Petition — Capanegro v. United States

Supreme Court brief1978

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IN THE

| MICHAEL RODAK, JR., CLERK

Supreme Court of the United States

October Term, 1978

No. 78-193

MICHAEL J. CAPANEGRO,

Petitioner,

—against—

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED’ STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

HENRY PUTZEL, III

Attorney for Petitioner

Michael J. Capanegro

140 West 62nd Street

New York, New York 11201

Telephone (212) 956-7144

TABLE OF CONTENTS

PAGE

EE 1

EES SE 2

Constitutional Provision Involved ................ 2

Ne kc ccc c cece 2

EEE IE 2

ES SESS TES 3

Reasons for Granting the Writ .................. 5

Ns ck ce ccc ee ces 11

APPENDIX:

1. Opinion of the Court of Appeals .......... la

2. Judgment of the Court of Appeals ........ 22a

3. Order Denying Petition for Rehearing ..... 23a

4. Order Denying Petition for Rehearing en

ES 24a

5. Special Findings of the District Court ..... 25a

CITATIONS

Cases:

Avis Rent a Car System, Inc. v. United States, 503

cw ccc c cece ees 7

Connally v. General Construction Co., 269 U.S. 385

EE ES 9

PAGE

Hynes v. Mayor of Oradell, 425 U.S. 610 (1976) .. 9

Lanzetta v. New Jersey, 306 U.S. 461 (19389) ..... 6,9

Loque Vv. United States, 412 U.S. 521 (1978) ...... 7

Morisette v. United States, 342 U.S. 246 (1952) ... 5,6

NLRB vy. United Insurance Co., 390 U.S. 254 (1968) ° 7

Radio City Music Hall Corp. v. United States, 135

ome Fae Ce Gels BOGE 6 5s ka Cee eencecvet cs 7

United States v. Culbert, — U.S. —, 98 S.Ct. 1112

SE Lid ua cdla swab bed Sos bamawadevemskaws 9

United States v. DiBrizzi, 393 F.2d 642 (2d Cir.

BEE Si enecc bus seyesad eg eethy ela de bahenee 6

United States v. Giordano, 489 F.2d 327 (2d Cir.

i: ME EPO EEE Ter re Te pos eres hee ee 8

United States v. Harrelson, 223 F. Supp. 869 (E.D.

OOP occ kavbinsicashatedscecensteaaws 7,10

United States v. Harriss, 347 U.S. 612 (1954) .... 6

United States v. Hart, 417 F. Supp. 1314 (D.C. Iowa,

BTOD lids Maweub ng hr ebewaeadecuwbe te Poa 6

BOOED in kos5, 0 6k0nd Sb enon assess heniberiests 10

United States v. Santiago, 528 F.2d 1180 (2d Cir.

1976), cert. denied, 425 U.S. 972 (1976) ..... 10

United States v. Silverman, 430 F.2d 106 (2d Cir.

1970), modified per curiam on other grounds,

439 F.2d 1198, cert. denied, 402 U.S. 958 (1971)

7, 8,10

United States v. Vitale, 489 F.2d 1367 (6th Cir.

enya |i er rOneD PeNeeN ge 10

ane Lente sedi

> eT Be we Sw ew

Sees wh bag ea Sart err x

oe ee ce

ili

Constitutional Provisions: .

U.S. Constitution, Fifth Amendment ..........

Statutes:

Title 29, United States Code, Section 50i(¢).. 2, 3, 5,

6, 7, 8,9, 10, 11

Title 28, United States Code, Section 1254(1) ...

Title 18, United States Code, Sections 654-66 ....

Other: |

S. Rep. No. 187, 86th Cong., Ist Sess. (1959) .

H.R. Rep. No. 741, 86th Cong., Ist Sess. (1959)

IN THE

Supreme Court of the United States

October Term, 1978

MICHAEL J. CAPANEGRO,

Petitioner,

—against—

UNITED STATES OF AMERICA,

Respondent.

TT Si

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

Michael J. Capanegro respectfully petitions for a writ

of certiorari to review a judgment of the United States

Court of Appeals for the Second Circuit, entered on May

15, 1978, affirming his conviction in the United States

District Court for the Southern District of New York

for violations of Title 29, United States Code, Section

501(c).

Opinion Below

<j ek Pte

: The opinion of the Court of Appeals affirming peti-

' tioner’s conviction has not yet been reported and appears

at pages la-2la in the Appendix to this petition.

Jurisdiction

The judgment of the Court of Appeals was entered

on May 15, 1978 (App. p. 22a). On July 5, 1978 the

Court of Appeals denied a timely petition for rehearing

and for rehearing en banc (App. pp. 28a-24a). The

jurisdiction of this Court is invoked under Title 28, United

States Code, Section 1254(1).

Constitutional Provision Involved

Amendment V of the United States Constitution pro-

vides in pertinent part:

“nor shall any person ... in any criminal case...

be deprived of life, liberty or property without due

process of law...”

Statute Involved

Title 29, United States Code, Section 501(c) provides:

“Any person who embezzles, steals, or unlaw-

fully and willfully abstracts or converts to his

own use, or the use of another, any of the moneys,

funds, securities, property, or other assets of a

labor organization of which he is an officer, or by

which he is employed, directly or indirectly, shall

be fined not more than $10,000 or imprisoned for

not more than five years, or both.”

Questions Presented

1, Does the due process clause permit conviction of the

petitioner of embezzlement from a labor union under

29 U.S.C. §501(c) in light of the undisputed evidence

that he was not an employee of the union but, as retained

counsel and attorney for individual union members, was

at most its independent contractor?

;

2. Was petitioner convicted upon an erroneous con-

struction of 29 U.S.C. $501(c) by which the District

Court was permitted to conclude that he was “indirectly”

employed by a labor union?

Statement

Petitioner, a member in good standing of the New

York bar for over twenty years, was charged in a twenty-

four count indictment with embezzlement of funds from a

labor union in violation of 29 U.S.C. §501(c). Specifi-

cally, the indictment alleged that the petitioner sub-

mitted bills to Local 110i of the Communications Workers

of America (“the union”) for legal services rendered to

its individual members and that he subsequently received

payment from the Local 1101 Defense Fund (“the De-

fense Fund”) despite knowledge that such bills “vastly

overstated the nature and value of the services per-

formed”. The indictment did not charge that Mr. Cap-

anegro had submitted bills for non-existent clients or that

he had failed to render any services to the clients named

in each bill. Moreover—and most significantly—the in-

dictment did not accuse Mr. Capanegro of aiding and

abetting any union officer or employee in a scheme of

embezzlement. Rather, it charged that in acting as an

attorney for each of the individual union members and

in receiving compensation therefor, petitioner was “em-

ployed, directly or indirectly” by the union and was thus

a principal in the alleged fraud. \

Following the denial of pre-trial motions to dismiss

the indictment, the petitioner waived a jury and pro-

ceeded to trial in June of 1977. With respect to the

central issue of his relationship to the union, the evidence

was not in dispute. It established that Mr. Capanegro

was a single practitioner who maintained law offices in

New York City. In 1971, petitioner was retained by the

union to represent it in a variety of matters and as a

result of such retainer received an annual fee of $25,000.

The retainer agreement by its terms did not, however,

encompass the personal representation of individual union

members, officers or employees. Although Mr. Capanegro

was denominated the “chief counsel’ tc the union, he

maintained no office at its headquarters, had no union

secretary at his disposal, and received no salary or

any of the usual employment benefits generally provided

to union officers or employees. In short, petitioner was

simply a private practitioner on general retainer by a

labor union.

In August, 1971, the union commenced a strike against

the New York Telephone Company. In the ensuing

months, individual members were charged in the New

York City criminal courts with a variety of crimes, most

of which were classified under state law as misdemeanors

or offenses and all of which arose from picket-line skir-

mishes and other incidents relating to the strike. As

such incidents occurred, members would apply to Local

1101 for an sttorney to represent them, and they would

be referred to the petitioner by officers or employees of

the union. Mr. Capanegro, in turn, would represent such

individuals and, by agreement with the union’s officers,

would bill the Defense Fund for his services. Many of

such bills were submitted in advance of actual court ap-

pearances and, by the testimony of the petitioner, were

good faith estimates of the services which he intended to

perform and the value of such services. The District

Court rejected such testimony with respect to seventeen

bills and concluded that such bills had been fraudulently

submitted; it acquitted Mr. Capanegro on seven counts

of the indictment, finding that the Government had failed

to adduce adequate proof that such bills were not in fact

good faith estimates of services to be rendered. [App. pp.

25a-50a).

With respect to the petitioner’s status vis-a-vis the

union, the District Court concluded simply that “[w]ith-

ons nici aaa

i ated Do: jo ne

in the meaning of 29 U.S.C. § 501(c) ... Capanegro was

employed by [Local 1101]” [App. p. 50a] but supplied

no further analysis to indicate the basis for concluding

that the statute applied to the petitioner.* The majority

of a divided panel of the Court of Appeals held that the

petitioner “was employed by the union within the mean-

ing of §501(c)” [App. p. 7a] but conceded that ‘Cap-

anegro as retained counsel of the Union was not its ‘em-

ployee’ in the common law sense of a servant as distin-

guished from an independent contractor.” [App. p. 8a].

Judge Friendly, in dissent, concluded that the petitioner

was an independent contractor to the labor union and

that his conduct was therefore not properly punishable

under § 501(c).

Reasons for Granting the Writ

In Morisette v. United States, 342 U.S. 246, 268,

(1952) this Court articulated the familiar due process

standard by which all federal criminal statutes must be

measured :

“The spirit of the doctrine which denies to the

federal judiciary power to create crimes forth-

rightly admonishes that we should not enlarge the

reach of enacted crimes by constituting them from

anything less than the incriminating components

contemplated by the words used in the statute.

*In denying the petitioner’s pre-trial motion to dismiss the

indictment on the ground that Mr. Capanegro was not an em-

ployee of the union—and therefore not chargeable under 29

U.S.C. §501(c)—the District Court observed: “There is no

case directly in point. Obviously Mr. Capanegro was not an

employee in the narrow sense of that word. He was presumably

an independent contractor.” (emphasis supplied).

And where Congress borrows terms of art in which

are accumulated the legal tradition and meaning

of centuries of practice, it presumably knows and

adopts the cluster of ideas that were attached to

each borrowed word in the body of learning from

which it was taken and the meaning its use will

convey to the judicial mind unless otherwise in-

structed. In such case, absence of contrary direc-

tion may be taken as satisfaction with widely ac-

cepted definitions, not as a departure from them.”

See also, Lanzetta v. New Jersey, 306 U.S. 451,

453 (1939) and United States v. Harriss, 347 U.S.

612, 617 (1954).

In construing 29 U.S.C. $501(c) to punish the con-

duct of a private attorney who was clearly not the em-

ployee of a labor union, the Court of Appeals has, we

submit, done substantial violence to the teaching of Mori-

sette, supra, and has, in the process, substantially broad-

ened the reach of an important federal criminal statute

beyond that intended by the Congress.

In enacting 29 U.S.C. §501(c) Congress employed

language which unequivocally limits the reach of the

statute to officers and employees of a labor union,* and,

in interpreting such statute, courts have routinely re-

quired the Government to prove such status as an essen-

tial element of the offense. E.g., United States v. Hart,

417 F. Supp. 1314 (D.C. Iowa, 1976); United States v.

DiBrizzi, 393 F.2d 642 (2d Cir. 1968). See also, United

* The legislative history of §501(c) fully supports the thesis

that the section is limited in its reach to officers and employees

of a union, and not to the public at large. See generally, S. Rep.

No. 187, 86th Cong., Ist Sess.; H.R. Rep. No. 741, 86th Cong.,

Ist Sess. (1959), U.S. Code Congressional and Administrative

News, pp 2318, et seq. See also, dissenting opinion of Friendly,

C.J., App. pp. 15a-19a.

aie ns matt etal eam taal

States v. Silverman, 480 F.2d 106, 113 (2d Cir.)

(Friendly, C.J.), modified per curiam on other grounds,

439 F.2d 1198, cert. denied, 402 U.S. 953 (1971) ; United

States v. Harrelson, 233 F. Supp. 869 (E.D. Mich. 1963).

Indeed, we have found no case in which any person has

been convicted as a principal under § 501(c) who was not

an officer or employee of a labor union.

In the instant case, petitioner was clearly not such an

officer or employee, but was nevertheless convicted as a

principal under § 501(c). He was not a member of the

union; he held no elective or appointive union office; he

received no salary or other monetary benefits of employ-

ment; no F.I.C.A. or withholding taxes were deducted on

his behalf from the money which he received; and he

reported to no supervisior or superior with respect to his

work. Instead, Mr. Capanegro, in acting as attorney for

individual union members, fit the classic common law

definition of an independent contractor, a person “who

contracts with another to do something for him but who

is not controlled by the other nor subject to the other’s

right of control with respect to his physical conduct in the

performance of the undertaking.” Restatement Second

of Agency §$2(2) (1958); see Loque v. United States,

412 U.S. 521, 527 (1973); Radio City Music Hall Corp.

v. United States, 185 F.2d 715 (2d Cir. 1943) (L. Hand

J.); Avis Rent a Car System, Inc. v. United States, 508

F.2d 423, 429 (2d Cir. 1974) ; see also, NLRB v. United

Insurance Co., 390 U.S. 254, 259 (1968). The majority

of the Court of Appeals panel conceded that the peti-

tioner “as retained counsel of the Union was not its

‘employee’ in the common law sense of a servant as dis-

tinguished from an independent contractor” [App. p.

8a] but nevertheless construed §501(c) to reach the

conduct of independent contractors:

“But the statute we are construing does not limit

its coverage to officers or employees of a labor

organization. It specifically provides for the crim-

inal liability of ‘{a]ny person’ who loots the funds

of a union ‘by which he is employed’ (emphasis

supplied). A labor union like any other employer

may employ independent contractors as well as

servants or employees.” [App. p. 8a].

It is respectfully urged that such construction, supported

by no legislative history, does violence to the clearly ex-

pressed intention of the Congress to limit the reach of

§ 501(c) to officers and employees of a labor union. See,

legislative history cited in dissenting opinion of Friendly,

C.J., App. pp. 15a-19a. Like similar embezzlement statutes

to be found in Title 18, the clear congressional purpose

in enacting §501(c) was to subject “union officers or

employees to the same test of criminality as government

employees, bank officers and the like...” United States

v. Silverman, 430 F.2d 106, 127, modified per curiam on

other grounds, 439 F.2d 1198, cert. denied, 402 U.S. 953

(1971). See 18, U.S.C. §§ 654-60. A fortiori, a non-

employee of a labor union may no more be convicted under

29 U.S.C. § 501(c) than a non-officer or non-employee of

a bank may be convicted as a principal under 18 U.S.C.

$656. See, United States v. Giordano, 489 F.2d 327, 330

(2d Cir. 1973).*

In broadly construing § 501(c) the Court of Appeals

has, we submit, permitted such statute to violate “the

first essential of due process of law” by defining the statu-

*It is, of course, possible to convict any non-employee or

officer of accessorial liability under such statutes by alleging and

proving that such individual assisted a principal, who was such

an employee, to embezzle funds. See, United States v. Giordano,

supra. In contrast to Giordano, however, Capanegro was prose-

cuted as a principal, not as an aider and abettor. And the trial

court’s special findings make clear that Capanegro was convicted

upon the theory that he was an employee, chargeable in his own

right with violations of §501(c). See, App. p. 50a. See also,

App. p. 14a, dissenting opinion of Friendly, C_!.

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tory term “employed” “in terms so vague that [persons]

of common intelligence [will] necessarily [have to] guess

at its meaning and differ as to its application.” See,

United States v. Culbert, — U.S.—, 98 S.Ct. 1112, 1114

(1978) ; Lanzetta v. New Jersey, supra; Connally v. Gen-

eral Construction Co., 269 U.S. 385, 391 (1926) ; see also,

Hynes v. Mayor of Oradell, 425 U.S. 610, 620 (1976).

Judge Friendly, in dissent, pointed to the consequences

of such construction:

“Instead of being able to refer to a well-de-

veloped body of law which provides a basis on

which criminal liability can be determined, trial

judges and juries must now minutely scrutinize

the relationships of independent contractors to

unions to determine if they are close enough for

the statute to apply. The majority supplies no

real clue as to when ‘employee’ in § 501(c) is to

be taken in its common law context and when it is

not.” [App. p. 20a].

In light of the substantial due process issue thus

raised with respect to the applicability of an important

federal criminal statute, it is respectfully submitted that

the instant case is appropriate for review by this Court

upon a writ of certiorari.

Apart from the important constitutional issue dis-

cussed above, it is apparent that the petitioner was con-

victed in part because of a serious misreading of 29

U.S.C. §501(c) both by the Government and by the

District Court. The statute provides, in pertinent part:

Any person who embezzles, steals or unlawfully and

willfully abstracts or converts to his own use...

any of the moneys [or] funds . .. of a labor or-,-~

ganization of which he is an officer, or by which

he is employed, directly or indirectly . . . [com-

mits a crime]

The indictment charged that the petitioner had embezzled

from a labor organization “of which he was employed

directly and indirectly as an attorney,” and the Govern-

ment contended both in the District Court and the Court

of Appeals* that even if Mr. Capanegro was not directly

employed by the union, he was “indirectly” employed by

it and was thus ~ubject to prosecution under § 501(c).

Such construction is completely at variance with the con-

struction of the statute urged by the Government in

numerous other cases. Indeed, the Second and Sixth Cir-

cuits have consistently interpreted the statutory phrase

“directly or indirectly” to modify the first phrase of the

statute, describing the crime of embezzlement, not the

phrase dealing with employment. “The statutory lan-

guage condemns the embezzlement or conversion not only

of moneys, funds and securities, but also of ‘property or

other assets of a labor organization . . . directly or in-

directly.’ United States v. Robinson, 512 F.2d 491 (2d

Cir. 1975); United States v. Silverman, 430 F.2d 106,

113-14 (2d Cir. 1970), modified per curiam on other

grounds, 439 F.2d 1198, cert. denied, 402 U.S. 953 (1971) ;

United Stetes v. Santiago, 528 F.2d 1130, 1135 (2d Cir.

1976), cert. denied, 425 U.S. 972 (1976), citing United

States v. Vitale, 489 F.2d 1367, 1370 (6th Cir. 1974);

United States v. Harrelson, 223 F. Supp. 869, 871 (E.D.

Mich. 1963).**

In light of such authority, it is clear that the prosecu-

tion in the instant case urged upon the District Court a

* The Court of Appeals found that the petitioner was “direct-

ly” employed by the union and so avoided reaching the question

of statutory interpretation discussed herein [App. p. 7a, n.3].

** Indeed, in Silverman, supra, the prosecutor framed the

indictment to eliminate any possible ambiguity as to the inter-

pretation of the statute: “‘[{T]he defendant, unlawfully, will-

fully and knowingly, directly and indirectly, did embezzle, steal,

abstract and convert, to his own use...” United States v. Silver-

man, supra, at 109-10. {Emphasis supplied. |

wee td cies theme diy De

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construction of the statute which was substantially at

variance with numerous cases construing the same lan-

guage differently. Such difference was of crucial signi-

ficance in the instant case, where the petitioner’s relation-

ship with the union—and the legal significance of such

relationship—were of central importance in the case. In

light of the apparent conflict which now exists within the

Second Circuit as to the construction—and hence the ap-

plicability—of 29 U.S.C. §501(c), this Court should

review the case at bar in order to resolve such discre-

pancy.

CONCLUSION

The writ of certiorari should be granted.

Respectfully submitted,

HENRY PuTZEL, III

Attorney for the Petitioner

Michael J. Capanegro

140 West 62nd Street

New York, New York 10023

Telephone (212) 956-7144

August 4, 1978

APPENDIX

Ora

she “reais

Opinion of The Court of Appeals

UNITED STATES COURT OF APPEALS

For THE Seoonp Circuit

tin

No. 729-—September Term, 1977.

(Argued February 21, 1978 Decided May 15, 1978.)

Docket No. 77-1425

—S

Unrrep States or AMERICA,

Appellee,

—against—

MicuarL Capanecro,

Defendant-A ppellant.

Before:

Frrenpuy, MuLuiGan and Mrsk111,

Circuit Judges.

Appeal from a judgment of conviction entered in the

United States District Court for the Southern District of

New York, Hon. Thomas P. Griesa, Judge, on seventeen

counts of violating 29 U.S.C. §501(c), theft of a labor

organization’s funds.

Affirmed.

Don D. Buoxwatp, Assistant United States

Attorney (Robert B. Fiske, Jr., United

States Attorney for the Southern District

of New York, Pamela Chepiga, Richard

Opinion of The Court of Appeals

Weinberg, Asst. United States Attorneys,

of Counsel), for Appellee.

Henry Purzer, III, New York, New York

(Donna M. Zerbo, Law Student Assistant;

Michael J. Capanegro, Pro Se, of Counsel),

for Defendant-A ppellant.

wow

Muucan, Circuit Judge:

This is an appeal by- Michael Capanegro from a judg-

ment of conviction entered on October 23, 1977 in the

United States District Court for the Southern District of

New York, after a 10 day trial before Hon. Thomas P.

Griesa, United States District Judge, sitting without a

jury. An indictment filed on September 24, 1976 charged

Capanegro with 24 counts of embezzling, abstracting and

converting monies of Local 1101 (Loeal or Union) of the

Communication Workers of America (C.W.A.) in viola-

tion of 29 U.S.C. §501(e). On July 7, 1977 the court

found the defendant guilty on 17 counts and not guilty on

seven counts. Judge Griesa filed special findings of fact

on July 19, 1977. On October 13, 1977 Capanegro was

sentenced to concurrent terms of imprisonment of one year

and a day on each count.

In carly 1971 appellant represented without fee Ricky

Carnivale, who was challenging the incumbent for the

presidency of the Local. The campaign was successful

anda Carnivale slate of officers was certified in April, 1971.

From that point through December, 1972 Michael Capa-

negro was retained as attorney for the Union at a $25,000

annual retainer, In June, 1971 the members of the Union

voted to pay the legal fees of 18 members who had been

arrested for actions committed during a 13 day wildcat

strike. The membership further voted to pay the legal

‘ ———

Opinion of The Court of Appeals

fees of any member arrested for strike activities in the

future. On July 14, 1971 the Local went on strike against

the New York Telephone Company; the strike lasted until

February 18, 1972. During that period about 45 Union

members were arrested for strike-related crimes. Al-

though a few were arrested for the felony of assault, the

vast majority were charged with such state misdemeanors

or offenses as disorderly conduct or harassment. As each

arrest occurred the Local’s officers either referred the

member to Capanegro or advised the attorney of the inci-

dent. Capanegro then submitted legal bills to the Union

for his alleged representation. These bills were paid from

the Local’s Defense Fund which was in part financed by

the parent union C.W.A. Between October 21, 1971 and

February 29, 1972, in addition to his regular fees under

the Retainer Agreement, Capanegro reecived 45 cheeks

totalling $113,025 from the Local’s Defense Fund. Capa-

negro’s bills for alleged legal services were sent directly

to Carnivale; no copy was sent to the individual member

allegedly represented. Carnivale signed all of the checks;

indeed, over $100,000 of the Defense Fund checks were

actually written out by Carnivale instead of by the “check

writers” of the Defense Fund Committee, the usual prac-

tice. After the strike, the extent of Capanegro’s billings

eventually became known to the parent union as well as

the Local. An audit was conducted and Capanegro’s bills

were brought to the attention of the Department of Labor

in 1978. As the result of a criminal investigation, this

indictment followed.

Nach of the 24 counts of the indictment related to Capa-

negro’s billing and subsequent receipt of payment for al-

leged legal fees incurred while representing individual

Opinion of The Court of Appeals

Union members. In finding Capanegro guilty on 17 counts

of embezzling, stealing, willfully abstracting or converting

to his own use the funds of the Union in violation of

§ 501(c), Judge Griesa wrote a carefully detailed 34 page

opinion finding facts specially as requested by the defen-

dant pursuant to Fed. R. Crim. P. 23(c). The opinion

examined the facts and cireumstances underlying each

count of the indictment.

Appellant argues that the evidence failed to support the

guilty verdicts. Under the familiar rubric the evidence

must be viewed in the light most favorable to the Govern-

ment. Glasser v. United States, 315 U.S. 60, 80 (1942). In

this light, or almost any other form of illumination, the

appellant’s argument on this point is, at best, unconvincing.

An examination of the findings below reveals that in

case after case Capanegro’s bills were knowingly false.

Each bill purported to provide a description of the services

which he had rendered a particular member of the Local.

In some cases appellant submitted bills for services to

members whom he never saw or consulted. At least twice

Capanegro’s only service was to speak on the phone and

advise the member to file a complaint with the police

department. Yet in both cases he billed for appearances

at hearings. On other occasions Capanegro made brief

court appearances for members whose cases were ad-

journed in contemplation of dismissal. However, he billed

for multiple court appearances including trial representa-

tion. He never prepared or filed a single brief or memo-

randum of law although in several cases he claimed that

such services had been performed. Capanegro consistently

claimed to have made appearances at police stations, at

hearings, and also to have held conferences with witnesses

when none of these events had actually transpired. In

some cases appellant claimed to have tepresented members

who in fact were represented by other counsel. A review

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Gpinion of The Court of Appeals

of all the counts upon which Capanegro was found guilty

discloses that as to each Judge Griesa found the statement

of defendant’s services was almost entirely a statement of

services which had not been rendered. Nor were the state-

ments good faith estimates of services to be performed.

We see no purpose in further discussion of individual

counts sinee the evidence fully established a brazen scheme

of looting the Union coffers.

On appeal it is argued that the Government offered no

evidence that Capanegro’s bills were so outrageously high

as to constitute fraud. In support of this we are told that

the law is “a profession which lacks any real standards

concerning the amount of money it bills its clients.’’ The

obvious answer, of course, is that an attorney under any

standard cannot bill a client for services neither performed

nor ever intended to be performed.

Capanegro did testify on his own behalf, generally main-

taining that his bills were a good faith estimate of services

rendered. Appellant now claims that Judge Griesa’s ac-

quittal of Capanegro on seven counts rendered the verdict

of guilty on 17 others inconsistent, thus requiring reversal.

The point is totally frivolous. Judge Griesa carefully

weighed the Government’s evidence with respect to each

count and found that in some the Government’s ease did

not persuade him beyond a reasonable doubt. The econvie-

tious here were amply supported, indeed, compelled by the

evidence, That the trial judge saw fit to aequit appellant

on seven counts attests to a careful weighing of the testi-

mony and other evidence on each count rather than to any

inconsistency.

1 On this point appellant relies solely on United States v. Maybury, 274

F.2d 899 (2d Cir. 1960) (Friendly, J.). In that case, the appellate court

found a verdict of guilty on an uttering count inconsistent with an ac-

quittal on a forgery count. The trial judge had found that the defen-

dant had forged the check for the purpose of proving knowledge of

forgery for the uttering charge; yet he acquitted the defendant on the

Opinton: of The Court of Appeals

The principal issue on this appeal? is whether Capa-

negro was employed by the Union wtthin the language of

§501(c). That section provides:

Any person who embezzles, steals, or unlawfully and

willfully abstracts or converts to his own use, or the

use of another, any of the moneys, funds, securities,

property, or other assets of a labor organization of

which he is an officer, or by which he is employed,

directly or indirectly, shall be fined not more than

$10,000 or imprisoned for not more than five years,

or both.

(Iamphasis supplied).

Capanegro was clearly “employed” by the Union. The

retainer agreement of June 10, 1971 provided in part:

1. The client does hereby employ and retain the

attorney [Capanegro] as its attorney for and during

a period commencing on the Ist day of April, 1971

and shall continue for as long as Ricky Carnivale,

President, shall remain in office.

2. The attorney accepts such employment and re-

tuiner and agrees to render and perform all legal ser-

forgery charge. Clearly, no such internal inconsistency is present here

since cach count referred to individual transactions between Capanegro

and his client,

Appellant has raised several other arguments—insufficiency of the evi-

dence, inconsistent verdict—which are discussed in the text. In addition,

wo do not overlook appellant’s elaimn that the settlement of a civil suit.

brought by members of the Union against him and based upon the same

factual issues here litigated, constitutes a collateral estoppel against this

criminal prosecution brought by the United States. The law of course

is contrary, Ashe v. Swenson, 397 U.S. 436 (1970) ; United States y.

Tramunti, 500 F.2d 1334, 1346-49 (2d Cir.), cert. denied, 419 U.S. 1079

(1974).

eee En aw | nail

avs

Opinion of The Court of Appeals

vices necessary or proper for the protection of the

interests and property of the client whenever and to

the extent required by such client... .

Carnivale or other Union officers either referred mem-

bers to Capanegro for legal assistance or advised him that

a member had been involved in some incident related to

the strike. Appellant’s fees were not paid by Union mem-

bers referred to him but by his employer, the Union. In

the only legal papers submitted by Capanegro to courts in

his representation of the strikers, affidavits for adjourn-

ment, he described himself as “Chief Counsel to the Com-

munications Workers of America, Local 1101.” Appel-

lant’s relationship with the Union was not casual or hap-

penstance. His affidavit indicates that he was at the Local’s

office “daily and working on union business.” He spoke at

Union gatherings. For the year 1972, 76% of his gross

professional income was derived from the Union.

In sum, Capanegro by express agreement and in fact was

employed by the Union. We have no difficulty therefore in

holding that Capanegro was employed by the Union within

the meaning of § 501(c).’ ;

Appellant’s argument to the contrary is that Capanegro

was not an “employee” of the Union (i.e., he was not on the

-———---

3 The Government urges that if Capanegro was not employed directly

by the Union he was at lonst “indirectly” so employed within the lan-

guage of § 501(¢), This argument rests upon the assumption that the

words “directly or indirectly” in the statute modify the verb employed.

Thore is some indication, however, in our prior opinion in United States

v. Robinson, 512 F.2d 491, 494 (2d Cir. 1975), that those words modify

embezzlo, steal, abstract or convert. For its interpretation, the Govern-

ment relies upon a report of the Department of Labor commenting on

a predecessor bill to that which eventually became § 501(c). That report

indicated that the Department construed the section to apply to persons

having “any direct or indirect functions in connection with the money

or other property of a labor organization....” 104 Cong. Rec. 1327

(Jan. 30, 1958). We need take no position on this point since in our

view Capanegro was in any event directly employed by the Union.

Opinion of The. Court of Appeals

Union payroll and no usual empluyee deductions were

taken from his fees by the Union). Rather, he argues; as

attorney he was an “independent contractor” and hence not

within §501(c). We agree that Capanegro as retained

counsel of the Union was not its “employee” in the common

law sense of a servant as distinguished from an indepen-

dent contractor. But the statute we ar» construing does

not limits its coverage to officers or employees of a labor

organization. It specifically provides for the criminal li-

ability of “[a]ny person” who loots the funds of a union

“by which he is employed” (emphasis supplied). A labor

union like any other employer may employ independent

contractors as weli as servants or employees. See, e.g.,

A.L.L, Restatement of Agency §220 (2)(b) (1933);

Black’s Law Dictionary 911 (4th ed. 1968) (independent

contractor); Harper The Basis of Immunity of an Em-

ployer of an Independent Contractor, 19 Ind. L.J. 494

(1935); Morris, The Torts of an Independent Contractor,

29 Til. L. Rev. 339, 341 (1934); Smith, Scope of the Busi-

ness: The Borrowed Servant Problem, 38 Mich. L. Rev.

1222, 1246 (1940); Steffen, Independent Contractor and

the Good Life, 2 U. of Chi. L. Rev. 501, 502-08 (1935).

ITowever, the common law distinction between these

classifications is irrelevant to the question in this case, The

issue here is not the vicarious tort liability foisted upon a

master by virtue of the unauthorized activity of his ser-

vant. Such liability is based on familiar respondeat su-

perior concepts which lead to exculpation where the person

employed performs the work without being subject to the

control of his employer. The lawyer, like the physician,

is a professional and if he is guilty of malpractice it may

well be that under common law doctrine his employer will

not be responsible in damages to one injured as the result

of the lawyer’s tortious activity. Cf. Birnbaum, Physicians

Opinion of The Court of Appeals

Counterattack: Liability of Lawyers for Instituting Un-

justified Medical Malpractice Actions, 45 Fordham L. Rev.

1003, 1026 n.126 (1977). Here we are construing a statute

enacted by Congress to protect union funds against pil-

ferage by any person it employed. Capanegro was given

such employment by the Union as its Chief Counsel. This

employment provided him with the opportunity, which he

clearly scized, to take illicit advantage of Union funds.

Whether he was an independent contractor, agent, or ser-

vant, was not the concern of Congress. This is clear from

the language which Congress chose in § 501(c).

The failure of Congress to use the word “employee” in

any person employed by the labor organization, is of some

significance. The definition of employee in 29 U.S.C. 4152

(3)* expressly exeludes independent contractors. The ex-

clusion was added by the Taft-Hartley Act in 1947, 61 Stat,

137, in response to N.L.R.B. v. Hearst Publications, Inc.,

322 U.S. 111 (1944), H. Rep. No. 245 on H.R. 3020, 80th

Cong., Ist Sess., 18 (1947), to clarify the congressional in-

tent that the term “employee” be understood in its common

4 29 U.S.C. § 152(3) states:

The term “employee” shall include any employee, and shall ndt be

limited to the employees of a particular employer, unless this sub-

chapter explicitly states otherwise, and shall include any individual

whose work has ceased as a consequence of, or in connection with,

nny current labor dispute or heenuse of any unfair Inbor practice,

and who has net obtained any other regular and substantially

equivalent employment, but shall not include any individual em-

ployed ax an agricultural laborer, or in the domestic service of any

family or person at his home, or any individual employed by his

parent or spouse, or any individual having the statua of an inde.

pendent contractor, ar any individual employed as a supervisor, or

anu individual employed by an employer aubject to the Roilway

Labor Act, as amended from time to time or by any other person

who is not an employer as herein defined.

(Fmphasis supplied.)

10a

Opinion of The Court of Appeals

law sense as a salaried person working under direct super-

vision. In determining the group with which an employer

must bargain on issues such as wages, hours and conditions

of employment, 29 U.S.C. § 158(d), it makes sense to ex-

clude independent contractors who depend not upon wages

but a fee and who themselves decide how the work will be

done. See H. Rep. No. 245, supra, at 18. On the other hand,

the purpose of the Labor-Management Reporting and Dis-

closure Act of 1959, of which § 501(¢c) is a part, is not at all

served by excluding from the coverage of that section a

trusted legal advisor who is able to gain access to the union

funds which the Act was designed to shelter.

Thus, in setting forth in §501(a) the fiduciary obliga-

tions of officers of a union, the statute specifies “officers,

agents, shop stewards, and other representatives of a labor

organization.” Again in §501(b) the same listing is pro-

vided. However, in §501(c) the statute does not refer

back to “such” persons but provides for criminal liability

for “any person” employed by a union. Section 501(c) does

not use the term “employee” which is defined in 29 U.S.C.

§402(f), but instead refers to any “person” broadly de-

fined in 29 U.S.C, § 402(d).

In our view, the choice of language here is sufficiently

flexible to include Capanegro’s employment as Chief Coun-

sel to the Union. We have heretofore affirmed the convic-

tions under § 501(c) of defendants who held such relatively

menial positions as Patrolman and Master-at-Arms of a

labor organization. United States v. Robinson, 512 F.2d

491, 492 (2d Cir. 1975). It would indeed be incongruous

if the Union’s Chief Counsel, who had a close relationship

with the Union hierarchy and obvious access to the till,

5 Whether Capanegro would he liable in a civil suit for damages under

§501(b) as a representative of the Union is not before us.

Va. ;

Opinion of The Court :of Appeals

were to escape the liabilities imposed by § 501(c) because

he was technically not on the Union payroll but was em-

ployed as its counsel. The clear intent of Congress, in view

of the purpose of the legislation as well as the language

of the statute, mandates the conclusion that Capanegro was

a person employed by the Union and thus was within the

coverage of § 501(c).*

6 In his dissenting opinion Judge Friendly cites cases where the courts,

when faced with congressional use of the term employee or its “equiv-

alent,” have construed that language in the common law sense excluding

independent contractors. However, in all of these cases the distinction

served the statutory purpose. If the issue is whether the employer is

responsible for the tort of his employee, Strangi v. United Stules, 21!

F.2d 305 (Sth Cir. 1954) (Federal Tort Claims Act), or whether an

employee is to be compensated when injured during the course of his

employment, Baker v. Tezas ¢ Pacific Ry. Co., 359 U.S. 227 (1950)

(FELA); Cimorelli v. New York Cent. B. Co., 148 F.2d 575 (6th Cir.

1945) (FELA); or whether the pay, working conditions or nnemploy-

ment tax payments of the employee are safeguarded, Rutherford Ford

Corp. v. McComb, 331 U.S. 722 (1947) (FLSA); United States v. New

England Coal & Coke Co., 318 F.2d 138 (1st Cir. 1963) (Walsh-Healey

Act); LR.C. §§ 3121(d)(2), 3306(i), then the degree of control exer-

cised by the employer over the work performed and the job environ-

ment sensibly determines the employer's responsibility. The distinction

between independent contractor and employee in those contexts is mean-

ingful. But these cases have no relevance when the purpose of the statute

is not to enforce some obligation upon the employer but rather to pro-

tect the funds of the union treasury from raids by those whose employ-

ment in a position of trust gives them access to those funds. In such

eases it should make no difference whether the person employed is an

employee or an independent contractor. The employer's degree of con-

trol over the thief is simply not relevant. As Mr. Justice Cardozo

observed, “Our concern is to define the meaning [of the statutory term]

for the purpose of a purticalor statute which must be read in light of

the mischief te he corrected and the end to be attnined.” Warner v.

Goltra, 208 US. 165, 15R (1034),

The purpose of the statute here was to dixcournge corruption hy those

employed in a position of trust by the union, 20 U.S.C, ¢ 401. Tad

Capanegro been “house counsel” then the dissent apparently would con-

eede that he would be criminally liable under § 501(¢). The faet that

he had his own outside office and employed his own secretary provides

no reason at all to exempt him from that liability. A distinction made

on this basis frustrates the congressional purpose by permitting the pro-

hibited mischief to be easily achieved. Capanegro enjoyed a position of

12a

Opinion of The Court of Appeals

Appellant also contends that it was the congressional

intent to limit the reach of § 501(c) to insiders. This nar-

row target class, it is suggested, includes only “corrupt

officers and employees, persons who—like any potential

embezzlers—had inherent access to the funds and assets

of a labor organization and authority to misappropriate

them.” The appellant argues that he had no authority

since he had to submit his bills for approval to the Union.

Aside from the dubious factual postulate that Capanegro

was not an insider in a rather choice position to loot the

Union’s funds, the legal argument is devoid of merit. Sec-

tion 501(c) is not limited to the common law crime of em-

bezzlement, which involves a misappropriation by one en-

trusted with funds. Indeed, the section, by its very terms,

includes other forms of theft, stealing and converting.

United States v. Silverman, 430 F.2d 106, 127 (2d Cir.),

modified per curiam on other grounds, 439 F.2d 1198, cert.

denied, 402 U.S. 953 (1971) (Friendly, J.). United States

v. Sullivan, 498 F.2d 146 (1st Cir.), cert. denied, 419 U.S.

993 (1974) and Colella v. United States, 360 F.2d 792 (1st

Cir.), cert. denied 385 U.S. 829 (1966), relied upon by ap-

pellant, are also contrary to his position. In Sullivan the

court commented:

Though common law embezzlement “carries with it the

concept of breach of fiduciary relationship,” ... neither

“stealing,” “abstraction,” nor “conversion” do. We see

no reason grounded in policy or logic to extend to these

terms a requirement of breach of fiduciary responsi-

bility.

498 F.2d at 149 n.4. Neither do we.

trust in his employment as an attorney which he egregiously abused and

he should not be permitted to escape by mechanical recourse to a hoary

common law rubric which is totally inappropriate here.

13a

Opinion of The Court of Appeals

The fact that Capanegro’s bills had to be passed upon

by the Union is not at all pertinent. As Judge Friendly

observed in Stlverman, “the ‘union’ presumably would

have objected if it had been able to speak freely.” 430

F.2d at 127. In United States v. Dibriezi, 393 F.2d 642 (2d

Cir. 1968) which also involved a § 501(c) violation, we held

that even if payments were authorized by the union, it did

not absolve a union official charged with conversion of

union funds. “When one sends the union a voucher known

to be an improper one, and then receives payment of the

voucher, the crime is completed.” Id. at 645.

Appellant reminds us that in construing a criminal stat-

ute we should not enlarge its reach beyond the language

employed by the statute. Morissette v. United States, 342

U.S. 246, 263 (1952). We agree. But the statute, in our

view, clearly provides that a person employed by the Union

under the circumstances we have set forth is unambigu-

ously within its coverage. The Supreme Court has recently

noted,

It is true that “ambiguity concerning the ambit of

criminal statutes should be resolved in favor of len-

ity .....” But here the Congress has conveyed its

purpose clearly, and we decline to manufacture ambi-

guity where none exists.

United States v. Culvert,

4261 (March 28, 1978).

Judgment affirmed.

U.S. ——, 46 U.S.L.W. 4259,

= ==

lrienpuy, Circuit Judge, dissenting:

‘Judge Griesa was abundantly justified in concluding that

Capanegro had been a party to a plan for embezzling, ab-

14a

Opinion of “The Court of Appeals

stracting and converting the funds of Local 1101 of the

Communication Workers of America. If the Government

had procured an indictment charging that Carnivale had

violated 29 U.S.C. §501(c) and that Capanegro had aided

and abetted him, I would have no hesitation in affirming a

conviction. However, the Government chose instead to

charge Capanegro as principal and thereby raise the ques-

tion whether § 501(c) includes a person whose relationship

to the union is solely that of an independent contractor.

With respect I cannot agree with the majority’s conclu-

sion that if does if his relationship with the union is close

enough.

Although the majority concedes that “Capanegro as re-

tained counsel of the Union was not its ‘employee’ in the

common law sense of a servant as distinguished from an

independent contractor,” it is worth emphasizing how well-

advised the concession is. Neither the retainer agreement

quoted ante at pages 3042-43, nor Capanegro’s references to

himself as the Union’s chief counsel, nor any other aspect

of the relationship between Capanegro and the Union re-

moves him from the common law description of an indepen-

dent contractor as a person “who contracts with another to

do something for him but who is not controlled by the other

nor subject to the other’s right of control with respect to

his physical conduct in the performance of the undertak-

ing.” Restatement Second of Agency §2(2) (1958); see

Logue v. United States, 412 U.S. 521, 527 (1973); Radio

City Muste Hall Corp. v. United States, 135 F.2d 715 (2

Cir, 1948) (I. Hand, J.). In Avis Rent a Car System, Inc.

v. United States, 503 F.2d 423, 429 (2 Cir. 1974), we laid

out some of the other applicable criteria: whether the per-

son rendering service has a substantial investment in his

own tools or equipment; whether he undertakes a substan-

tial cost, as by employing his own laborers; whether he

15a

Opinion of The Court of Appeals

has an opportunity to profit depending on his management

skill; whether the relationship between the person render-

ing the service and the person receiving it is permanent;

and whether the person rendering the service works in the

ordinary course of the recipient’s business rather than in

an ancillary capacity. See also NLRB v. United Insurance

Co., 390 U.S. 254, 259 (1968); Restatement Second of

Agency § 220. The evidence here was that Capanegro main-

tained his own office and employed a secretary, and that

he possessed a “special skill” upon which his opportunity

to profit depended. It is of no moment that services like

‘apanegro’s could equally well have been rendered by.

house counsel. That was not the relationship here.

As I understand it, the majority would agree that Cap-

anegro would not fall within §501(c) if that section had

been worded “Any officer or employee who embezzles,

steals” ete. “assets of a labor organization of which he is

an officer or employee... .” Its conclusion that “the statute

we are construing does not limit its coverage to officers or

employees of a labor organization,” rests primarily on the

basis that the draftsman applied the prohibition to “any

person” who embezzles or steals from a labor organization

“by which he is employed.” This method of drafting, it is

argued, evidences an intention of Cong:ess to avoid use of

the term “employee”, with its attendant common law con-

notations, in favor of a bronder usage of the term “em-

ploy” which would inelude all persons hired by a union as

independent contractors-—lawyers, accountants, physicians,

architects, builders of union headquarters, ete.—provided

their relationship with the union is sufficiently intimate.

Tn the absence of any legislative history to support such

a conclusion,’ this is attributing altogether too much sig-

] Such legislative history as exists is to the contrary. Congress did not

enact proposed versions of the LMRDA that would have exposed to

16a

Opinion of The Court of Appeals

nificance to what on its face appears to be only a drafts-

man’s choice. When Congress meant to go beyond officers

and employees in imposing criminal liability for the mis-

application of funds, it has not left the matter to am-

biguous inference. See 18 U.S.C. §§ 656 and 657 (“Who-

ever, being an officer, director, agent or employee of, or

connected in any capacity with”. . .).

The conclusion that Congress would have given a much

clearer signal if it had intended §501(c) to include in-

dependent contractors is fortified by history with respect

to related statutes. When Congress has used the term

“employee” or its equivalent, the courts have generally

confined it to its common law meaning; in those instances

where the courts have gone further, Congress has cor-

rected them. Examples of the attitude first described are

Cimorelli v. New York Central R.R., 148 F.2d 575, 577-78

(6 Cir. 1945), (provision of the Federal Employers’ Li-

ability Act, 45 U.S.C. 451, that “[e]very common carrier

by railroad ... shall be liable in damages to any person

suffering injury while he is employed by such carrier,”

described “the conventional relationship of employer and

employee” and excluded independent contractors) ; see also

Baker v. Texas & Pacific Ry. Co., 359 U.S. 227 (1959)

(Federal Employers’ Liability Act); Rutherford Food

Cor}. v. McComb, 331 U.S. 722 (1947) (Fair Labor Stan-

dards Act); United States v. New England Coal and Coke

Co., 318 F.2d 138, 143-44 (1 Cir. 1963) (phrase “all per-

sons employed by the contractor,” in the Walsh-Healy Act

criminal liability anyone “engaged directly or indirectly in or connected

in any capacity with (i) the administration, management, or control of

money or other property of a labor organization . . .,” S. 748, 86th

Cong., 1st Sess. § 412(a) (1959); H.R. 4473, 86th Cong., Ist Sess. § 215

(1959), or broader yet, “any person” whether or not employed by 2

labor organization, S. 1137, 86th Cong., Ist Sess. § 407 (1959); IT.R.

7265, 86th Cong., lat Sess, § 306 (1959),

fate ee eae A i i OE

DO on A

ee ,

Ler RRs LR

17a

Opinion:of The Court:of Appeals ».

41 U.S.C. § 35(b) was not intended to embrace persons who

were independent contractors); Strangi v. United States,

211 F.2d 305 (5 Cir. 1954) (Federal Tort Claims Act).

An example of the latter is the 1948 amendments to the

Social Security Act and the relevant sections of the In-

ternal Revenue Code which overruled the expansive con-

struction given in United States v. Silk, 331 U.S. 704 (1947)

and Bartels v. Birmingham, 332 U.S. 126 (1947), and tied

the definition of “employee” to common law standards, 62

Stat. 438, now codified at I.R.C. §§ 3121(d)(2), 3306(i) ;

see 42 U.S.C. § 410(j), in what the Senate Report termed

a “reassertion of Congressional intent regarding the ap-

plication of the act.” S, Rep. No. 1255, 80th Cong., 2d

Sess. 7 (1948). See United States v. W. M. Webb, Inc.,

397 U.S. 179, 182-90 (1970). An example still more per-

tinent to this case was the overruling of NLRB v. Hearst

Publications, Inc., 322 U.S. 111, 129 (1944). There the

Court, , arsuing a line of argument of which the majority’s

opinion is quite reminiscent, stated that the barebones

definition of employee in §2(3) of the NLRA left “no

doubt that its applicability is to be determined broadly,

in doubtful situations by underlying economic facts rather

than technically and exclusively by previously established

legal classifications,” and upheld the NLRB’s determina-

tion that newsboys distributing papers on a commission

basis and subject to various supervisory controls were the

papers’ employees.--a view which surely made sense in

the statutory context. Nonetheless, in the Taft-ITartley Act

Congress amended § 2(3) expressly to exclude independent

contractors. The louse report which accompanied the

statute used unusually strong terms with respect to the

Hearst decision.

An “employee”, according to all standard dictio-

naries, according to the law as the courts have stated

18a

Opinion of The Court of Appeals

it, and according to the understanding of almost every-

one, with the exception of members of the National

Labor Relations Board, means someone who works

for another for hire. But in the case of National Labor

Relations Board v. Hearst Publications, Inc. (322 U.S.

111 (1944) ), the Board expanded the definition of the

term “employee” beyond anything that it ever had

included before, and the Supreme Court, relying upon

the theoretic “expertness” of the Board, upheld the

Board. In this case the Board held independent mer-

chants who bought newspapers from the publisher and

hired people to sell them to be “employees”. The

people the merchants hired to sell the papers were

“employees” of the merchants, but holding the mer-

chants to be “employees” of the publisher of the papers

was most far reaching. It must be presumed that when

Congress passed the Labor Act, it intended words it

used to have the meanings that they had when Con-

gress passed the act, not new meanings that, 9 years

later, the Labor Board might think up. In the law,

there always has been a difference, and a big differ-

ence, between “employees” and “independent contrac-

tors”. “Employees” work for wages or salaries under

direct supervision. “Independent contractors” under-

take to do a job for a price, decide how the work will

be done, usually hire others to do the work, and de-

pend for their income not upon wages, but upon the

difference between what they pay for goods, mate-

rials, and labor and what they receive for the end

result, that is, upon profits, It is inconecivable that

Congress, when it passed the act, authorized the Board

to give to every word in the act whatever meaning it

wished, On the contrary, Congress intended then, and

it intends now, that the Board give to words not far-

‘.

19a

Opinion of The Court of Appeals.

fetched meanings but ordinary meanings. To correct

what the Board has done, and what the Supreme Court,

putting misplaced reliance upon the Board’s expert-

ness, has approved, the bill excludes “independent

contractors” from the definition of “employee”.

H. R. Rep. No. 245, 80th Cong., 1st Sess. 18 (1947). While

Congress did not repeat the express exclusion of inde-

pendent contractors in the definition of “employee” in

§ 402(f) the LMRDA,? this was doubtless because it saw

no need to reiterate what it had so plainly said. Indeed,

the majority does not contend that Capanegro was an

“omployee” as defined in § 402(f).

What is ultimately dispositive is that § 501(¢) is a crim-

inal provision and thus implicates Justice Jackson’s warn-

ing in Morissctte v. United States, 342 U.S. 246, 263 (1952)

(footnote omitted) :

The spirit of the doctrine which denies to the fed-

eral judiciary power to create crimes forthrightly ad-

monishes that we should not enlarge the reach of

enacted crimes by constituting them from anything

less than the incriminating components contemplated

by the words used in the statute. And where Con-

gress borrows terms of art in which are accumulated

the legal tradition and meaning of centuries of prac-

tice, it presumably knows and adopts the cluster of

ideas that were attached to each borrowed word in

the body of learning from which it was taken and the

S This ronda:

(f) “Kmployee” means any individual employed by an employer,

nnd includes any individual whose work has ceased as a consequence

of, or in connection with, any current labor dispute or because of

any unfair labor practice or because of exclusion or expulsion from

a labor organization in any manner or for any reason inconsistent

with the requirements of this chapter.

20a

Opinion of The Court of Appeals

meaning its use will convey to the judicial mind un-

less otherwise instructed. In such case, absence of

contrary direction may be taken as satisfaction with

widely accepted definitions, not as a departure from

them.

Cf. United States v. Ferrara, 451 F.2d 91, 95 (2 Cir.

1971), cert. denied, 405 U.S. 1032 (1972); and United

States v. Ottley, 509 F.2d 667, 672 & n.7 (2 Cir. 1975)

(applying Morissette in interpreting criminal provisions

of LMRDA). The wisdom of this statement is illustrated

by the consequences of ignoring it. Instead of being able

to refer to a well-developed body of law which provides

a basis on which criminal liability can be determined, trial

judges and juries must now minutely scrutinize the rela-

tionships of independent contractors to unions to determine

if they are close enough for the statute to apply. The ma-

jority supplies no real clue as to when “employee” in

§501(c) is to be taken in its common law context and

when it is not. I am baffled how the majority can conclude

that a criminal statute requiring such an inquiry to deter-

mine whether a person is subject to it could pass muster

under such cases as Langzetta v. New Jersey, 306 U.S, 451,

453 (1939) and United States v. Harriss, 347 U.S. 612, 617

(1954). At the very least such an interpretation of § 501(c)

raises constitutional doubts which a court should avoid.

Furthermore, the majority seems to have involved itself

in the anomaly of giving the criminal provision, § 501(c),

a brouder sweep than the civil ones, §§ 501(a) and (b),

since Capanegro could be brought under these only by

characterizing him as a “representative” of a labor organ-

ization——a tour de force in which the majority is as yet

unwilling to engage. See footnote 5 to majority opinion.

The understandable desire that Capanegro should not es-

2la

Opinion of The Court of Appeals

cape criminal punishment should not lead us to extend

the statute beyond what Congress directed.

I would reverse the conviction with instructions to dis-

miss the indictment on the ground that Capanegro was

not a person employed by a union as required by § 501(e).

22a

Judgment of the Court of Appeals

UNITED STATES COURT OF APPEALS '

SECOND CIRCUIT

At a Stated Term of the United States Court of

Appeals, in and for the Second Circuit, held at the

United States Court House, in the City of New York,

on the 15th day of May, one thousand nine hundred

and seventy-eight.

Present: HONORABLE HENRY J. FRIENDLY

HONORABLE WILLIAM H. MULLIGAN

HONORABLE THOMAS J. MESKILL

Circuit Judges.

77-1425

—EE OE ——

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

— |

MICHAEL J. CAPANEGRO,

Defendant-A ppellant.

er >

Appeal from the United States District Court for the

Southern District of New York.

This cause came on to be heard on the transcript of

record from the United States District Court for the

Southern District of New York, and was argued by

counsel.

ON CONSIDERATION WHEREOF, it is now hereby ordered,

adjudged, and decreed that the judgment of said District

Court be and it hereby is affirmed in accordance with the

opinion of this court.

A. DANIEL FUSARO

Clerk

By ARTHUR HELLER

Deputy Clerk

28a

Order Denying Petition for Rehearing

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

At a Stated Term of the United States Court of

Appeals, in and for the Second Circuit, held at the

United States Court House, in the City of New York,

on the fifth day of July, one thousand nine hundred and

seventy-eight.

Present: HONORABLE WILLIAM H. MULLIGAN

HONORABLE HENRY J. FRIENDLY

HONORABLE THOMAS J. MESKILL

Circuit Judges.

77-1425

cr i

UNITED STATES OF AMERICA,

Plaintiff-A ppellee,

—_—

MICHAEL J, CAPANEGRO,

Defendant-A ppellant.

PT i

A petition for’a rehearing having been filed herein

by counsel for the appellant Michael J. Capanegro.

Upon consideration thereof, it is

Ordered that said petition be and it hereby is

DENIED.

A. DANIEL FUSARO

Clerk

24a

Order Denying Petition for Rehearing en banc

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

At a Stated Term of the United States Court of

Appeals, in and for the Second Circuit, held at the

United States Court House, in the City of New York,

on the fifth day of July, one thousand nine hundred and

seventy-eight.

77-1425

UNITED STATES OF AMERICA,

Plaintiff-A ppellee,

—_

MICHAEL J. CAPANEGRO,

Defendant-A ppellant.

—

A petition for rehearing containing a suggestion that

the action be reheard en banc having been filed herein

by counsel for the appellant Michael J. Capanegro, and

no active judge or judge who was a member of the panel

having requested that a vote be taken on said suggestion,

Upon consideration thereof, it is

Ordered that said petition be and it hereby is

DENIED.

/s/ IRVING R. KAUFMAN

IRVING R. KAUFMAN, Chief Judge

25a

Special Findings of the District Court

UNITED STATES DISTRICT COURT

SOUTHERN District oF NEW YORK

76 Cr. 914

UNITED STATES OF AMERICA

MICHAEL CAPANEGRO,

Defendant.

OPINION

GRIESA, J.

The indictment in this action charges 24 counts of

violation of 29 U.S.C. §501(c). The statute provides:

“Embezzlement of assets; penalty

lawfully and willfully abstracts or converts to his

own use, or the use of another, any of the moneys,

funds, securities, property, or other assets of a

labor organization of which he is an officer, or by

which he is employed, directly or indirectly, shall

be fined not more than $10,000 or imprisoned for

not more than five years, or both.”

Defendant Capanegro was tried by the court without

a jury. Pursuant to Criminal Rule 23(c), the court

announced general findings at the conclusion of the trial,

and thereafter defense counsel — that the facts

be found specially.

26a

Special Findings of the District Court

The general findings with respect to the various counts

are:

Count Finding

1 Guilty

2 Guilty

3 Guilty

4 Not Guilty

5 Guilty

6 Guilty

7 Guilty

8 Guilty

9 Not Guilty

10 Guilty

11 Guilty

12 Guilty

13 Not Guilty

14 Not Guilty

15 Guilty

16 Guilty

17 Guilty

18 Not Guilty

19 Not Guilty

20 Not Guilty

21 Guilty

22 Guilty

23 Guilty

24 Guilty

The purpose of this opinion is to find the facts specially

as requested by defense counsel.

Unless otherwise noted, I find the following facts

proved beyond a reasonable doubt.

Capanegro is an attorney. During the relevant period

in 1971-72 Capanegro was counsel to Local 1101 of the

27a

Special Findings of the District Court

Communication Workers of America, under a $25,000

per year retainer.

Commencing in the summer of 1971, and continuing

until February 18, 1972, Local 1101 was on strike against

New York Telephone Company.

The International Union of the Communication Work-

ers of America had a so-called “Defense Fund.” This

fund was set up to take care of a variety of needs of a

local union and its members during a strike. Expenses

which might be paid out of the Defense Fund included

legal bills of the union and members for matters arising

out of the strike, and also other types of strike-related

expenses. |

The International Union made Defense Fund funds

available to Local 1101 with respect to the 1971-72 strike

against New York Telephone Company.

The present case arises out of legal fees collected by

defendant from the Local 1101 Defense Fund during

1971 and 1972, over and above his regular retainer.

In the following description of the various counts in

the indictment, the persons to whom legal services were

rendered, or allegedly rendered, by Capanegro were

members of Local 1101, unless otherwise noted.

First Count

On December 10, 1971 Capanegro rendered a bili to

Local 1101, which included the following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: MICHAEL ROSSO

As and for all negotiations and confer-

ences; appearances at Police Station;

28a

Special Findings of the District Court

appearances in Court; preparation for

trial and appearances on Trial Dates

for Criminal charges in Riverhead: 1,850.00”

Capanegro received payment of this amount from

Local 1101 on December 16, 1971.

Rosso was arrested December 3, 1971 in Suffolk

County and charged with disorderly conduct, which is a

“Violation”, as distinct from either a felony or a mis-

demeanor. Rosso received a summons to appear in court

December 8. He appeared on that date with a friend,

and without any lawyer. He then consulted Local 1101,

and was given Capanegro’s telephone number. Rosso

spoke to Capanegro for a few minutes in one or two

telephone calls, in which Capanegro stated that he would

not handle the case because it would be tried in Suffolk

County. Capanegro referred the matter to a Suffolk at-

torney, John Clayton. Capanegro spoke to Clayton, and

told him that the legal fee would be paid by the union

and wanted it to be nominal. Clayton agreed to charge

$250. Capanegro paid Clayton the $250 on January 4,

1972. Clayton represented Rosso, and on March 24,

1972 Rosso received an Adjournment in Contemplation

of Dismissal (“ACD”).

It is not clear whether Capanegro’s bill was sent

before or after there had been an agreement with Clayton

for the $250 charge. However, Capanegro has admitted

that at the time of the bill he had no intention of handling

the matter personally and intended to bring in another

attorney.

I find that Capanegro submitted the Rosso item know-

ing that it was almost entirely a statement of services

which he had not rendered and had no intention of

rendering. I find that Capanegro obtained payment of

$1850 which he knew he was not entitled to. Moreover,

29a

Special Findings of the District Court

after he had paid the $250 to Clayton, Capanegro failed

to send a corrected bill to Local 1101 or to refund to

Local 1101 any part of the remaining $1,600.

Counts 2 and 3

On December 16, 1971 Capanegro submitted a bill

to Local 1101 for the following items:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: LLOYD HAROLD AND FRANK

CARLO

As and for all negotiations and confer-

ences; appearances in Court; Prepara-

tion for Trial and appearances on trial

dates for Criminal Charges in re

LLOYD HAROLD; $1300.00

As and for all negotiations and confer-

ences; appearances in Court; Prepara-

tion for Trial and appearances on Trial

dates for Criminal Charges in re

FRANK CARLO: 1300.00

Total Due $2600.00”

Capanegro received payment of this amount from Local

1101 on the day the bill was submitted.

Lloyd Harold and Frank Carlo were arrested on

December 13, 1971 and charged with Disorderly Conduct

and Harassment—both being “Violations”. They were

released and told to appear in court December %2, 1971.

Both Harold and Carlo spoke to Ricky Carnivale, presi-

dent of Local 1101, who referred them to Capanegro for

legal assistance. Harold and Carlo spoke to Capanegro’s

secretary (not to Capanegro), and Harold was given an

affidavit to take to court requesting an adjournment.

30a

Special Findings of the District Court

Harold and Carlo went to court on December 22, and

for some reason did not present the adjournment affidavit.

Carlo called the union and complained about not having

a lawyer in court. A lawyer named Udoff, who normally

handles workmen’s compensation matters, came to court.

Udoff represented Harold and Carlo in a brief hearing

before the judge, who granted ACD’s to both men.

Capanegro testified that he spoke to Harold on the

telephone December 14 or December 15, and that he

probably spoke to the Assistant District Attorney prior

to the court date. I will give Capanegro the benefit of

the doubt as to conversing with Harold, but I reject the

contention that the defendant talked to the Assistant

District Attorney.

Capanegro contends that the Harold and Carlo bill,

like several others involved in the indictment, was one

of the bills which he prepared shortly after the opening

of a case, and that it reflected his estimate of the value

of the services based on the nature of the offense, and

his estimate as to what work would be required.

I find that Capanegro submitted this bill knowing that

it was almost entirely a statement of services which had

not been rendered. Separate items were written for

Harold and Carlo, on what was the same case, in order

to inflate the amount of the bill. I reject the contention

that the bill should be interpreted as, or was intended as,

a good faith estimate of services to be performed. I find

that Capanegro obtained payment of $2600 which he knew

he was not entitled to.

3la

Special Findings of the District Court

Count 4

On January 7, 1972 Capanegro rendered a bill to

Local 1101, which included the following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE:

AS AND FOR negotiations, conferences

and advice in regard to Criminal

Charges by Nick Fittipaldi, ROBERT

AST, and DENNIS LINCOLN in re

Telephone Company 1,000.00”

Capanegro received payment of this amount from Local

1101 on January 26, 1972.

Union members Fittipaldi, Ast and Lincoln were in-

volved in an incident January 3, 1972 leading to criminal

charges by them against certain other persons. The

criminal prosecution was handled by one or more Assist-

ant District Attornies. However, Capanegro conferred

with Lincoln and also probably with Fittipaldi. Capa-

negro appeared in court January 6, 1972 and introduced

the three complainants to an Assistant District Attorney.

I cannot find beyond a reasonable doubt that the

description of services was false. As to the $1,000 fee,

although it would appear high in relation to the amount

of services perfcrined, I cannot find beyond a reasonable

doubt that Capanegro knew he was not entitled to this fee.

32a

Special Findings of the District Court

Count 5

Capanegro’s bill of January 7, 1972 to Local 1101

included the following item:

“AS AND FOR PROFESSIONAL SERVICES

RENDERED IN RE:

all conferences, negotiations and ap-

pearances at hearing; appearance at

arraignment for charges involving Paul

Radloff, felonious assault charges; ad-

vice and legal briefs in regard there-

to: 1,075.00”

Capanegro received payment of this amount from Local

1101 on January 26, 1972.

A week or two before Christmas 1971 Radloff was

brushed by a car while he was in a picket line. President

Carnivale of Local 1101 referred him to Capanegro.

Radloff talked to Capanegro on the telephone for about

15 minutes. Capanegro advised Radloff to file a complaint

against the driver of the car. Capanegro told Radloff

he would defend him if any charge was made against

Radloff.

Capanegro did nothing further in the matter. Radloff

did not file any complaint against the driver. No pro-

ceedings were taken by anyone against Radloff.

As of the time Capanegro rendered his bill on January

7, 1972 defendant knew that this was a matter where

services might or might not be needed depending upon

what, if anything, developed. Defendant was simply

“available to this man” (Tr. 1110).

I find that Capanegro submitted the Radloff item

knowing that it was almost entirely a statement of

services which had not been rendered. This item was

33a

Special Findings of the District Court

not a good faith estimate of services to be performed. I

find that Capanegro obtained payment of $1075 which

he knew he was not entitled to.

Counts 6 and 7

On January 13, 1972 Capanegro rendered a bill to

Local 1101, which included the following items:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: HAL DOLGIN

As and for all negotiations, confer-

ences, appearances in Court in regard

to criminal Charges in re the above;

appearance in Court and attendance at

trial: $1,075.00

FOR PROFESSIONAL SERVICES RENDERED

IN RE:

As and for all negotiations, conferences,

advice, appearances in Court in regard

to Criminal Charges with DUNCAN

HEVENOR: 1,000.00”

Capanegro received payment of these amounts from Local

1101 on February 11, 1972.

Hevenor and Dolgin were involved in a scuffle at a

picket line on January 10, 1972. The police advised

making a complaint against one Sterling Hostern, as a

protection against any complaint against Hevenor and

Dolgin. Hevenor spoke to Carnivale, who said that the

union lawyer would be in touch with Hevenor. No

union lawyer ever communicated with Hevenor or Dolgin.

Nothing came of the case. The charge against

Hostern was not pursued, and no proceedings were taken

against Hevenor and Dolgin.

34a

Special Findings of the District Court

Capanegro testified that he was retained by the union

to represent Hevenor and Dolgin. However, Capanegro

performed no services of any substance.

I find that Capanegro submitted the items relating

to Dolgin and Hevenor knowing that they were almost

entirely statements of services which had not been ren-

dered. Separate items were written for the two men

in order to inflate the amount. These items were not

good faith estimates of services to be performed. I

find that Capanegro obtained payment of $2,075 which

he knew he was not entitled to.

Count 8

On January 13, 1972 Capanegro rendered a bill to

Local 1101, which included the following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: GIOSE FRANCO

As and for all negotiations, conferences,

advice appearances in Court in regard

to Criminal charges with Giose Franco: 750.00”

Capanegro received payment of this amount from Local

1101 on February i1, 1972.

On or about January 11, 1972 Franco was asked to

come to a police station. When he arrived, he was told

it was a mistake, but was asked by the police if he would

answer questions about some incident. Franco refused to

answer questions, and the matter went no further. A

relative of Franco, but not a lawyer, was present at the

police station.

Franco discussed the matter with a shop steward and

with others at the union. He thought he would be re-

ceiving advice about a false arrest action, but no one

called him about this, and the idea was dropped.

35a

Special Findings of the District Court

Capanegro was told of the incident either by someone

at the union, or possibly by Franco. However, other

than receiving this information, Capanegro performed no

services.

I find that Capanegro submitted the Franco item

knowing that it was almo.: entirely a statement of

services which had not been rendered. This item was

not a good faith estimate of services to be performed. I

find that Capanegro obtained payment of $750 which he

knew he was not entitled to.

Count 9

Capanegro’s bill of January 13, 1972 to Local 1101

included the following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: ROBERT ZAPPULLA

As and for all negotiations, conferences

in regard thereto; arrest for misde-

meanor; Dismissal of same: $500.00”

Capanegro received payment of this amount from Local

1101 on February 11, 1972.

On January 7, 1972 Zappulla was involved in an

incident relating to a telephone company truck. Zappulla

was notified to appear at a police station. Before going

to the station, he went to the union office, and was given

the telephone number of Capanegro, whom he called. He

toid Capanegro about the circumstances, and Capanegro

told him to deny everything at the police station, and to

call back if he needed more help. Later, the police took

Zappulla to the station, but released him. There were

no further proceedings, and there was no further con-

sultation with Capanegro.

Capanegro has testified that he made a telephone call

to the police and negotiated Zappulla’s release.

36a

Special Findings of the District Court

I cannot find beyond a reasonable doubt that defend-

ant either falsified this item or charged more than he

thought he was entitled to.

Count 10

Capanegro rendered a bill to Local 1101 dated Janu-

ary 14, 1972 containing the following item:

“FOR PRUTESSIONAL SERVICES RENDERED

IN RE: JOHN HYLAND

As and for all negotiations, conferences

and advice in regard to Criminal Charges

involving JOHN HYLAND; appearances

at hearing dates; Appearances at trial

and adjourned dates: 950.00”

Capanegro received payment of this amount from Local

1101 on February 11, 1972.

On or about January 10, 1972, while Hyland was on

picket duty, he was struck by a telephone company truck.

Hyland telephoned Carnivale, who had Capanegro call

Hyland. Capanegro advised Hyland to go to the police

station and make a report. Hyland went to the station

and filled out a complaint form. Nothing came of the

case. Capanegro’s expanation for this is that the driver

of the truck could not be identified. Capanegro per-

formed no further services after the telephone conversa-

tion, except speaking briefly to Hyland at the Playboy

Club, and possibly also at Capanegro’s office.

I find that Capanegro submitted the Hyland item

knowing that it was almost entirely a statement of serv-

ices which had not been rendered. This item was not a

good faith estimate of services to be performed. I find

that Capanegro obtained payment of $950 which he knew

he was not entitled to.

37a

Special Findings of the District Court

Count 11

On January 31, 1972 Capanegro rendered a bill to

Local 1101, which included the following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: JOSEPH CASSIDY

As and for all negotiations conferences,

appearances in Court; preparation for

Trial; appearance on trial dates and

adjourned dates; trial of case: 1,375.00”

Capanegro received payment of this amount from Local

1101 on February 24, 1972.

Cassidy was arrested on January 14, 1972 in connec-

tion with a strike-related disturbance. He was charged

with disorderly conduct. Cassidy called the union from

the police station. He was taken to court the day of the

arrest and told to appear again January 26. There was

no lawyer for Cassidy at the police station, and a court- -

appointed lawyer represented him in the court proceed-

ing on the day of the arrest.

The union gave Cassidy Capanegro’s name. Cassidy

conferred with Capanegro at his office. Capanegro

agreed to represent Cassidy, but told Cassidy to get what-

ever witnesses were available, and have them appear in

court.

Capanegro was in court with Cassidy on January 26.

They waited about an hour to go before the judge. Cas-

sidy telephoned the union from court about possible wit-

nesses, but nothing came of this. When the matter came

before the judge an ACD was granted, and that was the

end of the case.

A union member by the name of Jacob Adler was

arrested along with Cassidy in connection with the same

incident. His case was handled on January 26, 1972

38a

Special Findings of the District Court

in the same proceeding with the case of Cassidy. The

two cases were in effect one. In the bill of January 31,

1972 Capanegro included a separate item for Adler as

follows:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: JACOB ADLER

As and for all negotiations, conferences

appearances in Court; preparation for

Trial; appearances on Trial Dates; and

adjourned dates: 1,325.00”

Capanegro received payment of this amownt on February

24, 1972.

For some reason, the Adler item is not specifically

included in the charges in the indictment. However, evi-

dence about Adler was received as bearing on the Cassidy

item.

This is a situation in which Capanegro made a court

appearance and achieved a successful disposition of a

criminal case against union members. Nevertheless, I

find that the description of services in the Cassidy item

was intentionally exaggerated, by referring to multiple

court appearances and an actual trial. Also the treat-

ment of the Cassidy and Adler cases as two separate

items was a device to inflate fees. I find that, by means

of the bill in the Cassidy matter Capanegro knowingly

obtained payment beyond what he was entitled to.

Count 12

Capanegro’s bill of January 31, 1972 to Local 1101

contained the following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: JOHN TOOMEY

As and for all negotiations, conferences,

appearances in Court; preparation for

39a

Special Findings of the District Court

trial on four Criminal Charges (mis-

demeanors) to wit: Criminal Possession

of stolen property; Criminal tamper-

ing; Criminal Mischief and Larceny ;

appearances on Trial dates and ad-

journed dates; trial of case: 5,400.00”

Capanegro received payment of this amount from Local

1101 on February 24, 1972.

Toomey was arrested on January 19, 1972. He was

at the Port Authority bus terminal and was caught break-

ing pay telephone dials off the telephones. Toomey was

held overnight and taken to court the next morning,

where he was represented by a Legal Aid lawyer and

given a date to return to court—January 26.

The union referred. Toomey to Capanegro. Toomey

conferred with Capanegro at his office. Capanegro met

Toomey in court on January 26. Capanegro arranged

to have the case disposed of by a plea of guilty to a

charge of disorderly conduct and restitution of $12.00 in

payment for the dials.

Although this case again involves Capanegro’s repre-

sentation and court appearance leading to disposition of

a criminal case, I find that both the description of serv-

ices and the amount of the bill are grossly exaggerated,

and were done so intentionally in order to obtain a fee

which Capanegro knew he was not entitled to.

40a

Special Findings of the District Court

Count 13

Capanegro’s January 31, 1972 bill to Local 1101 in-

cluded the following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: ANTHONY CALIFRA

As and for all negotiations, conferences,

appearances in Court; preparation for

Trial; appearances on Trial dates and

adjourned dates; trial of case: 1,550.00”

Capanegro received payment of this amount from Local

1101 on February 24, 1972.

Califra was arrested January 19, 1972 and charged

with disorderly conduct in connection with a strike-re-

lated incident. He was taken to the police station and

told to appear in court February 7 for trial. Califra re-

ported the problem to Carnivale, who called Capanegro.

Califra also may have talked to Capanegro at this time.

Capanegro appeared with Califra in court on February

7. After a brief appearance before the judge, the case

was dismissed.

The bill of January 31 recites certain services, such

as court appearances and trial which had not been per-

formed as of that time. However, as already indicated,

Capanegro has advanced the theory that certain of the

bills were good faith estimates of services to be per-

formed, although, of course, they were not actually

phrased as such.

Giving Capanegro the benefit of every reasonable

doubt, I find that the Government has not proved beyond

such a reasonable doubt that the Califra item was not a

good faith estimate of the kind Capanegro describes.

4la

Special Findings of the District Court

Count 14

Capanegro’s bill of January 31, 1972 to Local 1101

contained the following item:

“FOR PROFESSIONAL SERVICES RENDERED

MICHAEL BLOCK

As and for all negotiations, conferences,

appearances in Court; preparation for

trial; appearances on Trial dates and

adjourned dates; trial of case: Crim-

inal Mischief, 1st degree: 1,725.00”

Capanegro received payment of this amount from Local

1101 on February 24, 1972.

Block was arrested January 20, 1972 in connection

with a strike-related incident. He was taken to a police

station and told to appear in court January 27. Block

described the situation to a shop steward at the union.

He was referred to Capanegro, and they conferred at

Capanegro’s office. Capanegro gave Block an affidavit to

present in court seeking an adjournment, which was

granted. Following that there was a second adjourn-

ment, and the matter was finally set for March 24. On

the latter date Capanegro appeared with Block. No one

from the telephone company was present, and the judge

dismissed the case.

My remarks in connection with Count 18 apply here.

I cannot find beyond a reasonable doubt that the Block

item was not a good faith estimate of services to be per-

formed.

42a

Special Findings of the District Court

Counts 15, 16 and 17

Capanegro’s January 31, 1972 bill to Local 1101 con-

tained the following three items:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: ROBERT NERI

As and for ali negotiations, confer-

ences, advice, appearances in Court in

regard to Criminal charges; prepara-

tion of trial; appearances on Trial

dates and adjourned dates; dismissal

of same; 1,850.00

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: THEODORE WALLEN

As and for all’ negotiatious, confer-

ences; preparation for trial; appear-

ances on trial dates; & adjourned

dates; dismissal of same: 2,000.00

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: STEVEN DZUBAY

As and for all negotiations, confer-

ences; advice; appearances in Court in

regard to Criminal charges; prepara-

tion of Trial; appearances on Trial

dates; and adjourned dates; dismissal

of same: $1,850.00”

Capanegro was paid these amounts by Local 1101 on

February 24, 1972.

Neri and Wallen were members of Local 1102, located

on Staten Island. Dzubay was a member of Local 1101.

On January 12, 1972 all three were arrested for dis-

orderly conduct in a demonstration near a telephone com-

pany building. They were taken to a police station and

told to appear in court January 17, 1972.

43a

Special Findings of the District Court

Wallen and Neri called an official of Local 1102, who

said that he would arrange for a lawyer. On January

17 the three men, and witnesses they brought, appeared

in court. Capanegro appeared to represent them. None

of the men had spoken to Capanegro prior to the court

appearance. Capanegro was apparently retained by Local

1101 as a result of discussions between Local 1101 and

Local 1102.

While waiting in court, Capanegro interviewed Neri,

Wallen and Qzubay, and also their witnesses. At an

initial appearance before the judge, Capanegro asked to

have the case dismissed, but this was not done. There

was a wait of about two hours. In a second appearance

before the judge, the Assistant District Attorney agreed

to have the case dismissed, and the judge granted an

ACD.

Capanegro billed separately for Neri, Wallen and

Dzubay, although there was basically only one case. I

find that the separate itemization and the description of

services was intentionally calculated to collect a grossly

exaggerated total fee of $5700, which Capanegro knew

he was not entitled to.

Count 18

On February 17, 1972 Capanegro submitted a bill to

Local 1101, which included the following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: PETER O’NEAL

As and for all negotiations, confer-

ences, appearances in Court, prepara-

tion for trial appearances on ad-

journed dates; trial of case: $1,450.00”

Capanegro received payment of this amount from Local

1101 on February 29, 1972.

44a

Special Findings of the District Court

O’Neal was involved in a strike-related incident on

January 27, 1972. He was arrested on February 2 while

he was in court watching the trial of Bruce Whyte, an-

other union member. Whyte was being represented by

Capanegro. O’Neal told Capanegro about his arrest and

had a brief conversation with Capanegro in the court

building that day. O’Neal was told to be in court on his

own case February 23. He obtained an affidavit from

Capanegro’s office on which an adjournment was obtained

to March 13, 1972. Capanegro appeared with O’Neal in

court on March 18, at which time Capanegro talked to

the Assistant District Attorney and appeared before the

judge. The judge granted an ACD.

My remarks in connection with Count 13 apply here.

I cannot find beyond a reasonable doubt that the O’Neal

item was not a good faith estimate ef services to be

performed.

Count 19

Capanegro’s bill of February 17, 1972 to Local 1101

contained the following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: PEOPLE V. ROBERT POMPOSELLO

As and for all negotiations, conferences,

appearances in Court; appearances on

adjourned dates; preparation for trial;

Conferences with witnesses for trial of

ease: (Assault in the 3rd degree) 1,850.00”

Capanegro received payment of this amount from Local

1101 on February 29, 1972.

Pomposello became involved in an incident with another

telephone company employee on January 18, 1972. On

January 23 he was asked to go to the police station, where

he was arrested and charged with third degree assault.

He was told to appear in court on February 2.

45a

Special Findings of the District Court

Someone at Local 1101 gave Capanegro’s name to

Pomposello. Pomposello conferred with Capanegro at his

office. The court hearing was adjourned to March 8.

Pomposello and Capanegro appeared in court on March

8 and, against Capanegro’s advice, Pomposello pleaded

guilty to a reduced charge of harassment. Pomposello

was given a conditional discharge.

My remarks in connection with Count 13 apply here.

I cannot find beyond a reasonable doubt that the Pom-

posello item was not a good faith estimate of services to

be performed.

Count 20

Capanegro’s bill of February 17, 1972 included the

following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: PEOPLE V. WALTER JASZCZUK

As and for all negotiations, conferences,

counselling, and advice in regard to pend-

ing charges which may be lodged against

him: 250.00”

Capanegro received payment of this amount from Local

1101 on February 29, 1972.

Jaszcezuk was called by the police for questioning in

connection with a strike-related criminal matter. He was

given Capanegro’s number by the union. Jaszezuk went

to the police station, was questioned, and no charges or

other proceedings resulted. Jaszczuk testified that, prior

to and after the trip to the police station, he spoke to

Capanegro’s secretary. Capanegro believes that Jaszezuk

spoke to him personally.

I cannot find beyond a reasonable doubt that Capanegro

billed more than he thought he was entitled to.

46a

Special Findings of the District Court

Count 21

Capanegro’s February 17, 1972 biil to Local 1101 in-

cluded the following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: PEOPLE V. WARREN LOPEZ

As and for all negotiations, conferences,

advice, appearances in Court in regard

to Criminal charges: 750.00”

Capanegro received payment of this amount from Local

1101 on February 29, 1972.

Toward the end of the strike Juan Lopez was involved

in a scuffle with a telephone company foreman. He went

to a police station because he heard that a complaint was

filed against him. However, none had been, and he went

home. He obtained Capanegro’s telephone number from

the union, and called Capanegro. He described the inci-

dent to Capanegro, who told him that, if the police came,

Lopez should have his wife answer the door or otherwise

try to avoid arrest. Capanegro said to call back if in-

deed Lopez was picked up. Nothing further happened in

the matter, and Lopez never spoke to Capanegro again.

I find that Capanegro submitted the Lopez item know-

ing that it was almost entirely a statement of services

which had not been rendered. This item was not a good

faith estimate of services to be performed. I find that

Capanegro obtained payment of $750.00 which he knew

he was not entitled to.

Count 22

Capanegro’s bill of February 17, 1972 to Local 1101

included the following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: PEOPLE V. MICHAEL ANTO-

NUCCI

47a

Special Findings of the District Court

As and for all negotiations, conferences,

advice, appearances in Court in regard to

Criminal Charges: 875.00”

Capanegro received payment of this amount from Local

1101 on February 29, 1972.

On January 23, 1972 Antonucci got in a fight with a

friend, which had nothing to do with the strike. A union

official, Fitzgerald, heard that a warrant was out for

Antonucci’s arrest and told this to Capanegro. Capanegro

spoke to Antonucci at the union office. However, Anto-

nucci told Capanegro that he had his own lawyer. Anto-

nucci’s lawyer was named Schwartz. Capanegro per-

formed no services in the case, and never communicated

with Schwartz.

I find that Capanegro submitted the Antonucci item

knowing that it was almost entirely a statement of

services which had not been rendered. This item was not

a good faith estimate of services to be performed. I find

that Capanegro obtained payment of $875 which he knew

he was not entitled to.

Count 23

Capanegro’s bill of February 17, 1972 to Local 1101

included the following item: : |

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: JACK RUSSEK

As and for Conferences, Negotiations and

Appearances at Hearing, Appeerance at

arraignment for charges invoiving Jack

Russek; legal advice in regard thereto 675.00”

Capanegro received payment of this amount from Local

1101 on February 29, 1972.

48a

Special Findings of the District Court

On January 25, 1972 Russek was in a picket line in

front of a telephone company garage. He was asked to

move by the driver of a truck. When Russek did not

move, the truck hit or brushed against Russek. Russek

went to a police station and complained. Russek was

told to appear in court on March 3. He called the union

and was told to speak to Capanegro. He talked to Capa-

negro on the telephone for a few minutes. Capanegro

told him that the Assistant District Attorney would

handle the case. Russek had no further communication

with Capanegro. Russek went to court alone on March 3

and dropped the charge.

I find that Capanegro submitted the Russek item

knowing that it was almost entirely a statement of

services which had not been rendered. This item was

not a good faith estimate of services to be performed.

I find that Capanegro obtained payment of $675 which

he knew he was not entitled to.

Count 24

Capanegro’s bill of February 17, 1972 to Local 1101

included the following item:

“FOR PROFESSIONAL SERVICES RENDERED

IN RE: JOSEPH McALEER

As and for all negotiations, confer-

ences, appearances in Court; prepara-

tion for trial; conference with wit-

nesses and with client; appearances on

trial dates and adjourned dates; trial

of case; (Felony and Misdemeanor) $4,500.00”

Capanegro received payment of this amount from Local

1101 on February 29, 1972.

On Jafiuary 31, 1972 McAleer was involved in a fight

in a picket line. During the evening after the fight

49a

Special Findings of the District Court

McAleer was at a union meeting, and heard that the

police were looking for him. He spoke to Capanegro

briefly and told Capanegro that he expected to be arrested.

McAleer went alone to the police station where he was

arrested. He was released on bail. On February 3

McAleer met with Capanegro and discussed the case.

Capanegro said that the case looked bad.

After this meeting McAleer decided he did not want

Capanegro to represent him, and retained another lawyer

by the name of Friedman. McAleer told this to Carnivale,

but not to Capanegro. However, McAleer did not request

any services from Capanegro prior to the date of Capa-

negro’s bill, or ever.

The union paid a retainer to Friedman of $1,000 at

the outset of Friedman’s services.

In August 1972 Friedman made a written motion to

dismiss the case, which was granted. By this time

Capanegro was corresponding with Friedman in a con-

trived effort to act as “co-counsel” for the purpose of

justifying Capanegro’s undeserved fee of $4,500. Fried-

man billed the union an additional $1,500 for his own

services, which bill he sent to Capanegro. Capanegro

paid this bil! out of his own funds. This left Capanegro

with a net of $3,000, none of which he refunded to the

union.

Capanegro knowingly billed for services he had not

performed. This was not the case of a good faith esti-

mate of services to be performed. At the very least,

Capanegro should have refunded the $4500 to Local 1101

when he learned that Friedman was in the case, which

was no later than mid-March. Capanegro’s payment of

$1500 to Friedman still left Capanegro with $3000 which

he knew he was not entitled to.

50a

Special Findings of the District Court

Conclusion

Within the meaning of 29 U.S.C. §501(c), I find

that Local 1101 was a labor organization and that Capa-

negro was employed by it. As to all counts on which I

have found Capanegro guilty, I find that he unlawfully

and willfully embezzled, stole, abstracted, or converted to

his use funds of Local 1101 in violation of the statute.

Dated: New York, New York

July 19, 1977

/s/ THOMAS P. GRIESA

THOMAS P. GRIESA

U.S.D.J.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.