Petition — Isenberg v. United States

~-967

on

Office-Supreme Court, U.S.

FILED

PES 10 1999-

ALEXANDER L. STEVAS,

In The CLERK

Supreme Court of the United States

October Term, 1982

LEE ISENBERG,

Petitioner,

—_

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

CRIMINAL MATTER

JAMES A. WADE

ROBINSON, ROBINSON & COLE

799 Main Street

Hartford, Connecticut 06103

Counsel for Petitioner

December 10, 1982

i

Preliminary Matters

1. Questions Presented

1. Does a jury charge which singles out the credi-

bility of the defendant and calls to the attention of the

jury his interest in the outcome of the case violate the due

process rights guaranteed the petitioner by the Fifth

Amendment to the United States Constitution?

2. In a prosecution for violation of 18 United States

Code, Section 1001 (making false and fraudulent state-

ments), does a jury charge which charges the jury that

the materiality of the allegedly false statement is a matter

of law for the court to determine and not a matter of fact

for the jury violate the petitioner’s rights to due process

and to trial by jury as guaranteed by the Fifth and Sixth

Amendments to the United States Constitution?

2. List Of All Parties

All parties appear in the caption of the case in

this Court.

ii

TABLE OF CONTENTS

PAGE

IE, PMOOIND coer ccc ccccctcsecccvccsens i

DT PRONOUN occ cctcvcccccccacess i

Ce i eM pd ccbcnesevecceeeress i

ee uns he was 0.0 0b bones co cnesess 1

Rr 2

Statutory Provisions Involved ............0e.00e0s 2

I PEE vise bc ccsicrecccacccsecvevens 2

i Ce ED viva cwossccseececesesscess 5

1. Formation of Lee Isenberg Associates and the

Early Training Programs ............... 5

2. How the CETA Chef Training Programs

os eee 7

TE, 5 cccccbeoscccccecsesceses 9

Be Ne BOUEE OE OT VIOED occ ccc ccccnsvccces 9

cc sis eb eeeeseasesseeseens 10

ce cceekebecsesecessecees 11

Reasons for Granting the Writ ..............006. 12

I. The Decision Below Affirming the Trial

Court’s Charge to the Jury on the Petitioner’s

Testimony, Which Called to the Attention of

the Jury His Interest in the Outcome of the

Case, Conflicts with the Decisions of Other

EE cetkbawevesneeenenedes 13

Il. The Decision Below Affirming the Trial

Court’s Charge to the Jury that the Issue of

the Materiality of a False Statement Under

Section 1001 of Title 18 of the United States

Code is a Question of Law for the Judge and

iii

PAGE

Not of Fact for the Jury is in Conflict with

Decisions of Other Courts of Appeal ....... 17

RO Pe ree rey Trey eee ee 20

PUG bic di-evautsnkeseca ee eersueeeewledaaes la

CITATIONS

Cases:

Alder v. State, 239 Ind. 68, 154 N.E.2d 716 (1958) .. 6

Allison v. United States, 160 U.S. 203 (1895) ..... 14

Barnett v. State, 240 Ind. 129, 161 N.E.2d 444 (1959) 16

Coffin v. United States, 156 U.S. 482 (1895) ....... 14

Deutch v. United States, 367 U.S. 456 (1961) ...... 14

Freidus v. United States, 223 F.2d 598 (D.C. Cir.

SD ka ep hae cuaak eb aviuds cde eis Caen tees 18

Garvin V. State, 263 N.E.2d 371 (Ind. 1970) ...... 16

Gonzales v. United States, 286 F.2d 118 (10th Cir.),

cert. denied, 365 U.S. 878 (1961) ............ 18

Hall v. State, 250 Miss. 258, 165 So.2d 345 (1964) .. 16

Hicks v. United States, 150 U.S, 442 (1898) ...... 14

lowa V. Bester, 167 N.W.2d 705 (lowa 1969) ...... 16

Quercia v. United States, 289 U.S. 466 (1933) ... 13,14

Rolland v. United States, 200 F.2d 678 (5th Cir.),

cert. denied, 345 U.S. 964 (1953) ............ 19

Poulos v. United States, 387 F.2d 4 (10th Cir, 1968) 18

State v. Alinutt, 156 N.W.2d 266 (lowa 1968) ..... 16

State v. Bennett, 172 Conn. 324, 374 A.2d 247 (1977) 16

State v. Finkelstein, 269 Mo. 612, 191 S.W. 1002

CEOAET oes cr rv esbneceeveeveseseus viesseekee 16

State v. Gibson, 228 Iowa 748, 292 N.W. 786 (1940) 16

SOOO =

iv

PAGE

State v. Guthridge, 164 Conn. 145, 318 A.2d 87

(1972), cert. denied, 410 U.S. 988 (1973) ....

State v. Jonas, 169 Conn. 566, 363 A.2d 1378 (1975),

cert. denied, 424 U.S. 928 (1976) ............

State v. Kurvin, 186 Conn, 555, 442 A.2d 1327

fb | ERSTE UEPE TIER Eee eRe E Te

State v. Mastropetre, 175 Conn. 512, 400 A.2d 276

| SERS gag ery erring are eee

State v. Palko, 122 Conn. 529, 191 A. 320, aff'd. 302

ee ED nda g Gama Ws had naw eee wok eS

State v. Schleifer, 102 Conn. 708, 180 A. 184 (1925)

State v. Stepney, Conn. Supreme Court Docket No.

SE Geavn seas evesaes ce san baeaeeenecdes oi

State v. Underwood, 281 N.W.2d 337 (Minn. 1979)

Swanson Vv. State, 222 Ind. 217, 52 N.E.2d 616 (1958)

United States v. Alu, 246 F.2d 29 (2d Cir. 1957)

United States v. Bear Killer, 584 F.2d 1253 (8th

Cir.), cert. denied, 429 U.S. 846 (1976) ......

United States vy. Bernard, 384 F.2d 915 (2d Cir.

es ee re oid Ree a cae hs

United States v. Brown, 453 F.2d 101 (8th Cir.),

cert. denied, 405 U.S. 978 (1972) ............

United States v. Cleary, 565 F.2d 43 (2d Cir. 1977),

cert, denied sub nom, Passarelli v. United States,

es We CD, Sis ase és 0 bebe tooes cee,

United States v. Deep, 497 F.2d 1816 (9th Cir.

I i ard ork in-g 6 iol ares oa Oe

United States v. East, 416 F.2d 351 (9th Cir. 1969)

United States v. Floyd, 555 F.2d 45 (2d Cir.), cert.

dented, 484 U.S. 851 (1077) ..... cc ccccceces

United States v. Hernandez, 588 F.2d 346 (2d Cir.

SN SG orig CSET a ee Wl ob uo bd ace saci oe

16

16

16

16

16

16

16

16

14

18

15

18

15

17

Vv

PAGE

United States v. Irwin, 654 F.2d 671 (10th Cir.

1981), cert. denied, 50 U.S.L.W. 3783 (1982) .. 18

United States v. Johnson, 284 F. Supp. 273 (W.D.

Mo, 1968), aff’d., 410 F.2d 38 (8th Cir.), cert.

denied, 896 U.S, 822 (1969) ................ 19

United States v. Marchisio, 344 F.2d 653 (2d Cir.

eee Ue ae ee eeeees 18

United States v. Martin, 525 F.2d 703 (2d Cir.), cert.

denied, 423 U.S. 1085 (1975) .............08. 15

United States v. Moore, 185 F.2d 92 (5th Cir. 1950) 19

United States v. Pereira, 463 F. Supp. 481 (E.D.N.Y.

a il SRA TEER a ee 18

United States v. Radetsky, 5385 F.2d 556 (10th

Cir.), cert. denied, 429 U.S. 820 (1976) ...... 18

United States v. Rucker, 586 F.2d 899 (2d Cir. 1978) 15

United States v. Schlesinger, 598 F.2d 722 (2d Cir.),

cert, denied, 444 U.S. 880 (1980) ............ 15

United States v. Standing Soldier, 588 F.2d 196 (8th

Cir.), cert. denied, 429 U.S. 1025 (1976) ...... 15

United States v. Talkington, 589 F.2d 415 (9th Cir.

ES A ne Pee eee eee eer ee 19

United States v. Voorhees, 593 F.2d 346 (8th Cir.),

cert. denied, 441 U.S. 986 (1979) ............ 19

Wilson Vv. United States, 162 U.S. 613 (1896) ...... 14

Statutory Provisions:

vette dhennceevescesaees 3, 17, 18, 19

EPO eT eT eee Te Tee eee Teer eee 4

Re 4

Miscellaneous:

Annot., 85 A.L.R. 5238 (1983) .......... eee eee 16

In The

Supreme Court of the United States

October Term, 1982

No.

LEE ISENBERG,

Petitioner,

— |

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SECOND CIRCUIT

CRIMINAL MATTER

The petitioner Lee Isenberg respectfully prays that a

writ of certiorari issue to review the judgment and

opinion of the United States Court of Appeals for the

Second Circuit entered in this proceeding on November

i2, 1982.

Opinion Below

The affirmance without formal opinion of the Court of

Appeals appears in the Appendix hereto. No opinion was

<s Seah Fee

2

rendered by the District Court for the District of Con-

necticut.

Jurisdiction

The judgment of the Court of Appeals for the Second

Circuit was entered on November 12, 1982.

The present petition for certiorari was filed within 30

days of that date. This Court’s jurisdiction is invoked

under 28 U.S.C. § 1254(1).

Statutory Provisions Involved

United States Code, Title 18 § 1001.

Statements or entries generally.

Whoever, in any matter within the jurisdiction of any

department or agency of the United States knowingly

and willfully falsifies, conceals or covers up by any trick,

scheme, or device a material fact, or makes any false, fic-

titious or fraudulent statements or representations, or

makes or uses any false writing or document knowing the

same to contain any false, fictitious or fraudulent state-

ment or entry, shall be fined not more than $10,000 or im-

prisoned not more than five years, or both.

Statement of the Case

On October 20, 1980, Edward Isenberg and Lee Isen-

berg were charged by indictment with fifty-eight counts

of violations of federal law. In essence, the indictment

charged petitioner and his brother with three crimes: a

conspiracy to defraud the United States government, the

theft of assets, in the form of services performed for a third

3

party and paid for by the United States government, and

the making and filing of false and fraudulent statements

to an agency of the United States government. More

specifically, count one alleges that from on or about

October 21, 1975 and continuing to on or about December

31, 1979 Edward Isenberg and Lee Isenberg conspired

together and with an unindicted co-conspirator, Ralph

Cardone, (1) to defraud the United States by hindering,

impairing, obstructing, and defeating the lawful adminis-

tration and implementation of the Comprehensive Employ-

ment and Training Act of 1973 (hereinafter “CETA”) ;

(2) to willfully misapply, steal and obtain by fraud

moneys, funds and assets of Associated Restaurants of

Connecticut Consortium * (hereinafter “AROC Consort-

ium”) which received grants and contracts of assistance

pursuant to CETA and to knowingly hire ineligible indi-

viduals for employment in CETA programs; and (3)

to violate § 1001 of Title 18 of the United States Code by

making false or fraudulent statements or representations

to an agency of the United States government.

Counts two through thirty-three of the indictment

allege that Edward Isenberg, Lee Isenberg and Ralph

Cardone, aided and abetted by each other, caused thirteen

individuals to perform services for Lee Isenberg Asso-

ciates, Inc. (hereinafter “LIA”) and Associated Restau-

rants of Connecticut, Inc. (a trade association not related

to the CETA training programs, hereinafter “AROC’’)

and other services not related to the CETA contracts, and

be compensated from CETA moneys and funds, all in

* Defined in the indictment as including the following entities:

Associated Restaurants of Connecticut Central Connecticut Ser-

vices Industries Consortium, Inc., Associated Restaurants of Con-

necticut New Haven County Service Industries Consortium, Inc.,

Associated Restaurants of Connecticut Fairfield County Service

Industries Consortium, Inc. and Food Service Industry Training

Project, Inc.

4

violation of Sections 2 and 665 of Title 18 of the United

States Code.

Counts thirty-four through fifty-eight allege that Ed-

ward Isenberg, Lee Isenberg and Ralph Cardone made

false, fictitious and fraudulent statements in violation of

Sections 2 and 1001 of Title 18 of the United States Code

in connection with the submission of 25 invoices to Con-

necticut CETA prime sponsors.

On November 20, 1981 the jury returned a verdict

of guilty as to all 58 counts against petitioner and a

verdict of guilty as to seventeen counts and not guilty as

to the remaining counts against defendant Edward Isen-

berg.

On January 4, 1982, District Court Judge T. Emmet

Clarie overturned the jury’s gwilty findings as to defend-

ant Edward Isenberg and granted a motion for judgment

of acquittal. On the same date the court denied peti-

tioner’s written motions for Judgment of Acquittal and

for a New Trial and imposed sentence on petitioner as

follows: Count # 1—3 years imprisonment and committed

fine of $10,000, execution of sentence of imprisonment sus-

pended after serving 90 days whereupon defendant shall

be placed on 2 years probation; Counts # 2 through 58

—2 years imprisonment, execution of sentence suspended

after serving 90 days whereupon defendant shall be placed

on 2 years probation. As to Counts 2 through 5 the court

also ordered a $5,000 committed fine as to each Count,

the total fine being $30,000. The sentence of imprison-

ment on Counts 2 through 58 was ordered to run con-

current with the sentence imposed on Count 1.

A timely Notice of Appeal was filed by the petitioner

in the United States Court of Appeals for the Second

Circuit. On November 12, 1982 a summary affirmance

of the judgment of conviction was issued by that court.

5

Statement of the Facts

1. Formation of Lee Isenberg Associates and

the Early Training Programs

In 1957, petitioner Lee Isenberg, after managing the

Retail Trade Board for the Greater Hartford Chamber of

Commerce for nine years, left that organization to open a

trade association management business, (Isenberg, L.

T.T. 3383-84) The name of the business was Lee Isen-

berg Associates (“LIA”) (Isenberg, L., T.T. 3384) and

its purpose was to serve small business associations that

could not afford to hire full-time executive directors.

(Isenberg, L., T.T. 3385)

LIA was formed as a partnership. (Isenberg, L., T.T.

3384-85) In January of 1971, LIA was restructured as

a corporation with the ownership of the shares divided

between Lee Isenberg, his brothers Charles Isenberg and

Edward Isenberg and Arthur Schuman. Lee Isenberg

gave the shares to his brothers and Arthur Schuman in

recognition of their efforts on behalf of LIA. (Isenberg,

L., T.T. 3420-22)

After developing an experimental training program in

the tool and die industry under the original Manpower

Training Act (Isenberg, L., T.T. 3391), petitioner became

interested in using a similar program for training chefs.

(Isenberg, L., T.T. 83391) One of LIA’s clients was the

Associated Restaurants of Connecticut (AROC), a trade

association formed to protect the interests of Connecticut

restaurateurs. (Zakos, T.T. 277-78) After running a

pioneer program for chef training in Connecticut, peti-

tioner extended his chef training program to 17 other

states, (Isenberg, L., T.T. 3393-95)

In 1970, at the suggestion of his outside accountants,

petitioner hired an in-house accountant, Ralph Cardone,

6

to straighten out the bookkeeping snarl that had resulted

from the administration of the national training pro-

grams. (Isenberg, L., T.T. 3401-02) Cardone was to put

the financial affairs of the training program in order and

to collect sums owed to the Food Service Industry Train-

ing Project (FSITP) by the United States government on

a number of individual state contracts. (Cardone; Isen-

berg, L., T.T. 2091; 3403) In the early 1970's, Cardone

was successful in obtaining reimbursement of $60,000 of

the amounts owed by the federal government. (Isenberg,

L., 3405-06).

In late 1969, before Ralph Cardone was hired, FSITP

was audited for 6-8 weeks by the U.S. Department of

Labor. (Isenberg, L., T.T. 3400-01) As a result of that

audit the Department of Labor made a $47,000 claim

against FSITP for questioned costs. (Isenberg, L., T.T.

8409) In an administrative proceeding, the $47,000 claim

of the government was denied and FSITP’s counterclaim

against the government in the amount of $49,000 was

upheld. (Isenberg, L., T.T. 3410)

In 1973, Congress passed the Comprehensive Employ-

ment and Training Act (“CETA”) and with CETA came

a shift away from the national administration of training

programs to a local one. (Isenberg, L., T.T. 3411) The

initial contracts under the CETA program were fixed fee

contracts (Isenberg, L., T.T, 3429) under which a fixed

percentage of the total contract amount was allocated to

administrative costs. (Cardone, T.T. 2360) It was peti-

tioner’s understanding, based on advice of his Washington

counsel, that under the fixed fee contracts, if administra-

tive costs for the training programs exceeded the fee

negotiated under the contract, there was a loss to the

programs, whereas if there was any excess, it belonged

to the programs, (Isenberg, L., T.T. 3429) The surplus

funds generated under the fixed fee contracts remained in

the FSITP accounts and in 1974, 1975 and into 1976

7

amounted to somewhere between $100,000 and $150,000.

(Cardone; Isenberg, L., T.T. 2764; 3430)

As the accountant for the food services training pro-

grams under CETA in the period 1976 through 1978,

Cardone dealt with two different kinds of contracts:

fixed price contracts and cost reimbursement contracts.

(Cardone, T.T. 2131) Under the fixed price contracts, in

order for payment from the government to be triggered,

the training programs only had to establish and document

that trainess were at the job site. (Cardone, T.T. 2358)

There was no direct chargeback against the contract for

reimbursement of individual costs. Under the cost reim-

bursement contracts, not only did the fact that trainees

were working have to be substantiated, but specific costs

such as personnel and rent also had to be detailed. (Car-

done, T.T. 2359)

Records maintained under the two kinds of contracts

also differed. Under the fixed price contracts, only train-

ing records to prove the attendance of trainees at the

restaurants at which they were employed were kept. (Car-

done, T.T. 2360) Itemized ledgers showing the hours

worked by particular administrative employees of the

program were not kept until cost reimbursement contracts

were instituted. (Cardone, T.T. 2360) The first cost

reimbursement contract was not entered into until Sep-

tember, 1976, and the first invoicing or substantiation of

claimed expenses under a cost reimbursement contract

was not made until May, 1977. (Cardone, T.T. 2825)

2. How the CETA Chef Training Programs

Worked.

Training consultants or “coach counselors” were re-

sponsible for the day-to-day operation of the chef training

program administered by FSITP under the various CETA

programs. To be eligible for a CETA program a person

8

had to be unemployed or underemployed and had to meet

certain income requirements, (Yoczik, T.T. 555-56) After

a trainee was accepted, the coach counselors placed the

trainee in a training site, usually a restaurant. (Yoezik,

T.T. 560-61; 565-66) Under the programs, participating

employers were eligible for an approximate daily reim-

bursement allowance of $6.00 per trainee for the first 180

days of the trainee’s employment. (Yocezik, T.T, 561-62)

As part of their job of monitoring trainees to make

sure they received adequate training and worked the ap-

propriate number of hours, the coach counselors were

required to supervise the completion of various forms

which were placed in each trainee’s file. (Yoezik; Isen-

berg, L., T.T. 655; 572; 3434) These forms were referred

to as “blue sheets,” “OJT forms,” and “JRE forms.” All

three forms, conceived by the administrators of the train-

ing programs, were not CETA forms and were not pro-

vided by the government. (Yoczik, T.T. 667-68)

Several of the coach counselors admitted to falsifying

records, including these forms and CETA intake forms,

(Yoezik; Burvick; Shurk, T.T. 599; 750; 889) But to

Ralph Cardone’s knowledge, petitioner never told any of

the coach counselors to falsify blue sheets. Neither did

he tell Cardone to have blue sheets falsified or to falsify

records himself. (Cardone, T.T. 2699) All petitioner

ever told Cardone with regard to blue sheets was to make

sure before audit periods that records were updated and

that whatever was missing be redone in accordance with

the master contro] sheet. (Cardone, T.T. 2699)

There was testimony that petitioner told the coach

counselors that trainees were needed on the roster and

that he didn’t care how the counselors did it, just do it and

don’t get caught. (Shurk, T.T. 903+ Petitioner denied

ever making such a statement. (Isenberg, L., T.T. 3438)

One counselor also testified that he spent a week in Hart-

ford falsifying paperwork and that petitioner knew he was

9

there. (Burvick, T.T. 753, 841) Petitioner denied any

knowledge of the counselor’s illegal actions. (Isenberg,

L., T.T. 3487-38)

3. The Conspiracy

The only testimony about the nature, extent and pur-

poses of the conspiracy came from Ralph Cardone, the

chief government witness and an unindicted co-conspirator.

Cardone served as Chief Accountant for the food services

programs and LIA from 1970 (Cardone, T.T. 2086) until

June of 1980), (Isenberg, L., T.T. 3477) On October 26,

1981, as the result of an agreement entered into by Car-

done and the government on July 23, 1979, Ralph Cardone

pled guilty to a one-count information charging him with

violations of sections 665 and 2 of the United States Code,

theft and aiding and abetting the theft of CETA funds.

(Cardone, T.T. 2087).

When asked with whom he conspired, Cardone said

that the conspiracy consisted only of petitioner and him-

self and not Edward Isenberg. (Cardone, T.T. 2672)

When asked when he entered into a plan of conspiracy

with Lee, his response was: “I don’t think we ever entered

into a plan together. I think it was an outgrowth of

something that existed.” (Cardone, T.T. 2672) Further,

in response to the question “You never entered into a plan

together? You mean you just both were functioning down

two separate lines right?” Cardone answered: “Correct.

We were perpetrating something that existed.” (Cardone,

T.T. 2672)

4. The Theft of Services

As to the “something that existed,” Cardone’s belief

was that the “crime” of “cost absorption” was taking

place when he first started working for LIA and the food

service programs in 1970. (Cardone, T.T. 2668). Under

the fixed fee contracts then in place, Cardone opined that

10

the fee for services charged should not be used to com-

pensate an employee who also worked on other unrelated

work or different contracts and that such a practice was

in fact double billing or “cost absorption.” (Cardone,

T.T. 2667-68; 2534).

When asked what the plan to defraud the United

States with Lee Isenberg was, Cardone responded that

the plan was to have people paid for by the government

working for LIA. (Cardone, T.T. 2711). However, he

did not enter into any agreement with Lee as to the plan

in 1970, he “just continued the job for which [he] in-

herited.” (Cardone, T.T. 2710-11).

Petitioner said that he had no discussions with Car-

done in the pre-’77 period about the use of LIA personnel

on fixed price contracts. He also said that from October

21, 1975 until May of 1977 he never got together with

Cardone to conspire to somehow defraud the United

States Government. (Isenberg, L., T.T. 3452). Both

before and after cost reimbursement contracts were

entered into, he believed, on Cardone’s representation,

that Cardone was keeping a cost allocation system under

which if training service people were being used by LIA

there was an appropriate charge back made. (Isenberg,

L., T.T, 3452-53). Arthur Schuman, an employee of LIA

since 1958 and a part owner from 1971 on (Schuman,

T.T. 2951, 2953-54) also said that he understood from

both Cardone and petitioner that there was a cost account-

ing for employees who were paid on the government ac-

count and who performed non-government work under

which the government was eventually reimbursed. (Schu-

man, T.T. 2979-80).

5. The Invoices

In order to receive payment for expenses incurred

under the cost reimbursement contracts, invoices had to be

submitted to the prime sponsors, usually at monthly

11

intervals. (Cardone, T.T. 2414; 2775). In reviewing

certain invoices submitted under these contracts Cardone

said that in each instance the invoice contained false in-

formation in that hours, salaries, and wages were inflated.

(Cardone, T.T. 2409-2494). Cardone prepared the in-

formation in the invoices, signed them himself and sub-

mitted them to prime sponsors for payment. (Cardone,

T.T. 2472).

Although Cardone said that he was directed to falsify

the invoices by Lee Isenberg, there was no evidence that

Lee Isenberg signed any of the invoices. Further, Lee

himself did not recognize any of the invoices shown to him

and did not review them before they were submitted.

(Isenberg, L., T.T, 3514-15).

Cardone testified that he believed that Lee Isenberg

personally benefitted from the conspiracy and falsification

of records in the following way. Because personnel were

doing work for LIA clients and being paid for their ser-

vices on a government payroll, during the years of the

conspiracy LIA received an annual monetary benefit in

the amount of the value of the services performed by

those personnel. (Cardone, T.T. 2521). Petitioner then

received a personal monetary gain in two ways. First,

the profits of LIA were inflated, thus causing his salary

and his share of company profits to be inflated. Second,

Cardone believed that petitioner personally benefitted

from the monthly transfer of funds to other entities in

which petitioner or his family had an interest. (Cardone,

T.T. 2615-19).

6. Surplus Funds

Both Cardone and petitioner testified about surplus

funds in the food service accounts and about the payment

of some FSITP expenses which were not reimbursed by

the government. A summary of the amounts of surplus

funds in the food service accounts and of expenses in-

lll

12

curred by FSITP and not reimbursed by the government

is as follows:

D.O.L. Settlement $ 49,000

Recapture by Cardone (States) 60,000

Build up of Surplus Funds 150,000

Interest Charges (Loans to CETA) 45,000

Amounts Owed by City of Hartford 60,000

Amounts Owed by City of New Haven 7,000

Subsidize Cardone’s Salary 15,000

Lee Isenberg Time Unreimbursed by U.S.

Government 75,000

Interim Loans (Cash Flow) 1,500

Investment of FSITP Funds 6,000

Prison Project 2,500

Newspaper Ads 5,000

LIA personnel used on FSITP 80,000

Indirect Overhead 15,000

See also Record, Stipulation filed January 11, 1982.

Reasons for Granting the Writ

This case shows how a complex legal relationship be-

tween the government and a citizen can be characterized

as criminal behavior merely because the government

chooses to treat it that way. Thereafter, it is a one way

battle in which the claims of the citizen against his gov-

ernment do not surface because on the face of the criminal

prosecution, they are not germane. Throughout this case,

petitioner claimed that his conduct simply was not

criminal, To the extent a dispute existed at all it was

civil in nature and should have been treated as such with

both sides having an opportunity to present their respec-

tive claims. However, a criminal trial presents no oppor-

tunity to assert counterclaims or to prove the weakness of

the government’s position through appropriate civil dis-

covery.

The Court should grant a writ of certiorari herein be-

cause, in view of the tangled regulations and the uncer-

—

—_—_ ©

13

tain and ever-changing administration of the CETA pro-

gram as a whole, the case of a volunteer citizen who

becomes enmeshed in the bureaucratic maze of adminis-

trative law only to find that he is being accused of

criminal wrongdoing, deserves careful scrutiny to ensure

that his constitutional protections have been observed to

the fullest. Numerous legal issues were presented to both

the trial court and the court of appeals. As outlined

below, the petitioner herein was denied fundamental

fairness in a number of key areas of the law where sharp

disagreement exists among the circuits and the states.

This petition has been limited to these areas. The issues

presented herein are of substantial importance in criminal

proceedings throughout the country.

Il. The Decision Below Affirming the Trial Court's

Charge to the Jury on the Petitioner's Testimony,

Which Called to the Attention of the Jury His

Interest in the Outcome of the Case, Conflicts

with the Decisions of Other Courts of Appeal.

A clear conflict exists among the decisions of the

various circuits and the highest courts of several states

as to the treatment to be accorded by the jury to the

testimony of a defendant who testifies on his own behalf.’

This Court has consistently heid that the testimony of a

defendant witness is to be accorded the same weight as

that of any other witness. However, no decision touching

on this subject has been issued by this Court since 1933."

In the interim, a conflicting body of law has developed as

to how the testimony of a defendant/witness is to be

treated by the jury.

1See Appendix, p. 6a infra for the trial court’s charge on

the credibility of the petitioner, who testified on his own behalf.

* Quercia V. United States, 289 U.S. 466 (1933).

14

Although the presumption of innocence is not specifi-

cally mentioned in the Constitution, this Court has said

that it is “the undoubted law, axiomatic and elementary

and its enforcement lies at the foundaiton of the ad-

ministration of our criminal law.” Coffin v. United

States, 156 U.S. 482, 453 (1895). The presumption of

innocence ranks among the “safeguards of a fair proce-

dure” that have been accorded constitutional status.

Deutch v. United States, 367 U.S. 456, 471 (1961). In-

herent in the presumption of innocence is the concept that

the accused stands before the jury on an equal footing

with any other person, entitled to no consideration, either

favorable or unfavorable, different from that any other

person merits. Swanson v. State, 222 Ind, 217, 52 N.E.2d

616, 617-18 (1944). To hold otherwise is to make a

mockery of the presumption. Either the accused has

equality before the jury or he does not. If he does not,

then he is not presumed to be innocent but rather he is

presumed to be something else which requires the jury to

pay special attention to what he has to say.

In Hicks v. United States, 150 U.S. 442 (1898), this

Court held that an instruction which said that the jury

should consider the interest the defendant had in the

result of the case was erroneous and refused to speculate

as to what effect it might have had on the jury. In Alli-

son V. United States, 160 U.S. 203, 207 (1895), the Court,

relying on Hicks, again said it was for the jury to test

the credibility of the defendant, uninfluenced by an in-

struction which might strip him of his competency as a

witness. Then in Wilson v. United States, 162 U.S. 613,

621 (1896), the Court, referring once again to Hicks,

and Allison, upheld a conviction because the trial court

specifically did not charge the jury to treat the defendant’s

testimony in a manner different from the other wit-

nesses.

Finally, in Quercia v. United States, 289 U.S. 466,

471 (1988), this Court reaffirmed the rule from Allison

oe ee pelt

15

that the weight to be given the defendant’s testimony lies

within the exclusive province of the jury “uninfluenced

by instructions which might operate to strip him of [his]

competency.” This Court has not ruled on the subject of

the weight to be given the testimony of a defendant wit-

ness since Quercia, As a result, there is a direct division

among the circuits as to how to treat such testimony.

The Second Circuit Court of Appeals has upheld a

charge calling attention to the defendant’s interest in the

case * but has done so gingerly pointing out that a bal-

ancing charge to the effect that such interest is not incon-

sistent with the defendant’s ability to tell the truth is

preferable.‘

The Eighth Circuit, however, has condemned the use

of a charge calling the jury’s attention to any interest the

defendant might have in the outcome of the case. In a

series of cases, the Eighth Circuit first warned the Dis-

trict Courts it “preferred” that the defendant not be

singled out,’ then said that the continued use of such a

charge could cause the court to rule per se that it is

erroneous," and finally that such a charge should not be

used “especially in a case where much depends upon the

defendant’s credibility.” " In the present case, the peti-

tioner’s credibility was directly on the line since most of

®’ United States v. Martin, 525 F.2d 703, 706-7, n.3 (2d Cir.),

cert. denied, 423 U.S. 1085 (1975).

‘United States v. Schlesinger, 598 F.2d 722, 727 (2d Cir.),

cert. denied, 444 U.S. 880 (1979); United States v. Hernandez,

588 F.2d 346, 349 (2d Cir. 1978); United States v. Rucker, 586

F.2d 899, 904 (2d Cir. 1978); United States v. Floyd, 555 F.2d

45, 47, n.4 (2d Cir.), cert. denied, 484 U.S. 851 (1977).

® United States v. Brown, 453 F.2d 101, 107 (8th Cir.), cert.

denied, 405 U.S. 978 (1972).

“ United States v. Bear Killer, 534 F.2d 1258, 1260 (8th Cir.),

cert, denied, 429 U.S. 1025 (1976).

* United States v. Standing Soldier, 588 F.2d 196, 204 (8th

Cir.), cert. denied, 429 U.S. 1025 (1976).

16

what he testified to was in direct conflict with the govern-

ment’s key witness, Ralph Cardone.

A similar conflict exists among the state courts on this

type of charge. As a result of the line of cases in the

Eighth Circuit cited above, Minnesota* joined Indiana,’

Mississippi,’ Missouri '' and Iowa * in overturning con-

victions because a charge singling out the defendant was

utilized.’ On the other hand, the Connecticut Supreme

Court has upheld a charge singling out the defendant ''

although in its most recent pronouncement," the court

reluctantly upheld the charge saying:

This is not to say that at some future" time this

court, especially in the case of a material violation

* State V. Underwood, 281 N.W.2d 337 (Minn. 1979).

"Garvin Vv. State, 263 N.E.2d 371 (Ind, 1970); Barnett v.

State, 240 Ind. 129, 161 N.E.2d 444 (1959); Alder v. State, 239

Ind. 68, 154 N.E.2d 716 (1958).

” Hall v, State, 250 Miss. 258, 165 So.2d 345 (1964),

'! State v. Finkelstein, 269 Mo. 612, 191 S.W. 1002 (1917).

12 Jowa Vv. Bester, 167 N.W. 2d 705 (Iowa 1969); State v. All-

nutt, 156 N.W.2d 266 (lowa 1968); State v. Gibson, 228 lowa

748, 292 N.W. 786 (1940).

* See also Annot., 85 A.L.R. 5238, 577 (1933) noting such a

charge to be prejudicially erroneous in Arizona, California, Idaho,

Kentucky, Louisiana, Mississippi, Missouri, Nevada, Oklahoma,

South Carolina and Texas,

' State v. Mastropetre, 175 Conn, 512, 400 A.2d 276 (1978)

(Bogdanski, J. dissenting on this issue); State v. Bennett, 172

Conn, 324, 374 A.2d 247 (1977) (Bogdanski, J. dissenting on this

issue) ; State v. Jonas, 169 Conn. 566, 363 A.2d 1378 (1975), cert.

denied, 424 U.S. 923 (1976) (Bogdanski, J. dissenting on this

issue); State Vv. Guthridge, 164 Conn. 145, 318 A.2d 87 (1972),

cert. denied, 410 U.S. 988 (1973); State v. Palko, 122 Conn. 529,

191 A. 320, aff'd, 302 U.S. 319 (1987); State v. Schleifer, 102

Conn. 708, 130 A. 184 (1925).

* State v. Kurvin, 186 Conn. 555, 570, n.8, 442 A.2d 1327

(1982).

‘The issue is again on appeal to the Connecticut Supreme

Court in State v. Stepney, Conn. Supreme Court Docket No.

10574,

17

of the language used here, might not reconsider the

question of whether such a reference in the charge

amounts to a violation of the defendant’s due pro-

cess rights either under the state or federal con-

stitution.

From the foregoing review of the state and federal case

law, it is apparent that a substantial body of conflicting

case law exists on the treatment to be accorded a defend-

ant’s testimony. In the present case, in which a very

complicated factual pattern emerged, the petitioner, a 59

year old businessman who had led a crime free life, was

pitted against the government’s cooperating witness. His

testimony was entitled to go to the jury unfettered by a

charge that it should consider his interest in the outcome

of the case in weighing what credence, if any, to give

him. This case presents an issue of substantial constitu-

tional importance which needs clarification for the courts

throughout the country.

ll. The Decision Below Affirming the Trial Court’s

Charge to the Jury that the Issue of the Mate-

riality of a False Statement Under Section 1007

of Title 18 of the United States Code is a Ques-

tion of Law for the Judge and Not One of Fact

for the Jury is in Conflict with Decisions of Other

Courts of Appeal.

The various circuits appear to be deeply divided over

whether or not materiality is an essential element of proof

in a prosecution for making false and fraudulent state-

ments. In the decision below, the Second Circuit sum-

marily said that materiality is a question for the court

and that the jury charge’ was correct. That appears to

be the well settled rule in this Circuit. *

17 See Appendix, infra p. 5a for the district court’s jury

charge on the issue of materiality.

‘8 United States v. Cleary, 565 F.2d 43 (2d Cir. 1977), cert.

[Footnote continued on following page}

Ul

18

However, the Tenth Circuit is equally clear in holding

that materiality is an “essential element of offenses de-

fined by 18 U.S.C.A, § 1001” and that “there must be

sufficient Government proof under the standard applied

in criminal cases that the alleged misstatement was mate-

rial.” "" In United States v. Irwin, 654 F.2d 671, 677

(10th Cir, 1981), cert. denied, 50 U.S.L.W, 8788 (1982),

the court upheld the conviction because the issue of mate-

riality had been properly submitted to the jury for con-

sideration. There the court told the jury:

A material statement of fact is one that has a

natural tendency or is capable of inducing action

by the agency...

This instruction left it up to the jury to decide whether

the allegedly false statements were material, The effect

of the charge by the court in the present action was to

tell the jury that the allegedly false statements were both

in fact and law material, This had the subtle effect of

making the jury believe that the trial judge felt that the

petitioner indeed had made material false statements.

The District of Columbia Circuit has said that “this

highly, penal statute [18 U.S.C. § 1001] must be construed

as requiring a material falsification” and that “the legis-

lative purpose strongly implies that only material false

statements were contemplated.” *’ The Ninth Circuit has

denied sub nom, Passarelli v. United States, 486 U.S. 915 (1978) ;

United States v. Bernard, 384 F.2d 915, 916 (2d Cir, 1967);

United States Vv. Marchisio, 844 F.2d 658, 665 (2d Cir. 1965);

United States Vv. Alu, 246 F.2d 29, 82 (2d Cir, 1957). See also

United States Vv. Pereira, 463 F. Supp. 481, 486 (E.D.N.Y. 1978).

1 United States Vv. Radetsky, 585 F.2d 556, 571 (10th Cir.),

cert, denied, 429 U.S, 820 (1976). See also, Gonzales v. United

States, 286 F.2d 118 (10th Cir.), cert, denied, 365 U.S. 878 (1961).

See also Poulos v. United States, 387 F.2d 4, 6 (10th Cir. 1968).

* Freidus Vv. United States, 223 F.2d 598, 601 (D.C. Cir.

1955).

19

noted that “the law is well settled in this Circuit that

materiality of the falsification is an essential element of

the offenses defined in 18 U.S.C, § 1001” and has said

that the failure to so charge the jury is erroneous,

The Eighth Circuit has also held that materiality is

an essential element of a charge under 18 U.S.C, § 1001

and that a jury should be properly instructed as to its

meaning.” See United States v, Johnson, 284 F. Supp.

278 (W.D. Mo. 1968), af’d, 410 F.2d 88 (8th Cir.),

cert. denied, 896 U.S. 822 (1969), in which the district

court approved a jury instruction which stated in part:

an essential element of the offense of making a

false, fictitious and fraudulent statement .. . is

that the statement be ‘material’, In determining

whether such a statement is material, the test is

whether it has a natural tendency to influence or

was capable of influencing agency action... . If

you find beyond a reasonable doubt that defendant's

statement ... had a natural tendency to influence

or was capable of influencing the agency ... , then

you should find that such statement was material.

The Fifth Circuit has dismissed *’ an indictment

because of the failure to allege materiality which it held

to be an essential element of a prosecution under 18

U.S.C. § 1001 and has affirmed" a lower court’s dismis-

sal of an indictment on the ground that the allegedly false

*' United States v, East, 416 F.2d 351, 353 (9th Cir. 1969),

Erroneous charge held not to be prejudicial since materiality had

been established as a matter of law. See also United States v.

Talkington, 589 F.2d 415, 416 (9th Cir, 1979); United States v.

Deep, 497 F.2d 1816, 1821 (9th Cir. 1974) (en banc).

*® United States Vv. Voorhees, 598 F.2d 346, 349 (8th Cir.),

cert, denied, 441 U.S. 986 (1979).

** Rolland v, United States, 200 F.2d 678, 679 (5th Cir.),

cert, denied, 345 U.S. 964 (1953).

** United States Vv. Moore, 185 F.2d 92, 94 (5th Cir, 1950).

ie

20

statements were not material because the defendant was

not subject to the act in question,

From the foregoing, it can be seen that a significant

division exists among the circuits as to the issue of mate-

riality. In a case such as the present one, the petitioner

was entitled to have the issue of materiality decided by

the jury. This court should grant a writ of certiorari to

review the issue in more detail.

CONCLUSION

For these reasons, a writ of certiorari should issue

to review the judgment of the United States Court of

Appeals for the Second Circuit.

Respectfully submitted,

JAMES A, WADE

ROBINSON, ROBINSON & COLE

799 Main Street

Hartford, Connecticut 06103

Counsel for Petitioner

With whom on the

petition was

Sally S. King.

December 10, 1982

Opinion of the District Court

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

At a stated Term of the United States Court of Ap-

peals for the Second Circuit, held at the United States

Courthouse in the City of New York, on the 12th day of

November, one thousand nine hundred and eighty-two.

Present:

HONORABLE IRVING R. KAUFMAN,

HONORABLE WILLIAM H., TIMBERS,

HONORABLE JON O. NEWMAN,

Circuit Judges.

82-1040

UNITED STATES OF AMERICA,

Appellee,

Vv.

LEE ISENBERG,

Appellant.

haga

Appeal from the United States District Court for the

District of Connecticut.

This cause came on to be heard on the transcript of

record from the United States District Court for the

District of Connecticut, and was argued by counsel.

N.B. Since this statement does not constitute a formal

opinion of this court and is not uniformly available to

all parties, it shall not be reported, cited or otherwise

used in unrelated cases before this or any other court.

2a

ON CONSIDERATION WHEREOF, it is now hereby ordered,

adjudged, and decreed that the judgment of said District

Court be and it hereby is affirmed.

1.

Isenberg contends Judge Clarie erred by denying

his motion for judgment of acquittal as to the

conspiracy count (Count I), the theft counts

‘Counts II-XXXIII), and the false statement

counts (Counts XXXIV-LVIII). Appellant’s argu-

ments are without merit.

Three claims are raised concerning Count I. Isen-

berg urges that to the extent a conspiracy was

proved at all, it vccurred between May, 1977 and

October, 1978, rather than between October 1,

1975 and December 31, 1979, as alleged. Even

assuming the government failed to demonstrate the

conspiracy was ongoing during the entire period

alleged in the indictment, this variance was harm-

less since “the conspiracy proved fell within the

period charged.” United States v. Postma, 242

F.2d 488, 496-97 (2d Cir.), cert. denied, 354 U.S.

922 (1957).

Appellant’s argument that the government pleaded

but failed to prove, as a part of the conspiracy,

that Isenberg caused or induced individuals con-

nected with the CETA training programs to falsify

information, is also meritless. Three program

counselors, charged with monitoring trainees’ per-

formance and ensuring they were receiving the

appropriate number of hours of employment, testi-

fied to falsifying various documents on the instruc-

tions of Lee Isenberg. David Shurk stated he

falsified records “to expedite the paperwork,” and

that Isenberg told the counselors he needed train-

ees “on the roll, and he didn’t care how we did it,

just don’t get caught.” On one occasion, Edward

Burvick, another counselor, spent almost a week

a> *

— ee

— le

_ —— rr SCC eh ,lCUhrF OC !hllhr—oa

6.

8a

at the offices of Lee Isenberg Associates falsifying

paperwork, although he was supposed to be in the

field supervising trainees. Burvick testified that

Isenberg was aware of these activities, inquired

“how long will it take?” and indicated his fear

that they might be “caught” by the auditors. As

to paragraph 11 of Count I, therefore, there was

evidence from which, “giving full play to the right

of the jury to determine credibility, weigh the

evidence, and draw justifiable inferences of fact, a

reasonable mind might fairly conclude guilt beyond

a reasonable doubt,” United States v. Taylor, 464

F.2d 240, 248 (2d Cir. 1972), quoted in United

States v. De Garces, 518 F.2d 1156, 1159 (2d Cir.

1975), and Judge Clarie properly denied the motion

for judgment of acquittal.

Isenberg contends further that the acquittal of

Edward Isenberg on the conspiracy count requires

the same disposition as to him. This is a mis-

statement of the law. F..9., United States v. Artuso,

618 F.2d 192, 197 (2d Cir.), cert. denied, 449

U.S. 951 (1980).

The district court properly denied the Rule 29

motion as to the theft counts. The variances alleged

to exist between the misappropriations estimated in

the government’s bill of particulars and the

amounts proved at trial depend entirely on Car-

done’s testimony, and ignore the employees’ own

assessments of time spent working for CETA and

Lee Isenberg Associates. Any variances which re-

main in no way prejudiced Isenberg. United

States v. Glaze, 313 F.2d 757, 759 (2d Cir. 1963).

Cardone’s testimony provided amply [sic] support

for the government’s case on Counts XXXIV-LVIII

and for the jury’s ultimate conclusion that Isenberg

directed in detail the falsification of invoices and

9.

da

other documents requesting reimbursement from

CETA prime sponsors. The motion for judgment

of acquittal on the false statement counts was

correctly denied.

Appellant’s claims of error in the district court’s

charge to the jury also have no merit. Judge

Clarie directed the jury’s attention to Cardone with

instructions that Cardone’s testimony was “to be

received with caution and considered with great

care,” and further cautioned that “[{t]he fact that

an accomplice has entered a plea of guilty is not

evidence of the guilt of any other person.” The

charge on accomplice testimony was therefore ap-

propriate. EF.g., United States v. Projansky, 465

F.2d 123, 136 & nn.21 & 25 (2d Cir.), cert. denied,

409 U.S. 1006 (1972).

The district court’s charge on Isenberg’s testimony

did not affect the presumption of innocence. The

court was careful to emphasize the jury should not

conclude “that simply because a person has a vital

interest in the end result of the trial, that he is

not capable of telling a truthful and straight-

forward story.” We have upheld similar instruc-

tions and have never accepted the argument that

they improperly single out the defendant for

special comment. E.g., United States v. Martin,

525 F.2d 703, 706-07 & n.3 (2d Cir.), cert. denied,

423 U.S. 1085 (1975).

Judge Clarie’s instruction that the government

must prove “the members [of an alleged con-

spiracy| in some way or manner, or through some

contrivance, positively or tacitly came to a mutual

understading to try to accomplish a common and

unlawful plan” correctly stated the elements of

the crime of conspiracy. United States v. Hock-

ridge, 573 F.2d 752, 760-61 & nn.22-23 (2d Cir.),

cert, denied, 439 U.S. 821 (1978).

a ee

ee

10.

11,

5a

Materiality is a question for the court and Judge

Clarie so charged the jury. United States v. Ber-

nard, 384 F.2d 915, 916 (2d Cir. 1967) (per

curiam).

The judgment of conviction is affirmed in all re-

spects.

/s/ IRVING R. KAUFMAN

IRVING R. KAUFMAN,

/s/ WM H. TIMBERS

WILLIAM H, TIMBERS,

/s/ JON O, NEWMAN

JON O. NEWMAN, Circuit Judges

6a

Excerpts from the Trial Court's Jury Charge

1. Defendant's Testimony

With respect to the defendants, Edward Isenberg and

Lee Isenberg, who testified, you must carefully consider

the testimony of each. An accused person is not obligated

to take the witness stand in his own behalf. On the other

hand, he has a perfect right to do so, as the defendants

have done here.

In weighing the testimony each has given, you should

apply the same principles by which the testimony of the

other witnesses is tested, including the witnesses called

by the Government. That necessarily involves a con-

sideration of the interest each defendant has in the case.

An accused person, having taken the witness stand, is

before you just like any other witness. He is entitled to

the same considerations, and may have his testimony

measured in the same way as any other witness, including

his interest in the verdict which you are called upon to

render.

However, I want to say this with equal force to you: It

by no means follows that simply because a person has a

vital interest in the end result of the trial, that he is not

capable of telling a truthful and straightforward story.

It is for you to decide to what extent, if at all, the de-

fendants’ interest have affected or colored their testi-

mony.... (T.T. 3812-13).

2. Materiality

The making of a false statement to an agency of the

United States Government is not an offense, unless the

statement made is a material statement. The issue of

materiality, however, is not submitted to you for your

decision, but rather is a matter for the decision of the

Court. You are instructed that the statements charged in

the indictment are material statements. (T.T. 3802).