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By Matthew Russell Lee, Patreon, thread

SDNY COURTHOUSE, August 1– Two REIT executives were arraigned on charges of fraud involving shopping malls on August 1 before U.S. District Court for the Southern District of New York Chief Judge Colleen McMahon. Brixmor CEO Michasel Carroll put up as collateral for $1 million bail his $5 million apartment in Manhattan.

  Co-defendant Michael Pappagallo's Connecticut house was valued at $850,000 but served to security his $1 million bond. Unlike most defendants in the SDNY both were allowed to travel around the country without pre-approval (Paul Manafort's banker Stephen Calk got this treatment too).

  Judge McMahon said discovery, approximately 250,000 documents, is due by the end of August and the parties will reconvene on November 5 after what should be for Judge McMahon of day of presiding over a trial. But much can happen by then. Two other co-defendants have pled guilty, each before a different SDNY judge. From the US Attorney's press release: "Steven Splain, 57, of Cheshire, Connecticut, pled guilty on July 16, 2019, before United States District Judge Vernon S. Broderick to one count of conspiracy to commit securities fraud and to make false filings with the SEC, and one count of securities fraud.  The conspiracy charge carries a maximum prison term of five years and the securities fraud charge carries a maximum prison term of 20 years.     Michael Mortimer, 49, of Yardley, Pennsylvania, pled guilty on July 10, 2019, before United States District Judge Valerie E. Caproni to one count of conspiracy to commit securities fraud and to make false filings with the SEC, and one count of securities fraud.  The conspiracy charge carries a maximum prison term of five years and the securities fraud charge carries a maximum prison term of 20 years."

  Inner City Press will follow this and other cases in the SDNY, like the one(s) below. Watch this site.

Near the end of the now-concluded criminal ERISA trial that began with jury selection and an argument to quash subpoenas, on July 25 the government in its summation acknowledged that its witness Zeynep Ekemen not only was arrested for shoplifting and lied to them about being a US citizen but also was unfaithful to her husband with the defendant. But Ekemen, who participated in the scheme but got a non prosecution agreement, is not mentioned in the U.S. Attorney Press release celebrating a victory that was only announced this way, with no exhibits uploaded: "Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that a federal jury found SHIVANAND MAHARAJ guilty of honest services wire fraud, paying kickbacks in connection with an employee benefit plan, and conspiracy, following a two-week trial before U.S. District Judge John G. Koeltl.  MAHARAJ’s co-conspirator, ENRICO RUBANO, a/k/a “Rick Rubano,” who was a director of information technology at a large union pension and health benefit fund (the “Funds”), pled guilty in connection with the same crimes shortly before trial.     Manhattan U.S. Attorney Geoffrey S. Berman said:  “For years, Shivanand Maharaj bribed an insider at a pension and health fund to approve hundreds of invoices for information technology work that was never done at all.  He now stands rightly convicted for depriving hardworking individuals out of millions of dollars of health and retirement benefits.”     According to the allegations contained in the Indictment and evidence presented during the trial in Manhattan federal court:     From 2009 through 2015, RUBANO was the co-head of information technology for the Funds and had the authority to approve the payment of invoices from third-party vendors.  Beginning in at least 2009, and continuing through 2015, MAHARAJ and RUBANO devised a scheme in which three different companies MAHARAJ owned or controlled submitted to the Funds invoices for millions of dollars in information technology services that were never performed or that had, in fact, been performed by employees of the Funds or other vendors.  RUBANO, in his position as co-head of information technology, approved these fraudulent invoices and received kickbacks from MAHARAJ.  MAHARAJ, by submitting hundreds of invoices and recruiting another co-conspirator to receive additional criminal proceeds, fraudulently received in excess of $2 million through this scheme.    

MAHARAJ, 39, of Cresskill, New Jersey, was convicted of one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years; one count of giving kickbacks to influence the operation of an employee benefit plan, which carries a maximum sentence of three years; and conspiracy to give kickbacks to influence the operation of an employee benefit plan, which carries a maximum sentence of five years.     MAHARAJ will be sentenced by Judge Koeltl on December 6, 2019.     RUBANO, 50, of Tappan, New York, who engaged in additional kickback and fraud schemes with other co-conspirators, pled guilty to three counts of conspiracy to commit wire fraud, each of which carries a maximum sentence of 20 years in prison." So what about Ekeman? Why no exhibits uploaded? Why no notice when the jury came back with the verdict? We'll have more on this.

 The defense in closing called Ekemen a "cold hearted... shoplifter" whose testimony should be thrown in the garbage. The moment when Ekemen cried and said she had not gone to her father's testimony in Turkey not because she could not get back into the US but because she was sick in bed. How will the jury take it? Why did Ekemen get a non prosecution agreement? Where does it stand now? Watch this site.

On July 23 the defense put into evidence a document showing what appeared to be legitimate, non fraudulent information technology contracts. On July 24 the government responded by showing account statements of identical payments then transfers between defendant Maharaj, non-prosecution agreement Ms. Ekeman and Rick Rubano whose name remains on the case. $3085 dollars in, $3085 dollars out, referring to Government Exhibit 2024 which has still not been provided despite requests.

  Meanwhile the defense it trying to get introduced the independent contract agreement between Maharaj Holdings and Raval Snehal, saying it is non-hearsay.

  But again the real action was behind the scene: the defense has proposed giving the jury in redacted for a New Jersey court document about the credibility of the government's witness Ms. Ekemen.

 On page 9 of the document, surrounded by redactions, the judge wrote that "The court disbelieves that Ms. Ekemen ever expressed to Salameno or his counsel his purported claim that Duffy deserved to receive his compensation, of that if only she knew where Duffy had 'hung his shingle' he might have actually been paid the commission he was due. Rather, I find, she initiated the contact with the seller, as testified to by Salameno, in order to thwart Duff's commission. There are several areas of testimony that impacted negatively on Ms. Ekemen's credibility." And here?

  The government, AUSA Matthew Podolsky who is also on the Avenatti case, wrote that while it still objects to the introduction of DX 4009, it wants the jury to be told it is only admitted "for any relevance it may have in assessing Ms. Ekeman's credibility." The trial is wrapping up. Watch this site.

on July 22 a number of invoices to AFTRA Health and Retirement Fund were entered as government exhibits. A typical one was for $4000 from a company called Z Tech for work on two HP hard drives. Except that AFTRA has a service contract with HP, requiring replacement of these hard drives described as "hot swappable" in four hours or less, so why the outside contract? Still, were irregularities in these amounts, about computer invoices and not investments, what ERISA prosecutions were meant to be? Inner City Press has requested the exhibits and is still waiting, notice of eventual jury verdict too.

Earlier in the trial an audio recording of the defendant Shivanand Maharaj and cooperating witness Zeynep Ekemen was played was played for the jury while the transcript was shown on screens. Nearly all objections were overruled.

 But then Zeynep Ekemen was cross examined about her non prosecution agreement. Had she promised to tell the whole truth? Yes.

  Had she disclosed her arrest for shoplifting at the Short Hills mall in New Jersey? She had not. She said her lawyer told her it was expunged, "as if it never happened."

  Had she told that U.S. Attorney's Office for the Southern District of New York, which gave her the non prosecution agreement, that she is not a citizen? No she had not. She believed and still believes she is a citizen.

  But why, then, had she not gone back to Turkey when her father died there? At this, Ms. Ekemen cried. "I was in bed for a week," she said.

  The question was, was Maharaj's defense lawyer humanizing her for the jury? The jury took a break, and Inner City Press sitting where it could see the exhibits on the lone monitor visible in the gallery was asked to move and did.

  Even with the jury out of the room, the objections were made at a sidebar with the white noise turned up. More on Patreon, here. And now this, from the US Attorney's Office: "On July 19, 2019, the defense was permitted, without objection by the Government, to cross-examine Zeynep Ekemen regarding her involvement in a prior civil lawsuit in New Jersey Superior Court and the judge’s findings in which he did not credit portions of her testimony. (Trial Tr. 559:22-573:23.) No limits were placed on the extent of the cross-examination. During this cross-examination, the defense elicited that Ekemen lost the lawsuit and was required to pay punitive damages, but was not aware of the basis for the judge’s decision. Ekemen’s testimony was consistent with what she had told the Government years prior to trial. (See 3503-09.) This line of cross-examination into the prior findings of the New Jersey Superior Court was admissible under the caselaw of this Circuit, which permits, in certain instances, inquiry into prior adverse credibility findings. Most recently in United States v. White, the Second Circuit explained that, pursuant to Rule 608(b)’s dispensation for inquiry (only) into a prior instance of a witness’s conduct that is probative of the witness’s character for truthfulness or untruthfulness, trial courts may permit a witness to “be cross-examined based on ‘prior occasions when his testimony in other cases had been criticized by a court as unworthy of belief.’” 692 F.3d 235, 248 (2d Cir. 2012) (quoting United States v. Terry, 702 F.2d 299, 316 (2d Cir. 1983)).

 Inner City Press has asked for the exhibits, and to be informed as much in real time as possible regarding the outcome of jury deliberations, which sometimes does not happened in the SDNY. Watch this site.

Further on non prosecution agreements: in the docket of this ERISA case a lawyer who also came up the the Jeffrey Epstein bond hearing on was named: Ms. Sigal P. Mandelker. She was named as having played a role in and signed off on Epstein's non-prosecution agreement in Florida. In the ERISA case it was she, as a Proskauer partner, who conducted the investigation that the firm is now seeking to withhold from the defense, see below.

An overarching question in the case is whether if a person in charge of information technology or computers for a retirement plan is accused of taking kick backs, does it violate the ERISA statute? The issue arose as an argument to try unsuccessfully to postpone the July 15 trial in before U.S. District Court for the Southern District of the New York Judge John G. Koeltl back on June 11. The request was triggered by a superseding indictment including new counts.

 The defense lawyer for Shivanand Maharaj, Henry E. Mazurek (whom Inner City Press readers may remember from the US v. Pinto-Thomaz trial) asked for time to brief the issue, posing as a hypothetical would a custodian or janitor who just happened to work at an ERISA retirement plan be covered?

 Judge Koeltl appears to believe the answer is yes, although he went to great pains to say he never decided an issue before it is fully briefed. The issue was fully brief by June 27. (After this, on July 12 Inner City Press was barred while SDNY Judge Victor Marrera charged "his" jury in US v. Kidd, here.)

  On July 15 after jury selection was finished, or almost finished, Edward J. Canter of Proskauer came to argue that AFTRA's internal investigation should not be given to the defense, as it is work product, covered by attorney client privilege. Judge Koeltl did not appear convinced, but rather than rule he allowed Canter to put in yet more arguments in a letter and invited the lawyers back at 8:45 am on July 16.

  On Sunday July 14 the government wrote to Judge Koeltl, trying to distinguish what fellow SDNY Judge Carter did, as "corrected" in a re-trail by Judge Hellerstein: "The Government respectfully writes regarding the argument raised by the defense, first in its requests to charge (see Dkt. No. 155 at 11, 28) and subsequently in open court, that an “outsider”—that is, a bribe payer—may be found guilty only of aiding and abetting another who engaged in an honest services fraud scheme, and not as a principal who engaged in such a scheme. This claim finds no basis in the relevant statutes, is contradicted by case law, and is wrong...The case relied upon by the defense in open court—United States v. Seabrook, No. 16 Cr. 467, is not to the contrary. Although it is true that Judge Carter’s jury instructions in that case required the jury to find that the outsider aided and abetted the scheme to defraud, in the context of that case, the Government did not object to such an instruction, and Judge Carter does not appear to have addressed the argument advanced by the defendant now.1...Although that trial ended with a hung jury, the briber payer subsequently pleaded guilty, and a second trial as to the bribe recipient proceeded to conviction before Judge Hellerstein." We'll have more on this.

  Inner City Press will continue covering this case, USA v. Rubano, 17-cr-169 (JGK). More on Patreon, here.

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