MIRIAM GOLDMAN CEDARBAUM, United States District Judge.
Defendant has made two post-trial motions. The first is for a judgment of acquittal with respect to Counts Two and Three pursuant to Fed.R.Crim.P. 29(c), the Sixth Amendment and Fed.R.Crim.P. 18 on the ground of improper venue. The second is for a new trial pursuant to Fed.R.Crim.P. 33 on the ground that defendant was deprived of a fair trial by the failure to include defendant's Request to Charge No. 15, concerning the distinction between avoidance and evasion of a lawful obligation, in the Court's charge to the jury. For the following reasons both of these motions are denied.
I. The Motion for Judgment of Acquittal with Respect to Counts Two and Three on the Ground of Improper Venue.
Count Two charged that defendant defrauded the United States Army by improperly causing it to issue a contract for asbestos removal at the Picatinny Arsenal to National Abatement Contracting Corp. in November 1988. Count Three charged that defendant defrauded the United States Army by improperly causing it to issue a contract for asbestos removal at the Picatinny Arsenal to National Abatement in February 1990. Both counts involve violation of 18 U.S.C. § 1031.
The Second Circuit explained in United States v. Reed, 773 F.2d 477, 481 (2d Cir. 1985), that the test to determine constitutional venue "is best described as a substantial contacts rule that takes into account a number of factors — the site of the defendant's acts, the elements and nature of the crime, the locus of the effect of the criminal conduct, and the suitability of each district for accurate factfinding."
Eighteen U.S.C. § 1031 criminalizes "any scheme or artifice with the intent to defraud the United States or to obtain money . . . by means of false or fraudulent pretenses . . . in any procurement of property or services as a prime contractor with the United States." A "scheme or artifice" to defraud is a continuing offense that can occur in more than one district over a period of time. See United States v. Bezmalinovic, 962 F. Supp. 435, 437 (S.D.N.Y. 1997). Thus, venue is appropriate "in any district in which such offense was begun, continued or completed." 18 U.S.C. § 3237(a). In accomplishing his scheme to defraud the government by obtaining and performing under contracts for asbestos removal, Bezmalinovic was required by government regulation to mail notices of National Abatement's asbestos removal work to the EPA regional office. That office is located in the Southern District of New York. The evidence presented at trial proved that notices were sent by Bezmalinovic's P.C. J. Contracting Co., Inc. employees in the name of National Abatement to the EPA office in this district. Those notice letters perpetuated Bezmalinovic's fraudulent representation that National Abatement was a company independent of Bezmalinovic. If Bezmalinovic had not sent the notice letters he could not have obtained payment under the contracts with the Army.
Additionally, the evidence produced at trial proved that in furtherance of his scheme with regard to the contract specified in Count 3, Bezmalinovic obtained bonding from U.S. Capital through a White Plains broker. Such bonding was a prerequisite to procurement of the contract with the Army. Again, but for his actions in this district, Bezmalinovic could not have completed his scheme to defraud the government.
The jury in this case was instructed that the government was required to prove that it was more likely than not "that an act in furtherance of the crime took place within the Southern District of New York" in order to convict Bezmalinovic of each count of the indictment. The jury was further instructed that it was "sufficient if any act in furtherance of the crime occurred in the Southern District of New York." (Trial Tr. at 1545-46.) The jury found Bezmalinovic guilty of Counts 2 and 3. The jury concluded that Bezmalinovic had performed acts in furtherance of his crime here in this district. The evidence at trial was sufficient to support such a finding and it will not be disturbed. Accordingly, defendant's motion for acquittal on Counts 2 and 3 on the ground of improper venue is denied.
II. The Motion for a New Trial.
Bezmalinovic moves for a new trial based on his claim that he was severely prejudiced because his request to charge on the distinction between avoidance and evasion was not included in the charge to the jury.
This issue was carefully considered at the charge conference. It was determined that the charge setting out the defense of good faith adequately covered the defendant's theory of the case. Moreover, there was no authority presented for including the requested charge. Defendant has yet to provide such authority. He was not prejudiced by the exclusion of the requested charge because the jury was charged on the defense of good faith, a charge which adequately covered the defendant's theory of the case. Accordingly, defendant's motion for a new trial is denied.
SO ORDERED.
FATICO HEARING FINDINGS OF FACT
In open court on December 13, 1996, Counts Eleven and Twelve of superseding indictment 3 were severed for improper joinder. Those counts charged Kreso Bezmalinovic with willful failure to collect and pay over tax in violation of 26 U.S.C. § 7202. By opinion dated December 23, 1996, Count Ten of superseding indictment 3 was severed for improper joinder. That count charged Mr. Bezmalinovic with attempting to interfere with the administration of the internal revenue laws in violation of 26 U.S.C. § 7212(a). A trial of these three counts was scheduled for October 6, 1998. By letter dated September 16, 1998 both parties agreed that in lieu of a trial on the outstanding tax charges, a pre-sentencing hearing would be held pursuant to United States v. Fatico, 458 F. Supp. 388 (E.D.N Y 1978), aff'd, 603 F.2d 1053 (2d Cir. 1979). Fatico hearings were held on October 13 through 15, 1998, March 29, 1999 and April 7, 1999. The following are my findings of fact based on a preponderance of the credible evidence presented at the Fatico hearing as well as the evidence received in the trial before me of Counts One, Two, Three, Four, Five, Six, and Seven of superseding indictment 4.
1. For P.C. J. Contracting Co., Inc. ("P.C. J."), National Abatement Contracting Corp., P.C. J. Consulting Co., Inc., Bezco Contracting Corp., and American Shipyard Corporation, Bezmalinovic retained control and ultimate authority for all expenditures as well as their recording on the corporate books and tax returns.
2. Bezmalinovic regularly paid employees compensation from which no payroll taxes were withheld and which were not recorded in the corporate records or reported as compensation on IRS forms 941 or W-2. These payments were falsely recorded as reimbursement for travel or subsistence expenses or were listed as deductible fringe benefits. Such payments were generally made by the issuance of checks which were blue in color, unlike regular payroll checks. P.C. J. issued "blue checks" in 1988 totaling $88,190; in 1989, $49,560; in 1990, $85,240; in 1991, $124,639; and in 1992, $57,445. National Abatement Contracting Corp., also issued "blue checks." "Blue checks" issued by National Abatement Contracting Corp. from 1989 through 1992, drawn on First Fidelity Bank, totaled $10,830; from 1990 through 1991, drawn on European American Bank, totaled $60,175. Bezmalinovic also paid P.C. J. employees with checks from P.C. J. Consulting, American Shipyard and Bezco and did not report or record the payments as P.C. J. payroll or issue forms W-2 to the employees.
3. Bezmalinovic withheld taxes from payroll checks issued by Bezco Contracting Corp. For the second and third quarters of 1992, he failed to file Employer's Quarterly Federal Tax Returns (IRS Form 941) and failed to pay over to the government any of the taxes withheld by Bezco for those periods. For the second quarter of 1992, Bezco withheld from employees' payroll checks income taxes totaling $24,055.75 and FICA and Medicare contributions totaling $16,061. For the third quarter of 1992 Bezco withheld from employees' payroll checks $9,359.95 which it did not report or turn over to the government.
4. P.C. J. filed a fraudulent Form 941 for the second quarter of 1992. That form falsely omitted payroll in the amount of $400,000 and reduced the payroll taxes that P.C. J. reported it owed for the second quarter of 1992 from $158,452.15 to $5,736.52. P.C. J. did not file a Form 941 for the fourth quarter of 1992.
5. In March 1992, Bezmalinovic began personally negotiating with IRS officer Thomas Vera with regard to P.C. J.'s delinquent payroll taxes. Bezmalinovic and his wife signed an acknowledgment on December 15, 1992 stating that each was 100% responsible for funds withheld from P.C. J. employees' salaries that were not turned over to the government. Bezmalinovic also represented in April 1992 and March 1993 that John Macguire was only an employee of P.C. J. Contradicting those representations, in July 1993, Bezmalinovic submitted to IRS officer Vera documents stating that Macguire controlled P.C. J. when it became delinquent in its payroll taxes. Based on these later representations, officer Vera abated the penalty that the IRS had assessed against Bezmalinovic and his wife.
SO ORDERED.