Opinion ID: 786706
Heading Depth: 2
Heading Rank: 3

Heading: The Investigation and Prosecution of Rothstein

Text: 14 At that time, Gene Malpas was the Department of Justice prosecutor in charge of the ongoing investigation into Rothstein — specifically, into Rothstein's connection with Bizarre. Malpas and Pellegrino believed that there was an obvious connection between Rothstein and Gordon, and between Bizarre and Star. They based that view on (1) the physical proximity of the two companies' offices, i.e., they shared a floor in the same Brooklyn building; (2) Bizarre's use of Star's shipping invoices; and (3) bank records showing unexplained money transfers between the two companies. 2 In short, Malpas believed that Mr. Rothstein had much more connection to ... Bizarre than would appear on any paperwork. 15 On March 18, 1994, Carriere was debriefed by Pellegrino and Malpas. Pellegrino's memorandum summarizing the interview reveals that Carriere gave the investigators the following information: 16 — Carriere had agreed with Bizarre to send Bizarre's promotional material to a group selected from Carriere's mailing list. 17 — The agreement originated with Carriere's former sales manager, Donald Sandy Sarnblad, who was a good friend of Rothstein's. 18 — According to Sarnblad, Rothstein had come to Sarnblad seeking to have Multi-Media sell Bizarre videos. 19 — Carriere finally agreed (after several importunings by Sarnblad) to include a page of Bizarre video titles in one of his mail order catalogues. 20 — The Bizarre titles sold well but were too expensive, so Carriere suggested that Sarnblad make a cash deal with Rothstein. Sarnblad did so, resulting in a substantial price break. 21 — To generate the cash for the Bizarre purchases, Multi-Media wrote checks to cash, cashed them, and delivered the cash to Rothstein in New York. 22 — Rothstein controlled Bizarre. All price discussions were with Rothstein. Although Gordon handled the nuts and bolts of the video sales, any matter of importance had to be decided by Rothstein. When Rothstein visited California (where Carriere had an office), he would discuss Bizarre business with Carriere. They would do the same when Carriere visited Rothstein's office in Brooklyn. 23 On February 7, 1996, 23 months after Carriere was debriefed by Pellegrino and Malpas, a grand jury in the Northern District of Florida returned a seven-count indictment charging Rothstein, Gordon, Sarnblad and Bizarre with various obscenity charges. All defendants were charged with conspiring to distribute obscene Bizarre videotapes. 24 As part of his cooperation, Carriere supplied Multi-Media documents to Malpas. In particular, Malpas asked Carriere for any records reflecting the delivery of cash to Rothstein for the Bizarre videotapes. Carriere produced records showing that Eric Gutterman, a longtime sales employee at Multi-Media, had delivered cash to New York. Carriere also facilitated an interview of Gutterman by Malpas and Pellegrino. When interviewed, Gutterman confirmed that he had delivered cash to Bizarre. Specifically, Gutterman stated that he had brought significant amounts of cash to New York and delivered it to Gordon at Bizarre's offices. 25 On January 13, 1997, Malpas made a motion to dismiss all charges against Rothstein and Sarnblad. The motion stated no reason for the relief it sought. On January 17, 1997, the district court granted the motion on a form order that provided no reason for the dismissal. 26 Although neither the prosecutor nor the court stated a reason for the dismissal, the record reveals that it was pursuant to an agreement between the parties. On November 18, 1996, Robert Katzberg, who is Rothstein's counsel in this case, and who was paid by Rothstein to represent Sarnblad in the criminal case, sent Malpas a letter referencing our agreement that the government will dismiss the ... indictment against defendants Donald Sarnblad and Theodore Rothstein in exchange for an affidavit from Sarnblad. The letter enclosed a draft of Sarnblad's affidavit for Malpas's approval. 27 Three days later, Katzberg wrote another letter to Malpas, stating: Enclosed, pursuant to our agreement to dismiss with prejudice the above-captioned indictment against defendants Sarnblad and Rothstein, is a photocopy of a fully executed affidavit of Donald Sarnblad.... As I understand it, the United States will now move to dismiss against Sarnblad and Rothstein (with, of course, the consent of defendants). 28 Sarnblad's affidavit admitted that as a Multi-Media employee, he was involved in the purchase of Bizarre videos. Sarnblad further admitted that he provided cash to another Multi-Media employee to deliver as partial payment for the videos to Morton Gordon, the principal of Bizarre Video. 29 After the case was dismissed against Rothstein and Sarnblad, Gordon pled guilty. 30