The opinion of the court was delivered by: DITTER
Charged in a three count criminal information, Vincent T. Improto, president of Local Union No. 830 of the International Teamsters, Chauffeurs, Warehousemen and Helpers of America (Local 830),
was convicted by a jury on one count of violating section 209(b) of Title II of the Labor-Management Reporting and Disclosure Act (LMRDA), 29 U.S.C. § 439(b),
for signing and filing a materially false LM-2 for 1980. Form LM-2 is an annually required disclosure statement to the United States Department of Labor reflecting, inter alia, monetary disbursements by a union to its business agents and officers.
Viewed in the light most favorable to the Government, as the jury's verdict requires, the evidence showed that the 1980 LM-2 filed by Local 830 and signed by Improto was materially false because it failed to report that payments of $ 60 each week by the union to its business agents for union expenses were kicked back to Gordon G. Grubb, secretary-treasurer of the union. Rather than reporting the expense money as indirect disbursements to Grubb, the LM-2 listed these payments as disbursements to the business agents. The testimony of the ten business agents and Matilda Garczynski, Grubb's secretary, revealed that each week, Garczynski would cash the agents' paychecks, hand them the money including the $ 60 allotted for expenses, and then collect the $ 60 for Grubb.
Upon receipt of the $ 60 from each agent, Garczynski noted payment on a list she kept.
There was no suggestion that Improto asked for or received any of the money in question-or that he required any of the business agents to pay it to Grubb. Because he knew of the payments to Grubb and signed the 1980 LM-2 which failed to report them, Improto violated section 439(b).
Improto has filed motions for judgment of acquittal, arrest of judgment, and for a new trial. Although there is little precedent for the issues raised by this unique fact pattern and Improto's arguments find some support in the relevant legal authority, I am compelled by the purpose of the LMRDA and the caselaw as it applies to these facts to deny defendant's motions.
Improto asserts he is entitled to judgment of acquittal because under the law and the evidence the money Grubb received came from the business agents and not from the union. In short, Improto contends that the LM-2 for 1980 was correct because the union was not required to report money paid to Grubb from sources other than the union itself and here the money came from the business agents individually.
Improto contends, however, that this is precisely the result compelled by the Uniform Commercial Code and the evidence. According to Improto, I should have ruled as a matter of law the union disbursed the money to the business agents and that the LM-2 was therefore correct. It follows, of course, according to this argument, that it was error to submit to the jury the question of whether the agents or the union had title to the money that was paid to Grubb.
Defendant is incorrect that the question of who had title to the money was for the court to decide as a matter of law.
"Whether an item is (union) property is ordinarily a question of law, and when the facts so establish, it is proper for the court to give such an instruction." United States v. Miller, 520 F.2d 1208, 1211 (9th Cir. 1975) (emphasis supplied). Although the basic facts were not in dispute, the ownership of the money was the key issue in the case and depended upon inferences to be drawn by the jury. As stated in my instructions, evidence showing the money was the union's included: the relationship between the size of the payments from the union to the business agents and the size of the payment to Grubb; the frequency and regularity of the payments; the number of business agents who made payments to Grubb; the position of power which Grubb held over each business agent, i.e., the power to hire or fire; the involuntary nature of the payments, if they were involuntary; the amount of time the business agents actually had the money in their possession; the fact that the so-called "expense money payments" continued even when the business agents were on vacation; the fact that when the amount of expense money paid to the business agents increased, the payment to Grubb also increased; the fact that all transactions were in cash; and the fact that a union employee, Grubb's own secretary, took the money from each business agent, kept a record of the payments, and handed the money to Grubb. Further support for the jury finding, although not mentioned in my instruction, was that each paycheck received by a business agent was a lump sum representing his salary less deductions, plus expense money. The salary was the business agent's compensation. Because the expense money purportedly was paid to the agents to use for union purposes, it was always union money until spent for union purposes. Thus, the payments to Grubb were of union monies, never the money of the agents. On the other hand, there was evidence upon which the jury could have found the money given to Grubb was the agents' own. This evidence included the testimony of some agents that they felt the money was coming from their own pockets; the fact that even though the payments to Grubb stopped, the business agents continued to receive money for expenses from the union; and the voluntary nature of the payments; if they were voluntary. In the face of such conflicting evidence, the question was properly left for the jury. See note 6 supra.
I reject the strict Uniform Commercial Code analysis advanced by Improto that as soon as the agents' checks were cashed, a disbursement to the agents occurred because the union lost all dominion and control over the assets represented by the checks, and likewise suffered a diminution of its cash assets. See United States v. Budzanoski, supra, 462 F.2d at 451; 13 Pa.C.S.A. §§ 3603(a), 3604(a), 3802(a)(2) (Purdon 1981). First, to adopt such a rigid analysis in this case frustrates the purpose of the LMRDA to insure that all financial transactions of the union and its officers are disclosed to union members so they can root out questionable practices of union officers.
Second, United States v. Budzanoski, supra, offers no salvation to Improto. Budzanoski makes the point that when the payees received their checks, a disbursement occurred to them, and the union no longer exercised control over the funds. Our case, however, is different. Even though the business agents received the funds, the union, via Grubb, continued to exercise control over the money through, 1) Grubb's position of authority in the union, i.e., the power to hire and fire, continue or discontinue the payments, 2) the continuous nature of the transaction, payment and then immediate return of the money, and 3) the fact that Grubb's secretary cashed the checks and received the money immediately. Notwithstanding the above evidence, Improto speaks of the union losing control over the funds. Actually, Grubb was the union. He controlled it in every respect, and it did what he said. When Grubb told the business agents to give him the expense money, the agents had no choice but to comply. To argue, therefore, that the union/Grubb lost control over the funds in favor of the business agents due to the intricacies of commercial law belies reality. It simply does not follow that every time someone gets a check, the payor relinquishes control of the funds which the check purports to represent. For reasons stated above, ours is the classic non-relinquishment case.
Further arguing for acquittal, Improto contends the Government's proof was insufficient because there was no evidence defining the monies received by Grubb as "indirect disbursements," the term charged in the information. Asserting the Government was required to prove the payments by the business agent to Grubb were indirect disbursements as an essential element of the crime charged, Improto posits that the Government's failure to do so necessitates the court grant judgment of acquittal. Although I agree that no evidence was introduced defining "indirect disbursement,"
I do not agree with Improto's conclusion. In charging Improto with violating 29 U.S.C. § 439(b), the Government was required to prove the following things beyond a reasonable doubt:
1. that the defendant knew Grubb was getting money from the union which the business agents had received as expense money;
2. that the defendant knew the payment of these monies to Grubb had to be reported on the 1980 LM-2, and
See N.T. 4-62 to 4-63; United States v. Ferrara, 451 F.2d 91, 96-97 n.10 (2d Cir. 1971) cert. denied, 405 U.S. 1032, 92 S. Ct. 1291, 31 L. Ed. 2d 489 (1972). Simply stated, the Government was not required to prove that monies received by Grubb were indirect disbursements.
A similar argument was raised and rejected in United States v. Bath, 504 F.2d 456 (10th Cir. 1974). In Bath, the defendant was convicted of violating section 439(b) because the LM-2 falsely reported $ 17,730. as strike benefits to members, when in reality, the money at issue was a strike expense paid to hired pickets. Arguing that the Government's proof failed because it had not shown the money could only have been properly reported under "Other Disbursements" as charged on the indictment, Bath urged his conviction could not stand. In disagreeing with Bath and refusing his motion, the Court of Appeals for the Tenth Circuit dismissed his contentions with reasoning that is applicable in this case. First, it interpreted Bath's reading of the indictment as overly technical and as ignoring the import of the charges against him. The essence of the charge against Bath was that he "knowingly reported the money as having gone to members on strike when it was actually used to pay hired pickets." Bath, supra, 504 F.2d at 459. The same reasoning applies here. The essence of the charge against Improto was that he knowingly reported the money as having gone to the business agents for union expenses when he knew it was actually being given to Grubb. As stated in Bath, supra, to require the government to prove the money was an indirect disbursement to Grubb, "unnecessarily defeat(s) the purpose of the LMRDA to insure that union officers accurately report to union members the details of all disbursements of union money." Bath, supra. Second, the Bath court reasoned that even if it adopted Bath's reading of the indictment, the Government's failure of proof need not be fatal to Bath's conviction. Bath, supra, 504 F.2d at 459 n.2. "It is not essential that everything in an (information) be proved. It is only necessary to prove so much thereof as establishes, prima facie, that there has been a violation of the statute involved." Bath, supra, quoting United States v. Archer, 455 F.2d 193, 194 (10th Cir.), cert. denied, 409 U.S. 856, 93 S. Ct. 135, 34 L. Ed. 2d 100 (1972). In this case, the government met its burden as described in Bath and Archer.
I also reject Improto's challenge to my instruction regarding "indirect disbursement". My instruction, in ...