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UNITED STATES v. COHEN

July 18, 1978

UNITED STATES of America
v.
Robert Baer COHEN and Reynold Yannessa



The opinion of the court was delivered by: BECHTLE

MEMORANDUM AND ORDER

Defendants Robert Baer Cohen ("Cohen") and Reynold Yannessa ("Yannessa") were charged in a 20-count indictment with violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 Et seq., and a series of other crimes which formed the pattern of racketeering activity upon which the RICO charges were based. *fn1" On March 23, 1978, after a joint trial which lasted three weeks, the jury returned a verdict of guilty against Cohen on eleven of the thirteen counts in which he was charged. He was acquitted on Counts 5 and 11. Yannessa was found guilty on all counts in which he was charged.

 Presently before the Court are Cohen's motions for judgment of acquittal, a new trial and in arrest of judgment, pursuant to Fed.R.Crim.P. 29(c), 33 and 34, respectively; and Yannessa's motions for judgment of acquittal or a new trial, pursuant to Fed.R.Crim.P. 29(c) and 33, respectively. For the reasons stated below, each of the defendants' motions will be denied.

 A summary of the evidence presented at trial will be helpful to an understanding of this Opinion: *fn2" The School District of Bensalem Township ("School District"), in Bucks County, Pennsylvania, is the municipal body concerned with the administration of the system of public education within Bensalem Township. The Board of School Directors of the School District of Bensalem Township ("School Board"), an enterprise affecting interstate commerce, manages the operation of the public schools in the School District by establishing, equipping, furnishing and maintaining elementary and high schools and related facilities, and by exercising other powers, rights and privileges on behalf of the citizens and approximately 7,000 students of the School District. Cohen, an attorney and partner in the Philadelphia Law firm of Abrahams and Lowenstein, served the School Board as its solicitor from June, 1972, to the date of the indictment in October, 1977. Yannessa, a deputy sheriff in Bucks County from May, 1971, to January, 1977, was a member of the School Board, serving at various times as its President, Vice-President and member of the Building and Grounds Committee. One of the functions of the Building and Grounds Committee was the consideration and review of architectural firms seeking appointment by the School Board to design and supervise construction of public schools and related projects to be built by the School District. The need to design and construct three school facilities in Bensalem Township set into play the various events that ultimately resulted in the jury's verdict against these defendants. Those three school building projects are: (1) the Valley Elementary School ("Valley"); (2) the Robert K. Shafer Middle School ("Shafer"); and, (3) the Russell C. Struble Elementary School ("Struble"). The evidence concerning these projects is as follows:

 THE VALLEY SCHOOL

 1. The Yannessa-Baldino Extortion

 In early 1971, architects Joseph B. Baldino ("Baldino") and Anthony Macaluso ("Macaluso") formed the firm known as Baldino and Macaluso, Architects ("BMA"), for the exclusive purpose of securing the architect's contract for the design and construction of Valley. On July 31, 1971, Baldino and Macaluso met with Yannessa and Dr. James Bardsley, Jr., another School Board member, to discuss, Inter alia, the amount of money which would be necessary for BMA to pay to certain School Board members in exchange for their influence in helping BMA receive appointment as the architect for Valley. The architect's fee for the design and construction of Valley was $ 150,000, that amount being 6% Of $ 2,500,000, the projected cost of Valley. Although Yannessa initially demanded 10% Of the architect's fee in return for assuring that BMA would be appointed to the Valley project, he and Baldino later agreed to settle for a "kickback" to Yannessa of 8.5% Of the architect's fee, or $ 12,750. *fn3" However, on October 7, 1971, the School Board, at a "meeting of the whole," decided in an unrecorded, informal "straw vote" to appoint the more experienced architectural firm of Valente and Klaus for Valley. Unaware of this proposed appointment of another architect, on October 21, 1971, Baldino assembled $ 500 in "seed money" to give to Yannessa "up front" as a sign of BMA's good faith. The School Board ultimately did not appoint Valente and Klaus for Valley and, after reconsideration of the other 13 recommended architects, did appoint BMA for Valley in November of 1971.

 Once the School Board officially awarded the Valley contract to BMA, Yannessa demanded and received from Baldino numerous payments in accordance with his "kickback" agreement with Baldino. Baldino maintained detailed records of these transactions with Yannessa (G-10A-D), which listed the dates the monies were assembled, the amount of the payments and the numbers of the checks used to assemble the monies. The procedure normally followed in the making of these payments was that Baldino would submit invoices to the School Board as each phase of the Valley project was completed (G77-82), and the School Board would then authorize payment of the architect's fees to BMA. Part of each payment received by BMA was thereafter given by Baldino to Yannessa. For example, on May 18, 1972, the School District paid $ 36,000 to BMA for the Valley Schematic Phase Fee (G-77), $ 5,000 of which was subsequently given to Yannessa as partial payment under the "kickback" arrangement (G-10B). Again, on September 21, 1972, the School District approved for payment $ 42,976 to BMA for architect's fees (G78-80), $ 5,000 of which was subsequently paid by Baldino to Yannessa (G-10B). Baldino always made these payments to Yannessa by personally handing Yannessa the cash. These payments to Yannessa were usually made in Baldino's car in the parking lot of the Penn Sheraton Hotel in Fort Washington, Pennsylvania. On May 31, 1973, Baldino paid the last Valley "kickback" to Yannessa in the amount of $ 9,400, for a total of $ 25,000 in "kickbacks" to Yannessa, or 10% Of the total architect's fee received by BMA in connection with the Valley project (G-10B). None of these payments to Yannessa were recorded as income on Yannessa's federal income tax returns for the years 1972 or 1973 (G-247).

 THE SHAFER SCHOOL

 1. The Yannessa-Baldino Extortion

 In December, 1972, before construction started on the Valley project, Yannessa met with Baldino to discuss the prospect of BMA being appointed as the architect to design and supervise construction of Shafer. The architect's fee for the Shafer project was $ 270,000, that amount being, again, 6% Of the projected cost of Shafer, which in this instance was $ 4,500,000. Yannessa demanded 10% Of the architect's fee in exchange for the use of his vote and his influence, with other School Board members, to cause the School Board to appoint BMA as the Shafer architect. He also demanded an additional 1% Of the architect's fee for himself. On January 11, 1973, Dr. Sanzotto, Superintendent of the School District, wrote to BMA to announce that the School Board had appointed BMA as the architect for the Shafer project (G-71), even though Sanzotto was "shocked" and "amazed" at the sudden selection of BMA, in light of numerous problems involving BMA developing at Valley. From January 26, 1973, to approximately April 12, 1974, Baldino paid Yannessa, under the Shafer arrangement, a total of $ 14,700, which total was comprised of $ 12,750 for the 10% "kickback" and $ 1,950 for the additional 1% For Yannessa (G-10D; See G38-59; G-83-85). None of these payments to Yannessa were recorded as income on Yannessa's federal income tax returns for the years 1973 or 1974 (G-247).

 At trial, Yannessa attacked the credibility of Baldino by calling witnesses who testified that Baldino had a poor reputation in the community for truth and honesty and by cross-examining Baldino with respect to his cooperation with the Government in exchange for being granted immunity. Specifically, Yannessa vigorously questioned Baldino about the accuracy and authenticity of the detailed records of his transactions with Yannessa (G-3 and G-10A-D). Yannessa introduced evidence that he had taken an active role in the design and construction of Valley and Shafer, and had argued with Baldino numerous times in regard to the resolution of problems developing on the construction sites. Yannessa also introduced evidence of a growing animosity between Baldino and Yannessa in June of 1975, when Yannessa sought to have the School Board terminate Baldino's contract on the Shafer job (DY-6).

 2. The Cohen-Baldino Extortion

 Cohen became involved when Baldino met with Cohen to discuss alternative arrangements for payment. Cohen and Baldino agreed that Baldino would make subsequent "kickbacks" related to Shafer to Cohen, who would then distribute the money to those School Board members involved in the scheme. Baldino testified that on August 8, 1974, he gave Cohen $ 4,250 in cash in an elevator in the building in Philadelphia where Cohen's law office was located in the hope of salvaging the reputation of BMA with the School Board.

 3. The Cohen-Chorlton Extortion

 BMA was rapidly losing favor with members of the School Board because of problems connected with the architect's role that were developing at Valley and Shafer. For example, in July of 1973, the Valley project was delayed partly because of a surveying error (DC-1, 2). Further, BMA was unable to secure preliminary approval from the Pennsylvania Department of Public Education of its plans for the design and construction of Shafer (DC-5; DC-7-12). Finally, on June 11, 1975, the School Board terminated Baldino's contract for the Shafer project and paid BMA a termination settlement sum of $ 2,500 for expenses incurred by BMA as a result of this termination.

 When it became apparent that the School Board planned to terminate its Shafer contract with BMA, Cohen called William B. Harvey ("Harvey"), owner of the consulting-engineer firm of Van Note-Harvey, to determine whether the architectural firm of Richard J. Chorlton, Associates ("Chorlton"), would be interested in finishing the Shafer project, in view of the work Chorlton had performed on the Struble school. However, Cohen conditioned the award of the Shafer contract to Chorlton upon a 10% "kickback" of the architect's fee by Chorlton to Cohen (N. T. Harvey 34). When advised of this, Chorlton agreed to the payment of the "kickback" but was unwilling to advance one-third of the "kickback" as required by Cohen (N. T. Harvey 34). Cohen thereafter agreed to take a lesser amount (N. T. Harvey 35). After Chorlton gave Harvey the payment in cash, Harvey delivered the cash to Cohen at Cohen's home in Philadelphia (N. T. ...


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