Documente Academic
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Documente Cultură
MARC L. MUKASEY
BRACEWELL & GIULIANI LLP
1177 Avenue of the Americas
New York, New York 10036
(212) 508-6134 (telephone)
Marc.Mukasey@bgllp.com
TABLE OF CONTENTS
Page
I. PROCEDURAL HISTORY............................................................................................... 1
II. THE PROPOSED BAIL CONDITIONS........................................................................... 2
III. FINANCIAL DISCLOSURES OF THE PROPOSED CO-SIGNORS............................. 3
(a) Co-Signor 1 and Co-Signor 2 ....................................................................................... 4
(b) Co-Signor 3 and Co-Signor 4....................................................................................... 5
(c) Co-Signor 5 .................................................................................................................. 6
(d) Co-Signor 6, Co-Signor 7, Co-Signor 8 and Co-Signor 9 ........................................... 6
(e) Financially Responsible Person 10............................................................................... 7
IV. THE COURT SHOULD ADJOURN SENTENCING UNTIL MR. DIPASCALI'S
COOPERATION IS COMPLETE..................................................................................... 9
V. CONCLUSION................................................................................................................ 13
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Defendant Frank DiPascali, Jr., by his attorneys, Bracewell & Giuliani LLP, respectfully
submits this memorandum in further support of his application for bail. At the most recent
hearing in connection with Mr. DiPascali's bail application, on October 28, 2009, the Court
reserved judgment pending further submissions by the parties regarding (1) the background and
financial circumstances of the individuals who are prepared to co-sign a bond on Mr. DiPascali's
investigations and prosecutions, and (3) the proposed application of Fed. R. Cr. P. 35(b) ("Rule
35(b)") to Mr. DiPascali's scheduled sentencing. This memorandum addresses the background
and financial circumstances of the proposed co-signors, as well as the potential application of
Rule 35(b) to Mr. DiPascali's case. We anticipate the Government will file a separate
submission, ex parte and under seal, addressing Mr. DiPascali's current and anticipated value as
a cooperating witness.1
I. Procedural History
On August 11, 2009, Mr. DiPascali entered into a cooperation agreement with the
Government and, pursuant to that agreement, pled guilty to a ten-count information. Following
the plea, the Court remanded Mr. DiPascali over the objections of Mr. DiPascali and the
1
The Court indicated that the parties may make applications under seal to protect
confidential information. This memorandum and the referenced exhibits, in accordance with
Fed. R. Cr. P. 49.1(g), are submitted in redacted form. Pursuant to Rule 49.1(g), counsel for Mr.
DiPascali hereby moves this Court to order the sealed filing of a reference list identifying each
item of redacted information and specifying an appropriate identifier that uniquely corresponds
to each item listed. See United States v. Amodeo, 71 F.3d 1044, 1051 (2d Cir. 1995) ("the
privacy interests of innocent third parties . . . should weigh heavily in a court's balancing
equation," and "family affairs . . . and similar matters will weigh more heavily against access");
United States v. Connolly (In re Boston Herald, Inc.), 321 F.3d 174, 184 (1st Cir. 2003)
(personal financial records, such as account balances, are universally presumed private, and
innocent third parties, like defendant's family members, have increased privacy interests); see
also United States v. Strevell, 2009 U.S. Dist. LEXIS 19020, at *13 (N.D.N.Y Mar. 3, 2009)
("Numerous courts have found privacy interests worthy of protection such as . . . financial
records, account information, personal identifiers, [and] third-party letters of support . . . .").
1
Government. The Court, however, invited the parties to raise the bail issue again at a future
time. Transcript of Proceedings dated August 11, 2009 ("Tr.") at 93. Accordingly, on October
16, 2009, the parties each filed a respective Motion for Reconsideration of Mr. DiPascali's Bail
Conditions ("Motions for Reconsideration"). On October 28, 2009, the Court heard argument in
support of the Motions for Reconsideration and reserved judgment pending further submissions
by the parties. As set forth herein, the issues on which the Court requested briefing weigh
heavily in favor of admitting Mr. DiPascali to bail and allowing his cooperation and sentencing
The proposed bail conditions provide clear and convincing evidence that Mr. DiPascali
does not pose a risk of flight, and should be granted bail pending sentencing. See 18 U.S.C. §
3141 et seq. Moreover, the extraordinary cooperation Mr. DiPascali is anticipated to provide and
the effect that cooperation may have in reducing his sentence further incentivizes Mr. DiPascali
not to flee.
It is respectfully submitted that Mr. DiPascali should be admitted to bail upon satisfaction
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(d) Mr. DiPascali will remain confined to his home at all times, save for Court
appearances and travel to the U.S. Attorney's Office as directed by that Office (or
such other location relevant to his cooperation as the US Attorney's Office or the
FBI directs him), as well as any medical emergencies;
(e) Mr. DiPascali will be fitted with an electronic monitoring device with global
positioning satellite tracking capability;
(f) Mr. DiPascali will only be permitted to leave his residence under the escort of at
least one Federal Bureau of Investigation Special Agent;
(g) Mrs. DiPascali will surrender her travel documents and not apply for new travel
documents;
Nine financially responsible persons have agreed to co-sign the proposed $10 million
bond in support of Frank DiPascali's bail application. Each of these financially responsible
people understands that (1) Mr. DiPascali pled guilty to ten felonies; (2) he faces certain life
imprisonment absent cooperation; and (3) the Court has expressed concerns that Mr. DiPascali
poses a risk of flight. Nevertheless, these financially responsible persons each have agreed to co-
sign a $10 million bond and pledge approximately $2 million in assets -- including three homes
and retirement accounts -- to secure Mr. DiPascali's bond. None of the assets being pledged in
2
The FBI has interviewed and approved each of the individuals to sign the bond. The
only co-signor who once unwittingly received fraud proceeds from Mr. DiPascali -- Co-Signor 5
-- is in the process of forfeiting to the Government the precise amount of that transfer, plus
interest. Further, the amount of that forfeiture already has been subtracted from the individual's
"assets" for the purposes of calculating her potential contribution to Mr. DiPascali's bail package.
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All of the proposed co-signors are either Mr. DiPascali's relatives or relatives of his
spouse. The financial condition and general background information of each co-signor is set
forth below, as well as the specific contribution of each person to the proposed bond securing
Mr. DiPascali's release.3 If Mr. DiPascali fails to honor the conditions of his release, each co-
signor will face certain financial ruin. None of the co-signors is wealthy enough to avoid a
lifetime encumbrance by the financial burden that Mr. DiPascali's flight would heave upon them,
and none is able to avoid the burden due to lack of assets.4 Put simply, Mr. DiPascali's flight
Co-Signor 1 and Co-Signor 2 are close relatives of Mr. DiPascali's wife. They have been
married to each other for over fifty years. They are currently retired. Co-Signor 1 is a former
sales manager and Co-Signor 2 is a former administrative assistant. They have known the
DiPascali family for thirty years. The two families are close and have always been actively
involved in each others' lives. They celebrate holidays together and have participated in each
others' children's significant life events, such as birthday parties, communions, and school and
3
Documents supporting the co-signors' financial information are attached hereto and
redacted pursuant to Rule 49.1(g) of the Federal Rules of Criminal Procedure. As set forth
above, counsel for Mr. DiPascali will submit a sealed reference list to the Court should the Court
enter an order permitting a sealed submission.
4
Counsel recognizes that 18 U.S.C. § 3142(c)(1)(B)(xii) generally requires that the bond
be signed by financially responsible persons with an aggregate net worth sufficient to secure the
full amount of the bond. In this case, the parties have agreed to a larger bond amount to ensure
the financial ruin of Mr. DiPascali's entire family in the event Mr. DiPascali fails to honor the
conditions of his release. Moreover, the larger bond also will obligate Mr. DiPascali's children
to work their entire lives to raise money for the Government if Mr. DiPascali flees -- in essence,
putting his children into bankruptcy before they join the workforce.
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Co-Signor 1 and Co-Signor 2 own their house in New Jersey with approximately
$250,000 in equity. They also own approximately $550,000 (combined) in three different
Neither Co-Signor 1 nor Co-Signor 2 has ever received money from Mr. DiPascali and they have
not relied on him to assist with their personal finances. Co-Signor 1 and Co-Signor 2 agreed to
co-sign the $10 million bond and pledge their home to secure the bond.5
If Mr. DiPascali fails to adhere to the restrictions of the proposed bail package, Co-Signor
1 and Co-Signor 2 will lose their house and retirement savings. They have no other assets.
Nonetheless, they trust Mr. DiPascali to comply with the conditions of his release.
Co-Signor 3 and Co-Signor 4 are close relatives of Mr. DiPascali's wife. They have been
married to each other for almost thirty years. Co-Signor 3 is a Certified Public Accountant and a
partner in an accounting firm. Co-Signor 4 is an office manager. Like Co-Signors 1 and 2, Co-
Signor 3 and Co-Signor 4 have known the DiPascalis for approximately thirty years. Further,
like Co-Signors 1 and 2, throughout those thirty years, Co-Signor 3 and Co-Signor 4 have been
close to the DiPascalis and have joined them to celebrate most holidays and significant life
events, including birthday parties, communions, and school and community sporting events.
Co-Signor 3 and Co-Signor 4 own their house in New Jersey. They have approximately
$223,000 of equity in the home. They also own approximately $110,000 in retirement accounts
and other assets. They have never received any money from Mr. DiPascali, and they have not
5
Financial documents provided by Co-Signors 1 and 2 are attached as Exhibit A.
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relied on him to assist with their personal finances. Co-Signor 3 and Co-Signor 4 are co-signing
If Mr. DiPascali fails to adhere to the restrictions of the proposed bail application, they
will lose their house and their retirement savings. Nonetheless, they have agreed to co-sign Mr.
(c) Co-Signor 5
financial institution, where she has been employed for thirty-three years.
Co-Signor 5 owns a house in New Jersey with approximately $169,000 in equity.7 She
also owns approximately $500,000 in investment and retirement accounts. In addition to co-
signing the bond, Co-Signor 5 is pledging her home and her retirement accounts as security.8 If
Mr. DiPascali fails to adhere to the restrictions of the proposed bail application, she will lose her
house and all her retirement savings. She has no other significant assets. Nonetheless, she has
agreed to trust Mr. DiPascali to honor the proposed conditions of his release.
is Mr. DiPascali's mother. She resides in New Jersey with one of Mr. DiPascali's sisters.9 Co-
Signor 7 is Mr. DiPascali's wife. Co-Signor 8 is Mr. DiPascali's twenty-four year old daughter.
6
Financial documents provided by Co-Signors 3 and 4 are attached as Exhibit B.
7
This amount reflects a recent reduction to account for assets subject to the related
forfeiture order.
8
Financial documents provided by Co-Signor 5 are attached as Exhibit C.
9
Financial documents provided by Co-Signor 6 are attached as Exhibit D.
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As an initial matter, there is no dispute that Co-Signors 6, 7, 8 and 9 were unaware of,
and uninvolved in, Mr. DiPascali's criminal conduct. Nor should the Court be concerned that
these Co-Signors are enjoying the fruits of Mr. DiPascali's criminal conduct. The Government
already has commenced forfeiture proceedings against assets that are fruits of Mr. DiPascali's
crimes; therefore any tainted assets held by Co-Signors 6, 7, 8 and 9 are subject to forfeiture by
the Government upon the Court's entry of an order. Specifically, the Government already has
forfeited and sold a fishing vessel that was in Co-Signor 7's name and the Government is in the
process of forfeiting the home in which Co-Signor 7 has resided since 2000. Co-Signor 7
recently has found a job in Somerset County, New Jersey and has begun the next stage of her
life, where she no longer needs to rely on Mr. DiPascali for financial support.
Co-Signor 8 and Co-Signor 9 do not, at present, possess significant financial assets. (Co-
Signor 9's apartment is subject to forfeiture). Co-Signor 8, however, is currently in her first year
of law school in New York City and intends to complete her Juris Doctor degree in 2012. Co-
Signor 9 is expected to graduate from college next May with a Bachelor of Arts in Economics.
Both children's degrees will render them employable for the next fifty years, starting in the
summer of 2010.
If Mr. DiPascali fails to adhere to the restrictions of the proposed bail application, his
mother, his wife, and his two oldest children will be financially ruined and their earning potential
will be permanently destroyed. Nonetheless, they trust Mr. DiPascali to honor the proposed bail
A tenth financially responsible person ("FRP 10"), a relative of Mr. DiPascali's wife, has
agreed to pledge assets in support of Mr. DiPascali's bail application. Since 2006, he has been
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part-owner of three businesses. Like Co-Signors 1 through 4, he has known the DiPascalis for
FRP 10 has agreed to pledge his 401k retirement account (approximately $1,000,000) to
secure the $10 million bond. Aside from his 401k account, FRP 10 owns approximately
partnership assets. He has never received money from Mr. DiPascali and has not relied on him
If Mr. DiPascali fails to adhere to the restrictions of the proposed bail package, FRP 10
will lose approximately 50% of his net worth -- and substantially all of his savings. Nonetheless,
* * *
Ultimately, the nine co-signors and one individual who are prepared to secure Mr.
DiPascali's bond provide the most powerful moral suasion available over Mr. DiPascali and will
help ensure he does not flee. The nine people to whom Mr. DiPascali is closest in the world --
his immediate family and other close family members -- would be left impoverished and
homeless if Mr. DiPascali were to flee; another relative would be left without substantially all of
his savings; and, perhaps most significantly, Mr. DiPascali's two oldest children -- age twenty-
two and twenty-four -- would be crippled before their careers begin, and compelled to forfeit
their earnings for the rest of their lives. Accordingly, and as set forth in the initial Motions for
Reconsideration, the conditions of the proposed bail package present clear and convincing
10
Financial documents provided by FRP 10 are attached as Exhibit E.
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IV. The Court Should Adjourn Sentencing Until Mr. DiPascali's Cooperation Is
Complete
At the bail hearing on October 28, 2009, the Court asked the parties to consider whether
it may be appropriate to sentence Mr. DiPascali before his cooperation is complete. The Court
explained that if Mr. DiPascali were sentenced imminently and thereafter continued to provide
substantial assistance in the investigation and prosecution of others, the Government could
submit an application pursuant to Rule 35(b) requesting a sentence modification. After giving
much consideration to the Court's suggested approach, we respectfully submit that proceeding in
such a manner could irreparably prejudice Mr. DiPascali and deprive him of the opportunity to
prosecution," and whether he "has fully complied with the understandings specified in [the
Government never raised the possibility that it would ask the Court to sentence Mr. DiPascali
before his cooperation was complete. The plain language of the cooperation agreement makes
no mention of Rule 35; it contemplates that Mr. DiPascali's cooperation will be complete at the
time of sentencing. Indeed, Mr. DiPascali may well be in breach of the agreement if he does not
There can be no doubt that Mr. DiPascali already has provided substantial assistance to
the Government. Though most of the information Mr. DiPascali has provided to the Government
remains confidential at this time, some of the fruits of his assistance are public: information he
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provided contributed to the arrest of three individuals to date. The complaints against these
individuals relied, in part, on Mr. DiPascali. In United States v. O'Hara et al., No. 09-mj-20484
(S.D.N.Y.), the Complaint noted that "DiPascali has provided reliable information to the FBI that
has been corroborated by documentary evidence, evidence found on BLMIS computer systems
and/or storage devices, and information obtained from other witnesses." Further, we understand
that the Government is filing a sealed ex parte submission reflecting its expectations for Mr.
DiPascali's continued valuable cooperation. Accordingly, we believe that under the terms of the
cooperation agreement, the assistance Mr. DiPascali already has rendered and that which he will
render in the future would require the Government to move for a sentence reduction pursuant to
If Mr. DiPascali is sentenced before his cooperation is complete, he only can receive
credit for the remainder of his cooperation if the Government subsequently decides to move for a
sentence reduction pursuant to Rule 35(b). The Government, however, does not have a
contractual obligation to seek a further reduced sentence under Rule 35(b). And, as the Court
well knows, a sentencing reduction under Rule 35(b) can only be made "[u]pon the government's
motion." Rule 35(b)(1). Furthermore, Mr. DiPascali cannot compel the Government to file a
Rule 35(b) motion on his behalf. United States v. Defeo, 2008 U.S. Dist. LEXIS 49469
(S.D.N.Y. June 24, 2008) (the Government may refuse to file a Rule 35(b) motion unless that
United States v. Leonard, 50 F.3d 1152, 1157 (2d Cir. 1995) ("[W]here a plea agreement
provides that the government will file a 5K1.1 motion if it determines that the defendant has
provided substantial assistance, . . . the government [must] live[] up to its end of the bargain"). If
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the Court sentences Mr. DiPascali before his cooperation is complete, Mr. DiPascali may be
Accordingly, we respectfully submit that the Court should defer Mr. DiPascali's
sentencing until the Government determines, in good faith and pursuant to the cooperation
35(b) motion. At least one Circuit Court of Appeals has held that it is improper to evaluate a
5K1.1 motion with the expectation that a Rule 35(b) motion will follow. In United States v.
Awad, 371 F.3d 583 (9th Cir. 2004), the United States Court of Appeals for the Ninth Circuit
specifically determined that "the possibility of Rule 35(b) relief in the future cannot influence the
government's or the district court's decision at sentencing about § 5K1.1 relief," and held that the
lower court's "decision to sentence in the face of an incomplete § 5K1.1 motion undermined the
clear temporal framework established by the interplay of § 5K1.1 and Rule 35(b)." Id. at 587,
589.
Sentencing Mr. DiPascali before his cooperation is complete exposes him to additional
prejudice if he is sentenced later under Rule 35(b). Courts have consistently rejected Rule 35(b)
motions for post-sentencing cooperation that is anticipated at the time of sentencing. For
example, in United States v. Gangi, 881 F. Supp. 820 (E.D.N.Y. 1995), the defendant received a
sentence reduction pursuant to 5K1.1. Id. at 823. Although the defendant continued to
cooperate after sentencing, the court later denied the Government's Rule 35(b) motion because
the defendant's post-sentencing cooperation had been "anticipated" pre-sentencing even though
"the prosecution may not have fully debriefed Gangi as to his knowledge of these individuals and
their past events at the time of the original sentencing." Id. at 825. See also United States v.
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Rasco, 1991 U.S. Dist. LEXIS 10365 (S.D.N.Y. July 26, 1991) (the defendant received a
sentence reduction pursuant to 5K1.1 and could not compel the Government to make a Rule
In this case, if Mr. DiPascali's sentencing is not adjourned, the Government will be forced
to file an incomplete 5K1.1 motion at sentencing. Mr. DiPascali could subsequently be denied
an additional sentence reduction if either the Government decides to not file a Rule 35(b) motion
or the Court determines that Mr. DiPascali's post-sentencing cooperation was "fully anticipated."
Finally, Mr. DiPascali also might be prejudiced in the future if the sentencing judge
determines that Rule 35(b) is inapplicable by its plain language. Rule 35(b) is designed to
reward defendants who provide "new information" after sentencing, not for cooperation provided
before a plea is entered. Under Rule 35(b)(1), "[t]he court may reduce a sentence if the
another person." Rule 35(b)(2) is limited only to information that is (1) unknown before one
year after sentencing, (2) not useful to the Government before one year after sentencing, or (3)
that could not have been anticipated as useful before one year after sentencing. See Rule
35(b)(2).11 To the extent Mr. DiPascali already has provided substantial assistance to the
Government at the time of his sentencing, he could find himself cooperating for years after he is
11
Rule 35(b)(3) permits the Court to consider pre-sentencing cooperation in connection
with a post-sentencing Rule 35(b) motion for a reduced sentence; however, pre-sentencing
cooperation cannot be included in a Rule 35(b) analysis if the sentencing court has already
reduced the defendant’s sentence pursuant to 5K1.1. See Gangi, 881 F. Supp. 820 (Rule 35(b)
motion was denied because post-sentencing cooperation was anticipated pre-sentencing); Rasco,
1991 U.S. Dist. LEXIS 10365, at *7-8 (defendant who benefited from 5K1.1 motion could not
have compelled Government to make Rule 35(b) motion where post-sentencing testimony was
"fully anticipated" by the sentencing court).
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