposito informed his partner Martuscello about Biaggi being a guest at the spa, indicating it was a worthwhile investment. After returning from the trip, Biaggi engaged in efforts to support Coastal, planning to introduce a bill for $800 million for smaller craft and meeting with Senator D'Amato to prepare for discussions with the Secretary of the Navy. He also contacted the Commandant of the Coast Guard to secure more work for Coastal, which went bankrupt in May 1986.

In October 1985, the federal government began investigating Esposito, unrelated to Coastal, and authorized electronic surveillance of his home and offices. This surveillance captured discussions about Biaggi's actions for Coastal and the vacations provided by Esposito. Following an FBI interview on June 2, 1986, where Biaggi was questioned about his relationship with Esposito, he contacted Esposito to suggest that the vacations were health-related rather than connected to his congressional position and to limit disclosures about trips to the FBI.

The jury acquitted both Biaggi and Esposito of conspiracy and bribery charges but convicted Biaggi of accepting gratuities for official acts, using interstate commerce for unlawful purposes, and obstructing justice. Esposito was convicted of paying gratuities to Biaggi and aiding his Travel Act violation. In their appeals, both defendants raised issues regarding the sufficiency of evidence for their convictions, challenges to the legality of the surveillance, juror exclusions based on ethnicity, the definition of 'official acts,' and constitutional arguments concerning the Travel Act.

Defendants' appeals have been reviewed, and no grounds for reversal were found. The government obtained significant evidence through electronic surveillance of Esposito's home and the offices of SVR and Beaumont, initiated through court orders starting in October 1985, in accordance with 18 U.S.C. § 2518. Esposito's pre-trial motion to suppress this evidence, based on alleged insufficient probable cause for the initial surveillance order, was unsuccessful and is reiterated here without merit. Under § 2518, a federal court may authorize interception of communications if probable cause exists regarding an individual’s involvement in specific criminal offenses, and if the communications are relevant and the facilities surveilled are linked to the offense. The probable cause standard mirrors that of a regular search warrant, with courts deferring to the issuing court's determination if a substantial basis exists. In this case, the initial surveillance order was supported by detailed affidavits from an FBI agent, which included information from reliable confidential informants and physical surveillance, suggesting the targeted individuals were engaged in racketeering offenses. The unrelated nature of the anticipated offenses to the current prosecution and the absence of Biaggi's mention in the application do not undermine the probable cause conclusion. Thus, the motion to suppress was rightly denied. Additionally, the defendants claimed entitlement to a new trial due to the government's alleged discriminatory use of peremptory challenges against Italian-Americans, violating the Equal Protection Clause and the Sixth Amendment. This claim was rejected.

During voir dire, defendants alleged that the government improperly used its first five peremptory challenges to exclude potential jurors with last names ending in vowels, arguing this indicated a deliberate attempt to exclude Italian-Americans from the jury. The government subsequently challenged two alternate jurors with similar surnames. Although the jury ultimately selected included Italian-Americans, defendants sought to dismiss the jurors and select a new panel, leading the court to postpone the matter until after the trial for thorough briefing.

After the trial, defendants renewed their motion for a new trial. In response, the government provided an affidavit detailing the lead prosecutor's reasons for the challenges, and both participating prosecutors testified during an evidentiary hearing, facing rigorous cross-examination. The district court found that the defendants established a prima facie case of discriminatory use of peremptory challenges, recognizing Italian-Americans as a cognizable racial group under relevant precedents. However, the court ultimately denied the defendants' motion, determining that the government presented sufficient neutral and reasonable explanations for its juror exclusions, citing concerns about potential juror bias due to past associations with the defendants and observations of juror demeanor.

The court noted that the jury composition included at least two Italian-Americans and was a diverse cross-section of the community. The district court's findings regarding the prosecution's motivations for its juror strikes are upheld unless clearly erroneous, with particular deference given to the court's credibility assessments of witness testimony and its firsthand observations during voir dire.

The government's explanations in this case were deemed sufficient and supported by evidence, leading to the conclusion that the district court's findings were not clearly erroneous. Consequently, there was no violation of the defendants' rights under the Equal Protection Clause or the Sixth Amendment. Under 18 U.S.C. § 201, which addresses bribery of public officials, an "official act" encompasses any decision or action by a public official in their official capacity, regardless of whether it is legislative. The court rejected the defendants' argument that Biaggi's actions were not "official acts" since they were not legislative and primarily involved municipal agencies. The court emphasized that the statute does not limit "official acts" to legislative functions and that established practices can define official conduct. The case referenced United States v. Birdsall, where the Supreme Court affirmed that actions by federal employees, even if not explicitly outlined by statute, could still constitute official conduct.

In a bribery prosecution involving a former U.S. Senator, the Supreme Court acknowledged that various non-legislative activities are integral to a Congress member's role. It was determined that a congressional aide's actions, such as leveraging their employer's official position to assist private individuals, qualify as official acts under Sec. 201(a). The court upheld the bribery conviction of a senator's administrative assistant by emphasizing that the aide's influence stemmed from their official capacity, particularly given their employer's role on the Senate Judiciary Committee. 

Testimony during the trial revealed that senators routinely assist constituents with issues involving government agencies. Senator D'Amato confirmed his and his staff's daily involvement in addressing problems for New Yorkers. The questioning highlighted that in 1982, both New York senators and several representatives worked together to secure a contract for Coastal, underscoring the collaborative nature of congressional efforts.

Regarding a meeting on December 3, 1985, involving Biaggi, Senator D'Amato, and Vincent Montanti, it was established that their actions were part of their official duties. Biaggi's approach to assisting Coastal included using congressional stationery for correspondence, managing the matter through his administrative assistant, and proposing legislation to benefit Coastal. He also offered to facilitate meetings between the City and the Navy to demonstrate congressional interest in Coastal's concerns.

The jury was permitted to consider Biaggi's intercessions as official acts, supported by ample evidence. Biaggi's argument that the gratuity provisions of Sec. 201 did not apply because his actions were directed at City officials, rather than federal officials, was rejected. Sec. 201's language does not impose such a limitation and encompasses any action taken by a public official in their official capacity. The broader scope of Sec. 201 is contrasted with the narrower focus of 18 U.S.C. Sec. 203, which specifically addresses federal matters. The legislative history of Sec. 201 indicates no intention to limit its application to federal agencies. The definition of 'official act' includes any decision or action by a public official in their capacity. The court found no basis to exclude acts directed at local officials from being considered official acts. Testimony confirmed that it is common for congressmen to intercede on city matters, and Biaggi's efforts were also directed towards federal officials, such as urging a senator to contact the Secretary of the Navy. The trial court properly instructed the jury on the definition of 'official acts,' emphasizing that they include activities associated with a congressman's role. Evidence was sufficient for the jury to conclude beyond a reasonable doubt that Biaggi's actions on behalf of Coastal were customary for his position.

The evidence presented at trial was deemed sufficient to establish that Esposito provided vacations to Biaggi in exchange for Biaggi's official acts on behalf of Coastal. Defendants argued the evidence was insufficient, but they bore a heavy burden to prove this claim. The court emphasized that evidence must be viewed favorably to the government, allowing all reasonable inferences to support the jury's findings. The jury could infer that the substantial costs of the Florida vacations indicated they were not mere gifts but rather compensation for Biaggi's efforts. 

Key points included that Biaggi solicited the vacations, suggesting he was not merely requesting gifts without providing something in return. Specific sequences of events supported this inference; for instance, after BNYDC's hard stance against Coastal in late 1983, Biaggi received a vacation in St. Maarten, coinciding with his subsequent efforts to assist Coastal. Additionally, the timeline showed that Biaggi continued to advocate for Coastal after receiving vacation offers, indicating a relationship between the vacations and his official duties. Conversations between Biaggi and Esposito further implied a connection between the vacations and Biaggi's obligations to Coastal, reinforcing the jury's decision to reject the notion that the vacations were given without expectation of reciprocation.

Defendants Esposito and Biaggi were implicated in a quid pro quo arrangement, where Esposito's funding of Biaggi's vacations was believed to be in exchange for Biaggi's assistance with Coastal. Esposito referred to the vacation expenses as "good money invested." Evidence indicated that after being questioned by the FBI, Biaggi coached Esposito on how to misrepresent the nature of these vacations, suggesting they were merely for Biaggi's health and advising him to alter the timeline of events to conceal the true nature of their arrangement. 

The indictment charged Biaggi with a violation of the Travel Act, asserting he traveled in interstate commerce to engage in unlawful bribery, with Esposito aiding this violation. The defendants argued that their convictions should be overturned due to their acquittal of direct bribery charges and claimed that Biaggi's travel was protected by the Speech or Debate Clause of the Constitution. However, the court found these arguments unpersuasive.

The Travel Act, under 18 U.S.C. § 1952, prohibits traveling in interstate commerce with the intent to promote unlawful activities, including bribery. The trial court instructed the jury that they could convict based on violations of the gratuity provisions of § 201, even if the jury found the defendants not guilty of bribery-related charges under subsections (b) and (c). Defendants contested this instruction, but the court upheld it, supported by a comprehensive analysis from the district court that affirmed the validity of using gratuity violations as a predicate for Travel Act convictions, rejecting the defendants' statutory interpretation argument.

The term "bribe" has evolved from its traditional association with corrupt intent influencing official actions. Scholars and lawmakers increasingly differentiate between corrupt payments and those given "for or because of" an official act, with the understanding that while corrupt payments warrant harsher penalties, both types of offenses aim to prevent the preferential treatment of wealthy citizens in public services. Under 18 U.S.C. § 201, penalties for corrupt intent offenses include fines up to $20,000 and 15 years' imprisonment, whereas "for or because of" offenses can lead to fines not exceeding $10,000 and up to two years' imprisonment. The legislative history reveals that the intent behind these two categories of bribery is largely aligned, emphasizing the prevention of monetary influence on public service. Prior to § 201's enactment in 1962, earlier bribery statutes prohibited offering something of value either "because of" or "with intent to influence" an official act without necessitating proof of corrupt intent. Congress aimed to consolidate existing bribery laws without significantly altering their substance. Consequently, any violation of § 201 is considered a "bribery" offense under § 1952.

Biaggi challenges his Travel Act conviction, claiming immunity under the Speech or Debate Clause due to his legislative activities during trips to Florida in 1984 and 1985. The court disagrees, stating that travel lacks the legislative character necessary for protection under the Clause. Evidence of Biaggi's use of interstate telephone facilities was sufficient for conviction under 18 U.S.C. Sec. 1952, independent of any travel. The Speech or Debate Clause, found in Article I, Section 6, prohibits questioning Senators or Representatives for their legislative speech or debate. However, its protection does not extend to all legislative-related conduct. Prior case law, including *Brewster* and *Gravel*, clarifies that accepting bribes or engaging in non-integral activities, like contacting a publisher, are not protected. Conversely, activities such as issuing subpoenas in legislative investigations are protected, as established in *Eastland*. While Biaggi's fact-finding during his trips is protected, the court rejects his claim that mentioning these activities to the jury violated his immunity, affirming that the Clause forbids inquiry into both clearly and potentially legislative acts.

The trial record shows no evidence of an impermissible inquiry during the questioning of Robert Blancato, Biaggi's administrative assistant, regarding whether the House Committee on Aging covered Biaggi's airfare for two Florida trips. Biaggi's counsel objected, referencing the speech and debate clause, but the objection was overruled due to the charge of conspiracy to defraud the United States. Blancato later volunteered details about the trips' purposes as legislative fact-finding, which Biaggi’s attorney argued was irrelevant, citing strategic reasons for not objecting further. The government initially sought to establish non-legislative reasons for the trips, and the defense's strategy did not waive any claims of legislative immunity regarding the travel. The court concluded that while travel can relate to legislative activities, mere transportation does not constitute an integral part of the legislative process unless directly linked to legislative duties or activities. The court found no basis for reversing the trial's decisions.

The Speech or Debate Clause does not provide immunity to a congressman for interstate travel intended to facilitate the receipt of an unlawful gratuity, similar to how it would not protect against theft of services. Legislative activity as a potential purpose of the travel does not negate the possibility of a conviction under Section 1952, which allows for prosecution if travel serves both legal and illegal purposes. The law does not require that travel be solely for criminal activity, and even without travel, use of interstate facilities for unlawful purposes can support a conviction. In Biaggi's case, evidence showed he used interstate communication to further his illegal activities. 

Additionally, to convict under Section 1503, the government must demonstrate that a federal judicial proceeding was pending, that the defendant was aware, and that he intentionally interfered. Biaggi's conviction stemmed from efforts to obstruct a grand jury investigation by advising Esposito to withhold and provide misleading information. Despite Biaggi's claims of insufficient evidence regarding the pending grand jury, trial stipulations and testimonies indicated that he was aware of the investigation and the associated grand jury proceedings. The circumstances supported the inference that Biaggi was informed of the grand jury's status when he attempted to influence Esposito.

Barlow, served with a grand jury subpoena during her interview, spoke with Biaggi before he called Esposito. During this call, Biaggi prompted Esposito to acknowledge their long friendship and expressed concern for his health, urging him to take the situation seriously. Esposito recognized the gravity of the situation, suggesting it sounded like a grand jury was involved, to which Biaggi confirmed. The evidence indicated that Biaggi was aware of the grand jury proceedings and sought to obstruct the investigation by coaching Esposito on how to characterize their interactions, particularly regarding spa trips and the St. Maarten vacation. Biaggi advised Esposito to conceal the St. Maarten trip, framing the spa visits as expressions of friendship rather than gifts related to his congressional position. The court upheld Biaggi's conviction for obstruction of justice, rejecting the defendants' claims concerning evidentiary errors. They argued against the inclusion of the St. Maarten trip as evidence, asserting it lacked proper foundational support under Fed. R. Evid. 404(b). The court clarified that the St. Maarten evidence was not subject to hearsay objections and did not need to determine the conspiracy's time frame for its admissibility, thereby affirming the trial court's decisions.

Evidence regarding the St. Maarten trip is not classified as hearsay, as it involves direct actions taken by the defendants. This trip is cited in the indictment as an overt act in furtherance of the conspiracy, and the government is entitled to present it as relevant conduct for which the defendants are charged. The defendants incorrectly assumed that this trip fell under Rule 404(b) as an "other act." Their argument that the trip was unrelated to the conspiracy is one that should be presented to the jury, rather than used to exclude evidence in court. Additionally, the trip is pertinent to charges of conspiracy and obstruction of justice. Defendants did not request jury instructions limiting the trip's consideration to those counts, allowing the jury to evaluate the evidence across all counts of the indictment. 

The court also addressed the admission of a recorded conversation between Esposito and a Beaumont officer, which occurred after Biaggi's FBI interview. This conversation was presented to demonstrate Esposito's inquiry about monetary amounts related to Biaggi, and it was admitted against Esposito as an admission and against Biaggi as a statement against penal interest. Defendants argued the transcription was inaccurate and that the conversation was irrelevant; however, the court found no grounds for reversal. Initially, the defendants challenged the conversation based on its characterization rather than its content, claiming the bribery-gratuity conspiracy had ended, which the court rejected when admitting the statement as a declaration against interest.

Defendants contested the government's interpretation of a tape recording after it was admitted as evidence, arguing through expert testimony that certain sounds indicated the phrase "How much we got in" referred to something other than Biaggi and that the mention of Biaggi represented a separate thought. This interpretation supported the defendants' claim that the statement was not against Esposito's interest. However, the expert's viewpoint was not presented to the court before the initial objections were raised, allowing the court to admit the conversation based on the existing record. If the defendants had disputed the tape's content prior to its admission, the court might have excluded it for prejudicial reasons under Federal Rule of Evidence 403. The government acknowledged the validity of the defendants' expert's perspective in its summation but, due to the defendants' failure to present their objections timely and the lack of merit in their initial claims, the court's decision to admit the tape was upheld. The appellate court affirmed the judgments of conviction in full.