Court Opinion

ID: 2651540
Source: CourtListenerOpinion
Date Created: 2014-01-29 15:37:26.858299+00
Date Added: 2024-06-11T12:17:54.767049
License: Public Domain

12-3493-cr (L)
United States v. LaVilla

                    UNITED STATES COURT OF APPEALS
                        FOR THE SECOND CIRCUIT

                             SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007,
IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING
A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE
(WITH THE NOTATION "SUMMARY ORDER").      A PARTY CITING TO A
SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT
REPRESENTED BY COUNSEL.

           At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Thurgood Marshall United
States Courthouse, 40 Foley Square, in the City of New York, on
the 29th day of January, two thousand fourteen.

PRESENT:  DENNY CHIN,
          SUSAN L. CARNEY,
          CHRISTOPHER F. DRONEY,
                    Circuit Judges.
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UNITED STATES OF AMERICA,
                    Appellee,
                                                     12-3493-cr
                       -v-                           12-3495-cr
                                                     12-3512-cr
MATTHEW LAVILLA, CLARKSON AUTO
ELECTRIC, INC., GERALD FRETTO,
                    Defendants-Appellants,

ANTHONY FRETTO, JAMES NOTO, DANIEL
STREFF, THOMAS RANDALL, DANIEL
LAROCCO, EDWARD HAWKINS, DAVID
DAILEY, RANDY VAN STEEN,
                    Defendants.

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FOR APPELLEE:                      BRADLEY E. TYLER, Assistant United
                                   States Attorney, for William J.
                                   Hochul, Jr., United States
                                   Attorney for the Western District
                                   of New York, Rochester, New York.

FOR DEFENDANTS-APPELLANTS:         JOSEPH M. LATONA, Office of Joseph
                                   M. LaTona, Esq., Buffalo, New
                                   York; MATTHEW R. LEMBKE, Cerulli,
                                   Massare & Lembke, Rochester, New
                                   York; and MICHAEL J. TALLON,
                                   Michael J. Tallon, P.C.,
                                   Rochester, New York.

            Appeal from the United States District Court for the

Western District of New York (Siragusa, J.).

            UPON DUE CONSIDERATION, IT IS ORDERED, ADJUDGED, AND

DECREED that the order of the district court is AFFIRMED.

            Defendants-appellants Matthew LaVilla, Gerald Fretto,

and Clarkson Auto Electric, Inc. ("CAE") were indicted below for

conspiracy to commit mail fraud, 18 U.S.C. § 1349; mail fraud,

id. §§ 1341 and 2; and conspiracy to launder monetary

instruments, id. § 1956(h).       Fretto and LaVilla were

additionally indicted for engaging in monetary transactions in

property derived from unlawful activity.          Id. §§ 1957 and 2.

The indictment seeks, inter alia, forfeiture of assets under 18

U.S.C. §§ 981(a)(1)(C) and 982(a)(1), as well as 28 U.S.C. §

2461(c).1

1
      Neither the parties nor the district court raised the issue below of
whether 18 U.S.C. § 982 authorizes the pretrial restraint of assets. See

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           Defendants appeal from the order of the district court

(Siragusa, J.) entered August 16, 2012, denying their

application for (1) the release of seized bank accounts to pay

for counsel and (2) the production of materials relied upon by a

government witness at a hearing held pursuant to United States

v. Monsanto, 924 F.2d 1186 (2d Cir.) (in banc), cert. denied,

502 U.S. 943 (1991).2      The district court adopted the reasoning

of Magistrate Judge Payson, who conducted the hearing and issued

the decision and order initially denying defendants' motion for

the release of their assets.

           On appeal, defendants argue primarily that (1) the

government failed to establish probable cause that they

committed the crimes charged in the indictment or that their

assets are forfeitable and (2) the Federal Rules of Evidence

should have been applied at the Monsanto hearing.            We address

these arguments in turn, assuming the parties' familiarity with

the facts, procedural history, and issues for review.

United States v. Razmilovic, 419 F.3d 134, 136, 138-40 (2d Cir. 2005).
Accordingly, we assume that Section 982 permits the pretrial restraint of
assets for the purposes of this case.

2
      Anthony Fretto -- a co-owner of CAE, father to Gerald Fretto, and also
a defendant named in the indictment -- owns assets subject to the seizure
order, but does not join in this appeal.

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1.   The Probable Cause Determination

           When an ex parte pretrial restraint is placed on a

defendant's assets, thereby restricting his ability to retain

counsel of choice, that defendant must be afforded "an

adversary, post-restraint, pretrial hearing as to probable cause

that (a) the defendant committed crimes that provide a basis for

forfeiture, and (b) the properties specified as forfeitable in

the indictment are properly forfeitable."   Monsanto, 924 F.2d at

1203.   Probable cause exists where the totality of the

circumstances suggests a "fair probability," and not necessarily

a "hard certaint[y]," that the defendant committed the crime

alleged.   Walczyk v. Rio, 496 F.3d 139, 156 (2d Cir. 2007)

(quoting Illinois v. Gates, 462 U.S. 213, 238 (1983)); see also

In re Seizure of All Funds in Accounts in Names Registry Pub.

Inc., 68 F.3d 577, 580 (2d Cir. 1995).

           Reviewing the district court's probable cause

determination de novo and its factual findings for clear error,

United States v. Walsh, 712 F.3d 119, 123 (2d Cir. 2013), we

conclude that the government established probable cause that (a)

defendants committed the crimes alleged in the indictment and

(b) the seized bank accounts are traceable to those crimes and

thus subject to pretrial restraint.

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    a.    Evidence of the Crimes Alleged in the Indictment

          The government alleges that the defendants arranged

for Xerox mechanics to place purchase orders with CAE, on behalf

of Xerox, for parts that Xerox did not need.   According to the

government, the Xerox mechanics provided defendants with used

parts that belonged to Xerox.   Defendants then repackaged those

parts as new and sent them back to Xerox to fill the purchase

orders.   At the Monsanto hearing, the government presented

sufficient evidence to establish probable cause to support these

allegations.

          Relying on information obtained from former CAE

employees and a former Xerox mechanic, IRS Special Agent Erin

Stacer testified that Anthony Fretto visited Xerox almost daily

to acquire boxes of used parts, unloaded them at CAE, and

instructed CAE employees to repackage the parts as new to be

delivered back to Xerox the next day.   Agent Stacer also

obtained incriminating business records from both CAE and Xerox

that showed that: between 2002 and 2007, CAE ordered

significantly fewer new parts from its suppliers than it

delivered to Xerox; in 2006, the five Xerox mechanics allegedly

involved in the scheme each ordered considerably more parts from

CAE than other mechanics, despite roughly equal workloads; in

2007, Xerox's Corporate Security intercepted five boxes
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delivered to Xerox by Anthony Fretto and found used parts that

were marked and billed as new parts; and Xerox's orders for new

parts plummeted after its relationship with CAE ended.

         Agent Stacer testified that CAE employees informed her

that LaVilla directed and personally participated in the

repackaging of parts.   She also testified that the Xerox

mechanics who placed the fraudulent purchase orders often went

to Gerald Fretto's house to pick up various goods as

compensation for their participation in the scheme.    She also

testified that a former CAE employee stated that LaVilla yelled

at him "to stop marking the parts, the Xerox parts that he was

repackaging."   That employee informed Agent Stacer that he

noticed that the same parts were being repackaged and resent

back to Xerox, and he thus began marking the parts to track how

many times this was occurring.

         This testimony and the corroborating business records

established probable cause that defendants committed the crimes

that were the basis of the forfeiture allegations.

    b.   Evidence of the Forfeitability of the Bank Accounts

         Agent Stacer presented a thorough accounting of

defendants' bank accounts, revealing that the seized bank

accounts were traceable to the allegedly ill-gotten proceeds

from the scheme.   On appeal, defendants make no argument
                                 -6-
suggesting otherwise.   Consequently, we conclude that the

district court did not abuse its discretion in finding

sufficient probable cause here to sustain the pre-trial

restraint on defendants' assets.

2.   Applicability of the Federal Rules of Evidence

         Agent Stacer noted at the Monsanto hearing that before

the hearing she reviewed her notes and memoranda of witness

interviews, her grand jury testimony, and spreadsheets she

prepared based on bank and Xerox records.    Defendants argue that

the magistrate judge erred by denying their request during the

hearing for the production of those documents, contending that

the magistrate judge should have applied Rule 612 of the Federal

Rules of Evidence, which governs the production of writings used

to refresh a witness's memory.     We reject defendants' arguments.

         Assuming Rule 612 applies to Monsanto hearings, we

conclude that the district court did not abuse its discretion in

rejecting defendants' request for the production of documents

that Agent Stacer reviewed before testifying.    When a witness

reviews a document to refresh her memory before testifying -- as

Agent Stacer did here -- a district court has discretion to

order the production of that document "if the court decides that

justice requires" production.    See Fed. R. Evid. 612(a)(2), (b).

We have previously identified Congress's concern regarding the
                                 -7-
unwarranted and premature disclosure of evidence in criminal

pretrial proceedings.   See Monsanto, 924 F.2d at 1197-98.   Here,

defendants failed to establish that justice required the

disclosure of Agent Stacer's notes and other materials where the

Agent was present at the Monsanto hearing for cross examination

by defense counsel and her affidavits had previously been

produced to the defendants.   Thus, the magistrate judge's

decision not to order the production of the documents sought by

the defendants was reasonable.

         We have considered all of defendants' remaining

arguments and conclude that they are without merit.   For the

foregoing reasons, we AFFIRM the order of the district court.

                              FOR THE COURT:
                              Catherine O'Hagan Wolfe, Clerk

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