Opinion ID: 6500514
Heading Depth: 2
Heading Rank: 6

Heading: Indictment and Pretrial Proceedings

Text: In October 2011, a federal grand jury in New Jersey handed down a twenty-five-count indictment against thirteen defendants, based on the FirstPlus scheme. All four Defendants before us – Scarfo, Pelullo, and the Maxwell brothers – were charged with conspiring to participate in the affairs of an enterprise through a pattern of racketeering activity, in violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(d); conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371; conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; sixteen substantive counts of wire fraud, in violation of 18 U.S.C. § 1343; conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h); conspiracy to commit bank fraud, in violation of 18 U.S.C. § 1349; conspiracy to make false statements in connection with a loan application, in violation of 18 U.S.C. §§ 371 and 1014; and conspiracy to transfer a firearm to prohibited persons, or to possess a firearm by a convicted felon, in violation of 18 U.S.C. §§ 371 and 922. In the RICO conspiracy count, prosecutors charged all four Defendants with engaging in a pattern of racketeering activity comprising various predicate acts: mail fraud, wire fraud, bank fraud, obstruction of justice, extortion under the federal Hobbs Act, interstate travel in aid of racketeering, money laundering, and fraud in the sale of securities. In addition, Scarfo, Pelullo, and William Maxwell were charged with conspiracy to obstruct justice, in violation of 18 U.S.C. § 1512(k). Scarfo, alone, was also charged with being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1). And finally, the indictment sought criminal forfeiture of assets acquired from the proceeds of the 21 defendants’ criminal misdeeds, including the vehicles, jewelry, and other assets that had been seized pursuant to the search warrants in 2008. The other nine defendants, who were less involved in the scheme, were charged with various combinations of those counts, though none faced as many charges as did the four primary Defendants. Five of the lesser players – Leshner, Parisi, Drossner, Lisa Murray-Scarfo, 11 and Todd Stark 12 – took plea deals before the case went to trial. Due to William Handley’s poor health, the charges against him were severed and eventually dismissed. That left three other defendants – McCarthy, Adler, and Manno, all of whom were lawyers – alongside the main four heading to trial. Extensive motions practice, discovery, and pretrial proceedings ensued, lasting more than two years. Given the breadth of evidence and the amount of time it was going to take all parties to get ready for trial, the District Court designated the matter a “complex case” and so tolled the deadlines of the Speedy Trial Act. The parties also engaged in comprehensive briefing and argument on numerous issues, some of which are relevant here. 11 Lisa Murray-Scarfo is Scarfo’s wife, who, along with the four primary Defendants, was indicted for conspiracy to commit bank fraud and conspiracy to make false statements in connection with a loan application. 12 Stark worked for Seven Hills as Pelullo’s driver and was indicted for conspiring to get Pelullo a firearm. 22 Multiple defendants, including both Maxwells, sought to sever their trials, particularly from Scarfo’s and Pelullo’s. The District Court denied those motions. In early 2013, Pelullo unsuccessfully tried to have the charges against him dismissed on the basis of the Speedy Trial Act, complaining that the government and the Court were taking too long to bring the case to trial. Later that year, Pelullo asked the Court to order that the yacht and the Bentley, among other assets, be returned to him, which the Court refused to do.