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UNITED STATES v. MANGIARDI

April 21, 1997

UNITED STATES OF AMERICA
v.
PAUL J. MANGIARDI, ERIC K. MANGIARDI, and WALTER REGULA, Defendants



The opinion of the court was delivered by: MCCLURE

 April 21, 1997

 BACKGROUND :

 On September 21, 1995, a grand jury sitting in the Middle District of Pennsylvania returned an indictment charging defendants Paul J. Mangiardi, Eric K. Mangiardi, and William J. Contino with conspiracy (1) to commit mail fraud, (2) to conduct financial transactions with the proceeds of unlawful activity (the mail fraud) to promote the carrying on of the unlawful activity, and (3) to conduct financial transactions with the proceeds of unlawful activity (the mail fraud) to conceal or disguise the proceeds of the unlawful activity. The indictment also sets forth fifteen substantive counts of mail fraud.

 On June 18, 1996, in conjunction with a plea agreement, the government filed a superseding information charging Contino with conspiracy to commit mail fraud. Contino entered a plea of guilty to the charge on July 19, 1996, and is awaiting sentencing.

 On August 28, 1996, a grand jury sitting in the Middle District of Pennsylvania returned a superseding indictment charging defendants Paul J. Mangiardi, Eric K. Mangiardi, and Walter Regula with: conspiracy (1) to commit mail fraud; (2) to conduct financial transactions with the proceeds of unlawful activity (the mail fraud) to promote the carrying on of the unlawful activity; (3) to conduct financial transactions with the proceeds of unlawful activity (the mail fraud) to conceal or disguise the proceeds of the unlawful activity; (4) to make false, material statements to agents of a federal agency; and (5) to obstruct justice. The superseding indictment also sets forth fifteen substantive counts of mail fraud.

 The defendants named in the superseding indictment all have entered pleas of not guilty, and jury selection currently is scheduled for October 9, 1997.

 A number of pre-trial motions by the parties have been addressed by separate memorandum and order. Before the court is a motion by Eric K. Mangiardi to dismiss in part Count One of the indictment for failure to state an offense; the motion is now applicable to the superseding indictment.

 DISCUSSION :

 Succinctly stated, the superseding indictment charges defendants with operating corporate entities in a fraudulent manner. They offered plans purporting to comply with the Employee Retirement Income Security Act (ERISA), as amended, 29 U.S.C. ยงยง 1001 et seq., which in fact did not comply with ERISA. Instead, among other things, money from various employers was pooled (as opposed to ensuring that the plans were self-funded), and the plans were dangerously under-funded. As a result, numerous individuals and employers were injured.

 Eric K. Mangiardi moves to dismiss Count One of the superseding indictment to the extent it relates to the Pennsylvania Insurance Department. As relevant, the superseding indictment provides:

 
From on or before January 1988, and continuing through on or about May 11, 1993, in Williamsport and South Williamsport, Lycoming County, within the Middle District of Pennsylvania and elsewhere, the defendants,
 
PAUL J. MANGIARDI
 
ERIC K. ...

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