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By Matthew Russell Lee, Patreon

SDNY COURTHOUSE, Aug 27 – Isidore Handler, Martin Handler, Menachem Lieberman, Harold Schwartz and Ben Werczberger were indicted and then presented on January 11 before U.S. District Court for the Southern District of New York Magistrate Judge Robert W. Lehrburger.

Inner City Press was there, the only media in the Mag Court. There was an argument about the defendants phones being searched, see below.

  The charges include wire fraud, theft of government funds, aggravated identity theft and money laundering.

On August 31, a change of plea (to guilty) hearing was docketed: "ORDER as to Isidore Handler: The Court has been informed that Defendant Isidore Handler may wish to enter a change of plea."

He did, and on February 16, 2024 Isidore Handler asked for a non-custodial sentence.

On March 7, it emerged that the lead defendant is to plead guilty: "ORDER as to (23-Cr-00004-1) Martin Handler. The Court has been informed that Defendant Martin Handler may wish to enter a change of plea. Accordingly, on Tuesday, March 12, 2024 at 10:15 a.m., a plea proceeding will take place... (Signed by Judge Jennifer H. Rearden on 3/7/2023)."

This was pushed back to March 15 at 10:30 am. Inner City Press went, see

Ok - now at guilty plea of Martin Handler. 

AUSA: He needs to be arraigned on the S-2 indictment first.

The plea deal is to tax evasion. 

Handler: ... On counts 5 and 7, from for profit day care NY Early Learning Co., I misapplied more than $5000...On the superseding information, I claimed charitable deductions for funds that weren't given until later. I am sorry.

 Then they went back to the S-2 indictment...

On July 22, with Arie Rangott on trial, Judge Rearden addressed his request to cross examination CW-1 about a divorce proceeding more than ten years ago, and a night the witness spent in the jail. Judge Rearden denied the request, or to put it another way, precluded that cross. She asked the sealed filings highlight in the copy to Chambers what is being withheld from the public. In this case, the US Attorney's Office's filings, too, have a many redactions.

On July 23, the prosecutors played for the jury voice notes between Rangott and Isidore Handler, about installing Chelsea in the financial position previously held by Sarah, and showing Head Start paperwork to back it up. And so it proceeds.

On July 24 it emerged that Chelsea will be the US' next witness, after Peralta. There is a pending motion for a defense witness.

On July 25 Chelsea was on the stand, in person - not as she was initially interviewed, by Zoom. In the docket, we can now report, Rangott has raised the Supreme Court's decision in Fischer v US about 18 USC 1512...  Inner City Press remains on the case.

On July 29, cooperator Schwartz was on the stand, describing how he was CEO in name only, and that he knew that it was wrong. Isidore Handler's photo was shown to the jurors...

On July 30, Sara Newman was on the stand, looking at herself being quoted from a meeting she said never, in fact, occurred...

At the end of the trial day on July 31, the jury charge was debated, from a question of multiple conspiracies (with Second Circuit case law cited) to Ragott opposing a "conscious avoidance" jury instruction - or in the alternative, wanting it emphasized the good faith would be an absolute defense.

On August 2, Arie Rangott was found guilty by the jury on all three counts. Sentencing set for 12/10/2024 at 11:30 AM before Judge Jennifer H. Rearden

On August 27 for Ben Werczberger, counsel wrote in asking for time served when he is sentenced on September 10 at 11:30 am.

The indictment, while ordered unsealed on January 11, was still not in PACER - in its place were two copies of the order to unseal. Inner City Press has obtained and published it on its DocumentCloud, here. 

Docketed on April 15, another co-defendant now intends to plead guilty: "ORDER as to Ben Werczberger. The Court has been informed that Defendant Ben Werczberger may wish to enter a change of plea. Accordingly, on April 18, 2024 at 2:15 p.m., a plea proceeding will take place (Signed by Judge Jennifer H. Rearden."

Summary: They are charged with participating in schemes to steal millions of dollars from government-funded childcare programs for low-income families, including by stealing proceeds from a fake after-school program that received millions in funding and by using funds to purchase private real estate, items at auction, and a luxury vehicle.

  The defendants were ordered released on bond on January 11.

There was an argument about phones seized from the defendants. Defense counsel wanted to litigate before any search warrant can be obtained. But Assistant US Attorney Daniel Wolf said the issue wasn't ripe, that they could move to suppress later. 

 Judge Lehrburger recommended that defense counsel write a letter to the assigned District Judge Jennifer H. Rearden.

On January 18, they did, arguing that "the government has not set forth the basis for the agents' belief that - at the time of the seizure - they had probable cause to believe that these specific phones contained evidence of criminality." And some phones, they say, were not in plain view. Motion on Patreon here

On January 19, Judge Rearden held the arraignment, and moved on to trial date. Inner City Press thread here, more on Patreon here

On March 14, 2023, the US Attorney's Office docketed redacted letters as to Martin Handler and Martin Lieberman, asserting their lawyers have conflicts of interest - that could be waived - with the blacked out material said to "address ongoing non-public matters before the grand jury."

On March 16, Judge Rearden ordered: "ORDER as to Martin Handler, Menachem Lieberman. Defendant Martin Handler, his counsel, and the Government shall appear for a Curcio Hearing on March 22, 2023 at 11:00 a.m. Defendant Menachem Lieberman, his counsel, and the Government shall appear for a Curcio Hearing on March 22, 2023 at 2:00 p.m." Inner City Press asked in its March 16 story, Can they hold a Curcio hearing which does not disclose the conflicts?

  Almost, is the answer. Inner City Press attended and covered both Curcio hearings on March 22. The 11 am, or Menachem Lieberman, when smoothly: he waived the conflict. But at 2 pm, Martin Handler's lawyer contested several of the questions - and then argued that the Court cannot order her client to speak to another lawyer. Judge Rearden asked for a letter by 5 pm on March 23 before she issues an order.

At the end, the AUSA asked to redact the transcript, as the name of one of the companies was said. Inner City Press heard it and wrote it down, but is voluntarily not reporting it here.

On the afternoon of March 23, Handler proposed his own Curcio counsel, citing Supreme Court precedent on a defendant's right "to choose who will represent him."

On March 23, the US Attorney's Office responded that the Court should question the counsel Handler has proposed. Then it separately reported on cellphones, some of which it has still been unable to decrypt or extract.

On March 30, Judge Rearden ordered: "ORDER as to Martin Handler: Martin Handler's application to retain Stacey Richman as independent Curcio counsel, ECF No. 74, is GRANTED. Mr. Handler, his counsel, his independent counsel, and the Government shall appear ... on April 11, 2023 at 10:30 am to continue the March 22, 2023 Curcio hearing."

  Inner City Press was there. Midway through the more than an hour hearing, Handler said he couldn't or wouldn't waive the right to cross examine employees of the two entities. His lawyer added that is not what in her understanding the law or ethics requires - only that information gained in the previous representation cannot be used. It emerged that both entities in the last 24 hours provided waivers. But the AUSA sought and got a question on that these waivers are not necessarily forever. After all this, a knowing acceptance of the (possible) conflict was found, and the case proceeds.

On April 18, all defendants and their counsel were before Judge Rearden. The defense requested a trial date in mid May 2024 but Judge Rearden said that was too far off. One has a conflict in EDNY in March; Judge Rearden asked for emailed about other dates in the first     quarter of 2024.

Watch this site.

Inner City Press will continue to cover this case.

The case is US v. Handler, et al., 23-cr-4 (Rearden)

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