12-3493-cr (L)
United States v. LaVilla
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007,
IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING
A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE
(WITH THE NOTATION "SUMMARY ORDER"). A PARTY CITING TO A
SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT
REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals
for the Second Circuit, held at the Thurgood Marshall United
States Courthouse, 40 Foley Square, in the City of New York, on
the 29th day of January, two thousand fourteen.
PRESENT: DENNY CHIN,
SUSAN L. CARNEY,
CHRISTOPHER F. DRONEY,
Circuit Judges.
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UNITED STATES OF AMERICA,
Appellee,
12-3493-cr
-v- 12-3495-cr
12-3512-cr
MATTHEW LAVILLA, CLARKSON AUTO
ELECTRIC, INC., GERALD FRETTO,
Defendants-Appellants,
ANTHONY FRETTO, JAMES NOTO, DANIEL
STREFF, THOMAS RANDALL, DANIEL
LAROCCO, EDWARD HAWKINS, DAVID
DAILEY, RANDY VAN STEEN,
Defendants.
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FOR APPELLEE: BRADLEY E. TYLER, Assistant United
States Attorney, for William J.
Hochul, Jr., United States
Attorney for the Western District
of New York, Rochester, New York.
FOR DEFENDANTS-APPELLANTS: JOSEPH M. LATONA, Office of Joseph
M. LaTona, Esq., Buffalo, New
York; MATTHEW R. LEMBKE, Cerulli,
Massare & Lembke, Rochester, New
York; and MICHAEL J. TALLON,
Michael J. Tallon, P.C.,
Rochester, New York.
Appeal from the United States District Court for the
Western District of New York (Siragusa, J.).
UPON DUE CONSIDERATION, IT IS ORDERED, ADJUDGED, AND
DECREED that the order of the district court is AFFIRMED.
Defendants-appellants Matthew LaVilla, Gerald Fretto,
and Clarkson Auto Electric, Inc. ("CAE") were indicted below for
conspiracy to commit mail fraud, 18 U.S.C. § 1349; mail fraud,
id. §§ 1341 and 2; and conspiracy to launder monetary
instruments, id. § 1956(h). Fretto and LaVilla were
additionally indicted for engaging in monetary transactions in
property derived from unlawful activity. Id. §§ 1957 and 2.
The indictment seeks, inter alia, forfeiture of assets under 18
U.S.C. §§ 981(a)(1)(C) and 982(a)(1), as well as 28 U.S.C. §
2461(c).1
1
Neither the parties nor the district court raised the issue below of
whether 18 U.S.C. § 982 authorizes the pretrial restraint of assets. See
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Defendants appeal from the order of the district court
(Siragusa, J.) entered August 16, 2012, denying their
application for (1) the release of seized bank accounts to pay
for counsel and (2) the production of materials relied upon by a
government witness at a hearing held pursuant to United States
v. Monsanto, 924 F.2d 1186 (2d Cir.) (in banc), cert. denied,
502 U.S. 943 (1991).2 The district court adopted the reasoning
of Magistrate Judge Payson, who conducted the hearing and issued
the decision and order initially denying defendants' motion for
the release of their assets.
On appeal, defendants argue primarily that (1) the
government failed to establish probable cause that they
committed the crimes charged in the indictment or that their
assets are forfeitable and (2) the Federal Rules of Evidence
should have been applied at the Monsanto hearing. We address
these arguments in turn, assuming the parties' familiarity with
the facts, procedural history, and issues for review.
United States v. Razmilovic, 419 F.3d 134, 136, 138-40 (2d Cir. 2005).
Accordingly, we assume that Section 982 permits the pretrial restraint of
assets for the purposes of this case.
2
Anthony Fretto -- a co-owner of CAE, father to Gerald Fretto, and also
a defendant named in the indictment -- owns assets subject to the seizure
order, but does not join in this appeal.
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1. The Probable Cause Determination
When an ex parte pretrial restraint is placed on a
defendant's assets, thereby restricting his ability to retain
counsel of choice, that defendant must be afforded "an
adversary, post-restraint, pretrial hearing as to probable cause
that (a) the defendant committed crimes that provide a basis for
forfeiture, and (b) the properties specified as forfeitable in
the indictment are properly forfeitable." Monsanto, 924 F.2d at
1203. Probable cause exists where the totality of the
circumstances suggests a "fair probability," and not necessarily
a "hard certaint[y]," that the defendant committed the crime
alleged. Walczyk v. Rio, 496 F.3d 139, 156 (2d Cir. 2007)
(quoting Illinois v. Gates, 462 U.S. 213, 238 (1983)); see also
In re Seizure of All Funds in Accounts in Names Registry Pub.
Inc., 68 F.3d 577, 580 (2d Cir. 1995).
Reviewing the district court's probable cause
determination de novo and its factual findings for clear error,
United States v. Walsh, 712 F.3d 119, 123 (2d Cir. 2013), we
conclude that the government established probable cause that (a)
defendants committed the crimes alleged in the indictment and
(b) the seized bank accounts are traceable to those crimes and
thus subject to pretrial restraint.
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a. Evidence of the Crimes Alleged in the Indictment
The government alleges that the defendants arranged
for Xerox mechanics to place purchase orders with CAE, on behalf
of Xerox, for parts that Xerox did not need. According to the
government, the Xerox mechanics provided defendants with used
parts that belonged to Xerox. Defendants then repackaged those
parts as new and sent them back to Xerox to fill the purchase
orders. At the Monsanto hearing, the government presented
sufficient evidence to establish probable cause to support these
allegations.
Relying on information obtained from former CAE
employees and a former Xerox mechanic, IRS Special Agent Erin
Stacer testified that Anthony Fretto visited Xerox almost daily
to acquire boxes of used parts, unloaded them at CAE, and
instructed CAE employees to repackage the parts as new to be
delivered back to Xerox the next day. Agent Stacer also
obtained incriminating business records from both CAE and Xerox
that showed that: between 2002 and 2007, CAE ordered
significantly fewer new parts from its suppliers than it
delivered to Xerox; in 2006, the five Xerox mechanics allegedly
involved in the scheme each ordered considerably more parts from
CAE than other mechanics, despite roughly equal workloads; in
2007, Xerox's Corporate Security intercepted five boxes
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delivered to Xerox by Anthony Fretto and found used parts that
were marked and billed as new parts; and Xerox's orders for new
parts plummeted after its relationship with CAE ended.
Agent Stacer testified that CAE employees informed her
that LaVilla directed and personally participated in the
repackaging of parts. She also testified that the Xerox
mechanics who placed the fraudulent purchase orders often went
to Gerald Fretto's house to pick up various goods as
compensation for their participation in the scheme. She also
testified that a former CAE employee stated that LaVilla yelled
at him "to stop marking the parts, the Xerox parts that he was
repackaging." That employee informed Agent Stacer that he
noticed that the same parts were being repackaged and resent
back to Xerox, and he thus began marking the parts to track how
many times this was occurring.
This testimony and the corroborating business records
established probable cause that defendants committed the crimes
that were the basis of the forfeiture allegations.
b. Evidence of the Forfeitability of the Bank Accounts
Agent Stacer presented a thorough accounting of
defendants' bank accounts, revealing that the seized bank
accounts were traceable to the allegedly ill-gotten proceeds
from the scheme. On appeal, defendants make no argument
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suggesting otherwise. Consequently, we conclude that the
district court did not abuse its discretion in finding
sufficient probable cause here to sustain the pre-trial
restraint on defendants' assets.
2. Applicability of the Federal Rules of Evidence
Agent Stacer noted at the Monsanto hearing that before
the hearing she reviewed her notes and memoranda of witness
interviews, her grand jury testimony, and spreadsheets she
prepared based on bank and Xerox records. Defendants argue that
the magistrate judge erred by denying their request during the
hearing for the production of those documents, contending that
the magistrate judge should have applied Rule 612 of the Federal
Rules of Evidence, which governs the production of writings used
to refresh a witness's memory. We reject defendants' arguments.
Assuming Rule 612 applies to Monsanto hearings, we
conclude that the district court did not abuse its discretion in
rejecting defendants' request for the production of documents
that Agent Stacer reviewed before testifying. When a witness
reviews a document to refresh her memory before testifying -- as
Agent Stacer did here -- a district court has discretion to
order the production of that document "if the court decides that
justice requires" production. See Fed. R. Evid. 612(a)(2), (b).
We have previously identified Congress's concern regarding the
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unwarranted and premature disclosure of evidence in criminal
pretrial proceedings. See Monsanto, 924 F.2d at 1197-98. Here,
defendants failed to establish that justice required the
disclosure of Agent Stacer's notes and other materials where the
Agent was present at the Monsanto hearing for cross examination
by defense counsel and her affidavits had previously been
produced to the defendants. Thus, the magistrate judge's
decision not to order the production of the documents sought by
the defendants was reasonable.
We have considered all of defendants' remaining
arguments and conclude that they are without merit. For the
foregoing reasons, we AFFIRM the order of the district court.
FOR THE COURT:
Catherine O'Hagan Wolfe, Clerk
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