Saturday, January 19, 2013

Prosecutors In Never-Ending Fumo Case Back In Court Seeking To Extract Another $783,264 From Vince

By Ralph Cipriano
for bigtrial.net

The feds aren't done with Vince Fumo, not by a long shot.

The former state senator, now doing his 40th consecutive month in a Kentucky prison, has already paid $411,000 in fines and $3,435,548 in restitution, for a total of $3.8 million.

But prosecutors were back in the U.S. Court of Appeals on Friday morning Dec. 14th seeking to extract from Fumo another $783,264 in restitution.

"Mr. Fumo is the one who took all the money," argued Assistant U.S. Attorney Robert A. Zauzmer to a panel of three appellate judges for the Third Circuit. "This is someone who has all this money."

U.S. District Court Judge Ronald L. Buckwalter presided over Fumo's five-month trial that ended on March 16, 2009, when the former state senator was convicted by a jury of 137 counts of fraud, conspiracy, obstruction of justice and filing a false tax return.

The judge originally gave Fumo a 55-month sentence and ordered him to pay $411,000 in fines and $2.3 million in restitution. The prosecutors took the unusual step of appealing, saying that Judge Buckwalter's sentence was based on faulty math, and was too lenient. 

The prosecutors won their appeal, and Judge Buckwalter was ordered by the Third Circuit Court of Appeals to re-sentence Fumo. The prosecutors urged the judge to give Fumo at least 15 years, which defense lawyers said that at Fumo's age, then 68, it meant he would die in prison. But on Nov. 10, 2011, Judge Buckwalter increased Fumo's sentence by only six months, to a total of 61 months. Judge Buckwalter kept the fines levied against Fumo at $411,000, but he boosted restitution in the case from $2.3 million to $3.4 million -- an increase of $1.1 million.

When Buckwalter re-sentenced Fumo, U.S. Attorney Zane David Memeger told this reporter that prosecutors were finally done with the case, and, after an investigation that began in 2004, it was finally time to move on.

But on Dec. 4, 2012, the government filed another appeal with the U.S. Court of Appeals, Third Circuit, this time arguing that Judge Buckwalter had abused his discretion when he decided that $1,566,528 of the restitution owed in the case [to the Citizens Alliance for Better Neighborhoods] should be equally divided between Fumo and Ruth Arnao.

Arnao, former executive director of the alliance was convicted as a co-defendant with Fumo, and served a year and a day in prison.

In their appeal, the feds said that the 50-50 split on the $1.5 million in restitution, amounting to $783,264 each, was unfair because "Fumo conceived and directed the fraud, personally benefitted from over 96 percent of the fraud proceeds, and has a vastly superior ability to pay restitution."

A pre-sentence report said that Fumo was worth $11 million. In contrast, Zauzmer told the judges today that Arnao had a net worth of less than $100,000.

As part of her sentence, Arnao was ordered to pay her $783,264 in restitution at the rate of $1,000 a month. At that rate, it will take more than 60 years to repay the Citizens Alliance, Zauzmer said.

Why should the Citizens Alliance have to wait for their money when Fumo has plenty, Zauzmer argued.

"Mr. Fumo ran this scheme ... he put it all in his pocket," Zauzmer told the appellate judges. 

"You would be satisfied if he was liable for the whole works?" asked Senior Judge Morton Greenberg.

"That's correct," Zauzmer said.

The court, however, did not seem familiar with the trial record and who wound up with that $1.5 million stolen from Citizens Alliance.

Vince Fumo did help himself to $63,000 worth of power tools, and he and Ruth Arnao did go on some memorable shopping sprees bankrolled by credit cards from Citizens Alliance. Fumo and Arnao also drove around in pricey vehicles that belonged to Citizens Alliance, including a bulldozer that wound up at Fumo's farm in Harrisburg. The government proved all this and more at trial.

But what the prosecutor didn't mention was that out a total of $4 million stolen in the Fumo case [from Citizens Alliance and two other victims of fraud, the state Senate and the Independence Seaport Museum] most of that money did not wind up in Fumo's pocket. Instead, that money wound up in the pockets of Fumo's employees, consultants, Senate contractors, and political allies such as Arnao's husband, Mitchell Rubin, and political operative Howard Cain. The money was also spent on Fumo pet causes that included Bob Casey's campaign for governor, a campaign against sand dunes at the Jersey shore that would block homeowners' views, and a war memorial in Bucks County that honored military dogs that died in the Vietnam War.

The largest portion of the $1.5 million in restitution for Citizens Alliance was hundreds of thousands of dollars spent on the purchase and renovation of a building on Tasker Street. That building was owned by Citizens Alliance and rented to the state Senate, for an amount of rent that prosecutors said was below market value, thereby constituting more fraud. As one of Fumo's lawyers was heard grumbling after Zauzmer got through muddying the waters, how do you stuff a building into your pocket?

Next, Peter Goldberger, representing Fumo, stood up and began arguing that Judge Buckwalter "did not abuse his discretion" before he was abruptly cut off by Judge Robert E. Cowen.

"Hasn't he abused his discretion?" the judge asked about Judge Buckwalter. "The victim is not going to be reimbursed."

When Goldberger tried to explain, Cowen again interjected.

"How can this not be in error?" the judge said. "How can we let this stand? The victim is never going to be reimbursed."

Wasn't Fumo the "dominant player behind this fraud?" Judge Cowen asked.

"No one would deny that," Goldberger replied. "But what the government proposes to do is undo her [Arnao's] sentence."

Goldberger argued that if the appeals court overrules Buckwalter's decision on restitution for Fumo and Arnao, it would amount to overturning the judge's sentencing of Arnao, without any appeal ever being filed by Arnao or the government.

Judge Cowen noted that district court judges such as Buckwalter have wide discretionary powers.

"It's not easy to step on a district judge's toes when he [Buckwalter] sets sentencing or whacks up distribution of restitution," Judge Cowen said.

Goldberger argued that the feds could seek more money from Arnao, because she and her husband, Mitchell Rubin, former chairman of the Pennsylvania Turnpike Commission, are worth about $2 million.

But when Bob Zauzmer stood up for rebuttal, he told the judges, "You simply cannot get blood out of a rock," referring to Ruth Arnao.

Judge Cowen followed up on Golberger's argument, saying of Arnao and her husband, "They had boats, they had houses."

But Arnao's worth less than $100,000, Zauzmer protested; the rest belongs to Rubin. "We can't get it," Zauzmer said.

Of the three judges, only Judge Joseph A. Greenaway seemed disturbed at the possibility of vacating Judge Buckwalter's decision on the $1.5 million in restitution.

"I get your argument," he told Goldberger.

After the hearing, Assistant Atty. Zauzmer declined comment on why the feds changed their minds about going after Fumo again, after Zauzmer's boss had said they were done with the case.

Zauzmer, chief of the U.S. Atty's appeals unit, said he has a policy of never commenting on a pending appeal.

So no one from the U.S. Attorney's office is going to comment on the feds' continuing vendetta against Fumo, even after they beat him 137-0 at trial, took him out of office forever, and put him away in jail for 61 months.

Vince Fumo isn't worth $11 million any more after shelling out $3.8 million in fines and restitution, and at least $3 million more in legal fees.

He's lost his law license and his pension.

He'll be 70 years old when he gets out of prison. Then he'll be on probation for three more years, and have to do 500 hours of community service.

The Fumo saga has been going on for more than nine years. The Philadelphia Inquirer has recently reported that the IRS may be the next agency to investigate the former state senator. And as a lawyer for Fumo has said, if the IRS has its way with Fumo, he'll be insolvent.

When it comes to Vince Fumo, it seems the feds will never say enough is enough.

And if the feds are seem obsessed with Fumo, there's one other gang that can't get enough blood out of a rock, even though Vince is currently stashed 500 miles away in a Kentucky prison.

The press.

Since Dec. 20, 2003, one reporter, Craig R. McCoy of the Inquirer, has personally written in excess of 300 stories about Vince Fumo. And I do mean excess. Every time the cash-strapped Fumo sells off another property, or gets sued by an ever growing cast of characters that now includes his daughter, or there's a rumor that he may pick up the prison phone and call his fiancee at a Christmas party, it's front-page news.

When both dailies were in bankruptcy proceedings several years ago, up to ten reporters and columnists from the Inky and Daily News packed the Fumo trial in a single day. The trial itself was a curious five-month-long spectacle that featured the public flogging of a guy that just about everybody, including the judge, agreed was perhaps the city's most effective legislator ever, a state senator who over his 30-year-career never sold his office or took a bribe, and brought home more than $8 billion in aid to his district. But the Inquirer in particular threw all objectivity out the window, portraying the trial as a morality tale, pitting those courageous feds crusading against the Satanic Vince of Darkness.

So the local populace cheered when Fumo was tarred and feathered for a string of petty crimes that one former federal prosecutor described in a letter to Judge Buckwalter as "serial misdemeanors." Yet the feds invented a new set of legal and ethical standards for public servants in the Fumo case that no politician in America could live up to. And who was the big loser in the Fumo case? These days, with Fumo in prison, the city of Philadelphia is so lacking in clout and cash that the City Council has publicly discussed the need to hire a full-time lobbyist.

Hey guys, we used to have a full-time lobbyist; his name was Vince Fumo. But at least we now live in a political utopia free of all corruption.

The Inquirer remains a big fan of our current mayor, whose most lofty achievement was the institution of weekly recycling. The Daily News actually employed another former Philadelphia mayor, Ed Rendell, as a sports columnist, even though he's the guy who gave us the DROP, the city's most wasteful program ever that's paid out more than a billion dollars in cash bonuses to city workers, just for showing up. In Milwaukee, the man who created that city's DROP program wound up in jail. In corrupt and contented Philadelphia, however, Ed Rendell can still show his face in public, and hang with his fellow journalists at Daily News Live. Yet in the pages of the Inquirer, Vince Fumo remains the city's most notorious reprobate.

As Vince used to write in his emails, WTF?

Today's appeal hearing on the Fumo case was held on the 19th floor of the federal courthouse at Sixth and Market. Four floors below, there's a federal racketeering trial going on that features "Uncle Joe" Ligambi, the alleged mob boss of Philadelphia, and six associates.

Things are going so bad for the newspapers in this town that on most days, both the Inquirer and the Daily News don't have a single reporter available to sit in on the mob trial, and write about what's doing with the city's mob boss, even though it's only two blocks away from the newspapers' new digs in the old Strawbridge building.

But they'll always have somebody around to cover Vince.

Ralph Cipriano, who covered the Fumo trial as a blogger for The Beasley Firm, is writing a book about Vince Fumo. 

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