Source: http://openjurist.org/968/f2d/1512
Timestamp: 2015-07-30 08:18:01
Document Index: 616129390

Matched Legal Cases: ['§ 371', '§ 7206', '§ 1', '§ 4081', '§ 4083', '§ 4082']

968 F2d 1512 United States v. Aracri | OpenJurist
968 F. 2d 1512 - United States v. Aracri Home
968 F2d 1512 United States v. Aracri 968 F.2d 1512
UNITED STATES of America, Appellee,v.Joseph ARACRI, John Papandon, and Anthony Zummo,Defendants-Appellants.
Argued Oct. 25, 1991.Decided June 30, 1992.
John S. Siffert, New York City (Patricia McDonagh, Maria L. Zanfini, Lankler, Siffert & Wohl, of counsel), for appellant Aracri.
Steven Alan Reiss, New York City (Harris J. Yale, Weil, Gotshal & Manges, of counsel), for appellant Papandon.
Andrew M. Fallek, Brooklyn, N.Y. (Joseph Fallek, of counsel), for appellant Zummo.
Brett Dignam, Tax Div., Dept. of Justice, Washington, D.C. (Shirley D. Peterson, Asst. Atty. Gen., Robert E. Lindsay, Alan Hechtkopf, Tax Div., Mark Rasch, Criminal Division, Dept. of Justice, Washington, D.C., Andrew J. Maloney, U.S. Atty., E.D.N.Y., Brooklyn, N.Y., of counsel), for appellee.
Defendants Joseph Aracri, John Papandon and Anthony Zummo appeal from judgments of conviction entered after a jury trial before Wexler, J., in the United States District Court for the Eastern District of New York. Defendants were convicted of conspiracy to defraud the United States in violation of 18 U.S.C. § 371 and of aiding and assisting in the preparation of fraudulent federal excise tax returns in violation of 26 U.S.C. § 7206(2). Defendants make various claims of error. For the reasons set forth below, we affirm in part and remand for consideration of whether impeachment material that the government should have disclosed pursuant to Giglio v. United States, 405 U.S. 150, 92 S.Ct. 763, 31 L.Ed.2d 104 (1972), would have affected the outcome of the trial.
Defendants' convictions stem from their participation in a scheme to avoid the payment of gasoline excise taxes through a system of fictitious invoices falsely representing that taxes had been paid on sales of gasoline. During the indictment period the Internal Revenue Code, 26 U.S.C. § 1 et seq. (IRC), imposed a nine cent per gallon tax on gasoline sold by producers of gasoline. See IRC § 4081(a) (1984).1 Sales of gasoline to "producers" were exempted from this tax. See id. § 4083. The definition of "producers" relevant to this appeal included wholesale distributors who elected to register with respect to the tax imposed by obtaining an IRS Form 637, Registration for Tax-Free Transactions. See id. § 4082(a), (d)(2). To conform to the evidence at trial we will refer to registered companies as "licensed companies" and to the registration forms as "licenses." Thus, a licensed wholesale distributor did not have to pay federal excise tax on gasoline sold to another licensed wholesale distributor. The first licensed wholesale distributor who sold gasoline to an unlicensed company was required to pay excise taxes on that sale. New York State had a similar licensing and taxation law.
At trial the government introduced evidence from which the jury reasonably could have found the following facts: Defendants and other individuals set up fictitious paper sales of gasoline through various licensed and unlicensed companies--sometimes referred to as "daisy chains"--to make it appear that excise taxes had been paid on gasoline sales when, in fact, no taxes had been paid. As part of the scheme, the defendants used shell companies that held licenses. This design made it difficult for authorities to trace the real owners in interest of licenses. These shell companies were referred to as "burn" companies and the gasoline that fraudulently was treated as tax-paid gasoline was referred to as "burned" gasoline. The shell companies employed by the defendants changed as the scheme progressed because various authorities cancelled the licenses when they realized that gasoline was being "burned" through them, although unsure by whom. To help the reader understand the scheme, we have included as an Appendix six charts used by the government at trial.
Aracri and Papandon owned and operated Pilot Petroleum Associates, Inc. (Pilot), a licensed wholesale distributor of gasoline. Zummo was the president of Pride Oil Corp. (Pride Oil), a retail gasoline company.
In late 1982, Aracri and Papandon met with a group of individuals, including Lawrence Iorizzo and George Kryssing, both of whom testified at trial, to discuss a scheme to avoid paying gasoline excise taxes by setting up a paper trail of purported gasoline sales. Kryssing and Bernard Short ran Petroleum Haulers, Inc. (Petroleum Haulers), an unlicensed company that could not buy tax-free gasoline. The group agreed that Petroleum Haulers would purchase the license of Pilot International, a company controlled by Aracri and Papandon, in order to create fictitious invoices to make it appear that taxes had been paid on the sale of gasoline when, in fact, they had not been paid. They also agreed that Pilot, a separate company of Aracri's and Papandon's, would be the supplier of the gasoline on which taxes would not be paid.
According to the testimony, as a condition of the sale of the license, Aracri and Papandon insisted that the name of the company on the license be changed. According to Kryssing, the license was owned by an individual named Don Kuss who knew nothing about the scheme. Through the name change, Aracri and Papandon hoped to maintain his ignorance. Iorizzo explained that Aracri and Papandon insisted on the name change in an attempt to conceal their connection to the scheme. Iorizzo arranged for a Panama corporation to acquire the stock of the company. For whatever reason, the group changed the name of the company to Northbrook Associates, Inc. (Northbrook). Kryssing and Short received the license after paying Aracri and Papandon $41,000. Iorizzo acquired the assets of the company through a Panamanian company.
The group carried out this first phase of the scheme as follows. Pilot obtained gasoline from General Oil Distributors, Inc. (General) that legitimately was tax-free gasoline because it was sold by a licensed company to a licensed company. Pilot supplied the gasoline to Petroleum Haulers. Without the scheme Pilot would have incurred tax liability at that point because Petroleum Haulers was an unlicensed company. Through the use of the Northbrook license and fictitious invoices the group made it appear that Northbrook incurred the tax liability on the sale before it was purchased by Petroleum Haulers. The invoices represented that gasoline was transferred from Pilot to Northbrook tax-free and then sold tax-paid by Northbrook to Future Positions, a company controlled by Iorizzo, before it was transferred to Petroleum Haulers. Future Positions would prepare the paperwork stating that federal and state excise taxes had been paid on the gasoline. Petroleum Haulers then sold some of the tax-paid gasoline back to Pilot and the rest to Zummo's company, Pride Oil, or other companies. This method of "burning" gasoline through Northbrook made it appear that Northbrook had paid taxes on the transaction. The taxes in fact had not been paid.
In December 1983, Northbrook's license was cancelled by New York because millions of gallons of gasoline were being transferred through the company and no taxes were being paid on the transfers. Unable to use the Northbrook license to further their tax avoidance scheme, Aracri, Papandon, Kryssing, Short and Sheldon Levine agreed to find another license through which to "burn" gasoline. On Kryssing's request, Zummo located a new license for sale--Cabot Petroleum Products, Inc. (Cabot). The license was desirable because it was considered a "clean license," one that had been "up to date on the filings" and had had "[v]ery little activity on it." Aracri, Papandon, Levine and Short gave Zummo approximately $175,000 to purchase the Cabot license. They set up an office for Cabot and had Zummo mail the license to Cabot's new business address. Yassim Akkurt was named president of Cabot and was the sole signator on all corporate documents. The group planned that if and when tax collectors discovered their scheme Akkurt would abscond to his native Turkey. An unlicensed sham company, Vestal Petroleum Company (Vestal), also was created as an offshoot of Cabot to further the scheme.
Cabot and Vestal were used to prepare invoices representing that General or Rappaport Fuel Company (Rappaport Fuel)--both licensed companies--transferred the gasoline tax-free to Cabot, Cabot transferred gasoline tax-paid to unlicensed Vestal, Vestal transferred the gasoline tax-paid to Petroleum Haulers, and Petroleum Haulers transferred the gasoline tax-paid to Pilot or Pride Oil or Snug Harbor, another company. Cabot, which purportedly incurred the tax liability, never paid taxes on the transactions.
Defendants used Cabot to further their scheme during the first few months of 1984. In March 1984, the Cabot license, like that of its predecessor Northbrook, was cancelled. As planned, Akkurt disappeared, as did the records of Cabot and Vestal.
Once again, Aracri, Papandon, Zummo, Levine and Kryssing were left without a licensed company through which to "burn" gasoline. Around April or May 1984 Zummo and Aracri contacted Iorizzo to discuss "burning" gasoline through Rappaport Fuel. Zummo, Aracri and Iorizzo discussed the matter among themselves and with Ronald Weiner.
In May 1984, defendants utilized Conlo Service, Inc. (Conlo), operated by Weiner, to further their scheme. After Iorizzo asked Weiner to do a favor "to accommodate" Aracri, Kryssing and Aracri met with Weiner. They discussed paying Weiner to prepare fictitious invoices representing that Pilot sold gasoline to licensed Conlo and then Conlo transferred the gasoline to an Iorizzo company--either Rappaport Fuel or Houston Trading--and then to Petroleum Haulers tax-paid. The purpose of Rappaport Fuel and Houston Trading in the "daisy chain" was to avoid paying taxes on the sale.
A three count indictment was filed against Aracri, Papandon and Zummo in the Eastern District of New York on April 25, 1990. Count One of the indictment charged that from December 31, 1982 through August 31, 1984 defendants and other individuals knowingly, willfully and unlawfully combined, conspired, confederated and agreed to defraud the United States Treasury Department and the Internal Revenue Service (IRS) by impeding, impairing, obstructing and defeating their lawful governmental functions in the ascertainment, computation, assessment and collection of revenue through federal gasoline excise taxes, and that they concealed this fact. Counts Two and Three charged defendants with willfully aiding, assisting, procuring and causing General and Rappaport Fuel, respectively, to prepare and present to the IRS a fraudulent and false Quarterly Federal Excise Tax Return, Form 720, for the quarter ending March 31, 1984.
After a seven day trial, the jury returned a general verdict of guilty as to each defendant on all three counts.
Before we heard argument in the case on appeal, the government moved to remand to the district court for consideration of whether newly discovered impeachment materials that the government should have disclosed pursuant to Giglio would have affected the outcome of the trial. We denied the motion because defendants had raised numerous arguments on appeal that, if accepted, would warrant reversal of their convictions barring a new trial. See, e.g., Burks v. United States, 437 U.S. 1, 18, 98 S.Ct. 2141, 2150, 57 L.Ed.2d 1 (1978) ("the Double Jeopardy Clause precludes a second trial once the reviewing court has found the evidence legally insufficient"); United States v. Garcia, 938 F.2d 12, 14 (2d Cir.1991) ("when an appellate reversal is based on insufficient evidence, a retrial is prohibited") (citation omitted), cert. denied, --- U.S. ----, 112 S.Ct. 868, 116 L.Ed.2d 774 (1992).
Defendants offer numerous challenges to Count One of the indictment. Count One enumerates several "schemes" in furtherance of a conspiracy to defraud the government. Arguably, only one of these schemes is within the applicable statute of limitations period. Defendants argue that the government linked several separate time-barred conspiracies to one timely brought conspiracy in a single count in order to circumvent a statute of limitations bar. They advance numerous specific challenges based on this premise. None of these challenges has merit.
Defendants claim that the relevant statute of limitations period for the conspiracy charged in Count One is five years instead of the six year limitations period applied by Judge Wexler. We disagree. The applicable statute of limitations period for conspiracies such as the one charged in this indictment is six years. See United States v. Ingredient Technology Corp., 698 F.2d 88, 98-99 (2d Cir.), cert. denied, 462 U.S. 1131, 103 S.Ct. 3111, 77 L.Ed.2d 1366 (1983). IRC section 6531 provides that the limitations period "for offenses involving the defrauding or attempting to defraud the United