Three Felonies a Day Read online

  To a hammer, goes the saying, everything is a nail. And so it was for Weld that Anzalone’s series of transactions must have been configured to launder money that was acquired illegally, rather than simply to hide from scrutiny the possession or source of lawfully-acquired funds. Under federal banking regulations in effect at the time, a bank was required to report to the United States Treasury any cash transaction involving more than $10,000. This reporting was to be accomplished by the bank’s filing a so-called Cash Transaction Report (“CTR”). The law made clear—or at least appeared to do so—that this obligation rested with the bank and not with the depositor. However, by Anzalone’s breaking up the cash into under-$10,000 installments, the bank supposedly was kept from realizing that a total of $100,000 was involved in the aggregate series of check purchases. Then-applicable law further dictated that if bank checks rather than cash were deposited with the brokerage firm, the firm did not have to report receipt of over $10,000 in cash in connection with the White brokerage account. Finally, since the money was invested in tax-free bonds, the mayor’s wife and mother would not have to report on their respective tax returns the interest accruing in the brokerage account.

  To the feds, it seemed a perfect scheme to hide illegally gotten gains, because all reporting to governmental authorities was circumvented. To nab the great White, however, Anzalone’s cooperation would be needed to confirm the feds’ suspicions, and that cooperation, the feds believed, could be gotten only under the pressure of Anzalone’s conviction and imprisonment. Collatos was the key to unlock Anzalone’s cooperation.

  Adding the two money-laundering counts to the extortion charge was thus meant to further bolster Collatos’s testimony by linking together additional (otherwise unlinked) cash and check transactions. The jury’s common sense would conclude that the cash used to fund both the birthday party and the brokerage account, laundered ostensibly to hide its origins, came from an illegal source, in this case extortionate activities by Anzalone on behalf of White. Tied together at trial, all three transactions would support one another: the money laundering counts explaining what happened to the extortion proceeds, and the Maguire extortion count explaining the cash’s origins—all without any direct evidence linking the three. If convicted, the feds believed, Anzalone would face tremendous pressure to testify, at what the feds dreamed could be Kevin White’s criminal trial, to precisely such a link. Weld would have his trophy catch.

  Soon, however, the fabric of the government’s strategy to sew all of these events together was torn apart. The trial judge, the late A. David Mazzone, after some initial hesitation, granted Anzalone’s motion to separate the trial of the extortion count from the money-laundering counts. My then-law partner Nancy Gertner and I argued that, because no proof linked these transactions, the jurors should not be allowed to speculate precisely as the feds wished them to speculate, making unproven assumptions about the origins of the cash in order to strengthen a weak extortion claim. All of a sudden, the prosecution of the extortion claim turned almost entirely on the testimony of a self-confessed small-time extortion artist-cum-perjurer, Collatos.

  The money-laundering trial began on June 13, 1984. The government’s witnesses testified pretty much as expected: that they had received cash from Anzalone in exchange for providing checks to the birthday party fund, after which the transactions were reversed when the party was cancelled. Haymarket Cooperative Bank officials testified that they were kept in the dark by Anzalone’s breaking down the transaction into under-$10,000 increments, resulting in their failure to file CTR reports.

  The surprise, if any, came in the defense’s case. Robert Coviello, a Boston lawyer, testified that Anzalone, an acquaintance for 20 years, asked for advice in 1980 as to whether he could lawfully take $100,000 in cash and invest it for Anzalone’s client, Patricia White, without having to report the investment. Coviello testified that he advised Anzalone it would be lawful for him to break up the cash into under-$10,000 segments and to purchase a series of bank checks. Because each transaction would involve less than the $10,000 reporting-trigger figure, the bank would not have to report the transaction to the Department of the Treasury. “In my opinion, it was legal to take a large cash transaction and reduce it into a series of checks of $10,000 and less,” Coviello told the jury. “There was no problem with it.”

  The defense theory was simple. The bank, while obligated to report cash transactions in excess of $10,000, did not know that each transaction was part of a series totaling $100,000. It therefore did not have to report Anzalone’s transactions. Conversely, Anzalone, who had no obligation either to report cash transactions at all (the statute imposed that obligation only on the bank) or to purchase his checks in amounts exceeding $10,000 in order to trigger the bank’s reporting requirement, had broken no law by transacting his business in a way that kept the bank from having to file a report. Introducing Coviello’s testimony further buttressed Anzalone’s defense that he acted lawfully, in good faith, and on the advice of legal counsel.

  Judge Mazzone’s jury instructions, however, followed a different script. Even though the reporting requirement of cash transactions exceeding $10,000 was, on the face of the statute, the bank’s, the judge said a customer like Anzalone committed a crime by breaking up a larger transaction into several smaller transactions, each non-reportable, to cause the bank to fail to file the cash transaction reports that were its legal duty. Indeed, the bank would not even realize that the series of small transactions were related. The judge’s reading of the cash transaction statute and regulations effectively sealed Anzalone’s fate, since the defense did not contest the prosecution’s evidence, but simply its—and the judge’s—reading of what the statute and regulations required. Anzalone’s supposed obligation to facilitate the bank’s filing a CTR, nowhere in the statute or regulations, was woven out of whole cloth.

  Predictably, the jury convicted Anzalone of the cash-laundering charge. He was acquitted, however, of laundering the birthday party funds. Judge Mazzone sentenced him to a one-year prison term, six months of which were to be served with the balance suspended and accompanied by a period of probation. The judge stayed the sentence temporarily while Anzalone appealed to the U.S. Court of Appeals for the First Circuit.

  As Anzalone pursued his appeal of the money-laundering conviction, Judge Mazzone went ahead with the extortion trial, which became pivotal to the government’s plan to “turn” Anzalone. While unarticulated in the indictment, the charges’ subtext was clear: White was in cahoots with Anzalone in the extortion racket. Yet thinking that the six-month sentence imposed by Judge Mazzone on the money-laundering conviction was insufficient to get Anzalone to cooperate, the government would need a guilty verdict in the extortion trial and hence a more daunting prison sentence looming over Anzalone’s head to get him, as the prosecutors saw it, to betray an old friend and testify against White. It did not matter that the feds had no evidence that White had committed crimes, nor that Anzalone may not have known anything that could get the mayor indicted, much less convicted. There was an assumption that if only Anzalone would sing, the mayor could be indicted. The first step in this process would hinge on George Collatos’s testimony against Anzalone.

  The government’s case imploded when Collatos took the stand. Unbeknownst to the judge or the prosecutors, a few months before the trial Anzalone reported to me an astonishing story. Collatos had invited Anzalone to meet him in a dilapidated coffee house in Boston’s storied North End, home to the city’s largest Italian-American population. At LaBella’s Coffee Shop, reported Anzalone, Collatos threatened him: Unless Collatos was paid $200,000, he would testify to Anzalone’s guilt at the upcoming extortion trial, despite knowing Anzalone was in fact not guilty of extorting the C. E. Maguire Company. If paid, however, Collatos said he would tell the truth and Anzalone would be acquitted. In other words, Collatos was demanding a payoff from Anzalone in order to testify truthfully. When Anzalone pointed out that he did not have $200,000, Co
llatos told him to get it from Kevin White. Ever the entrepreneur, Collatos had even figured out a mechanism by which White could transfer the payoff to Collatos: for $200,000, Collatos would sell the mayor an old nag of a race horse. On the surface, it would look like a legitimate transaction, but in fact it would be a bribe to Collatos to get him to testify truthfully. Anzalone told Collatos that he needed time to think about it and left LaBella’s. He rushed to my office, located on the edge of the North End, to report Collatos’s threat.

  After discussing this extraordinary turn of events with Gertner, I instructed Anzalone to contact Collatos to set up another meeting at LaBella’s. In one of the more theatrical moments of my career, I arranged for three witnesses to be secreted in the basement of LaBella’s, ensconced beneath a trap door located just under the table where Anzalone would sit with Collatos. Due to a Massachusetts law making it illegal to tape-record someone without his consent, the eyewitnesses to Collatos’s threat had to be unimpeachable, and they were: John Wall, a respected, indeed legendary, former federal organized crime and political corruption prosecutor who left the Department of Justice in disgust during the Nixon administration, since then working in private law practice in Boston; and Thomas Viles, a recent Harvard College graduate working for my firm as a paralegal before heading off to law school. A legal stenographer had fled in terror after encountering a mouse when she entered the basement space, but the former prosecutor and the paralegal stayed underground and took diligent notes while Collatos proceeded, sure enough, to extort Anzalone and White for a $200,000 payoff in exchange for his testifying truthfully at Anzalone’s upcoming extortion trial. Anzalone turned down the deal and both left.

  What did Gertner and I do with our case-shattering evidence? We sat on it. By keeping mum until trial, we prevented the prosecutors from having the opportunity to reframe their case to get around their as yet unknown “Collatos problem”—and what a problem it was! Instead, we wanted the government to organize its case around Collatos and rely on his credibility. That way, we could upend both Collatos and the prosecution in one fell swoop.

  Collatos took the witness stand and told the jury his well-rehearsed story, blithely unaware of the drama that would soon unfold. During the cross-examination, Gertner caught him off guard by inquiring about the LaBella’s meeting. Collatos tried to play dumb, but toward the end of his testimony he became increasingly evasive and visibly nervous. At that point, due to a technical trial rule, Gertner and I were required by the judge to indicate to him, at a hushed conference held at the side-bar of the judge’s bench outside the jurors’ earshot, the factual and legal basis for Gertner’s continuing line of cross-examination. We disclosed to the judge and the prosecution team the whole sordid tale—the dingy café, the ensconced witnesses, the extortionate threat—that we were about to parade before the jury.

  The prosecutors erupted. They desperately tried to formulate a convincing argument why the judge should exclude from the jury’s knowledge this shocking evidence. They argued surprise. In reality, they must have known it was a lost cause. Gertner and I had no legal and ethical obligation to report to them Collatos’s attempted extortion of Anzalone as soon as it happened. We had given the feds a taste of their own medicine, and they knew it. We had kept our “undercover” operation under wraps until it was time to spring the trap.

  In a blatant attempt to intimidate the key eyewitnesses to Collatos’s threat, two FBI agents visited paralegal Viles in the middle of the night. Viles reported that the agents threatened him with prosecution for “misprision of a felony,” a federal statutory crime for failure to report a witnessed felony to the authorities. Viles told them to leave, but was understandably shaken up the next day. Gertner and I assured Viles that, in our view, neither he nor we had committed misprision, since the Supreme Court had some time ago limited the scope of that statute. Wall likewise received a middle-of-the-night visit.

  Despite the FBI’s threats, Viles dutifully testified as to what he had witnessed in the North End, as did Wall, who was more experienced in the ways of the Department of Justice (and whom the FBI agents proved utterly incapable of shaking). The combination of the testimony of a recent college student, and a legendary former federal prosecutor who left the Department of Justice because he considered the then-Attorney General, John N. Mitchell, to be a liar (Mitchell indeed ended up serving a prison sentence in the Watergate scandal), had its predicted impact. With Collatos’s credibility irreparably damaged, Gertner was able to deliver an argument to the jury that capitalized on the prosecution’s case being covered by the stench of Collatos’s extortion—the very crime the feds were trying to prove against Anzalone! The jury acquitted.

  Gertner and I then focused on reversing on appeal the money-laundering conviction. We reasoned that a citizen does not have an obligation to conduct business in such a way as to maximize his or another’s legal duties, unless there is a valid and clear law requiring him to do so. There was no such law here, and so, in the absence of requirements to the contrary, a citizen in a free society is entitled to conduct his business in as much privacy as the law allows. We were therefore fairly confident on appeal.

  Ultimately, our confidence was well-placed. The Court of Appeals saw through Weld’s gambit and Mazzone’s misdirected jury instructions, issuing its unanimous decision on July 1, 1985.14 Anzalone, in short, had no obligation to do other than what he did when structuring his transactions to avoid activating the bank’s obligation. If the government wishes to impose such an obligation on the banking customer, admonished the Court of Appeals, “let it require so in plain language.”

  Perhaps the most pointed observation the Court made concerning the government’s seeking effectively to transfer the bank’s reporting obligation to the customer was to warn against criminal laws that fail to inform “ordinary people” as to “what conduct is prohibited.” This was a crucial point. Then, in a footnote, the Court of Appeals panel discussed the infamous “principle of ‘crimes by analogy’”—a hallmark of the Soviet Union, not of the United States. Indeed, under the Soviet Criminal Code, any citizen was in constant danger of being prosecuted for virtually any action if it could be analogized to or derived from something in the criminal code.15 It was a sure formula for government oppression. Each citizen was perpetually susceptible to being prosecuted at the whim of the authorities for some act that the law did not clearly specify was criminal.

  And so the government’s hunt for Kevin White hit a wall. All the Department of Justice could do after it lost the Anzalone appeal was to persuade Congress to amend the CTR law to make structuring by the customer as much a crime as when done by the bank.16

  But the human wreckage of the effort to indict White had been substantial, even though neither man ever saw the inside of a federal prison. The rigors of the investigation persuaded the mayor to forgo his planned run for a record fifth term in City Hall. He also shed his White House ambitions. At the end of his fourth term he left office to take a teaching position at Boston University. A relentless U. S. attorney’s office, furious over its defeat, subpoenaed Boston University’s then-President John R. Silber, seeking to learn if the teaching job was awarded to White in exchange for his granting the university a favorable price for a city-owned building committed, during White’s tenure, to be sold to B.U. Silber, an imposing intellect and himself a famously haughty practitioner of hardball, proved invulnerable to Weld’s pressure and categorically denied to the grand jury, under oath, any such payoff to White. Weld’s last-ditch effort to snag the mayor faded into history. White lived quietly thereafter.

  Anzalone, his law practice in tatters after nearly every one of his clients had been visited by hostile FBI agents and then hauled before the grand jury, gave up lawyering and undertook the job of maintaining buildings owned or managed by his wife, Joanne Prevost Anzalone. Anzalone was never subpoenaed to the grand jury and asked about White. The prosecutors seemingly were not confident that they would get testimony to support their
suspicions unless they held over the witness’s head the threat of a long prison sentence—a threat that evaporated with Anzalone’s acquittals. Anzalone continued to insist that he could not truthfully implicate the mayor in any criminal conduct.

  Despite his failure to get White, Weld parlayed his “crusading prosecutor” image into the Massachusetts governorship in 1990 and won a second term four years later.

  The prosecutions in Hialeah and Boston, based on the shifting parameters of federal bribery and extortion law, signaled the early stages of an expanding trend that manifested itself in a wide variety of areas of civic, business, and cultural life in which federal criminal statutes could be stretched to cover myriad situations, some of them quite unpredictable. That trend has involved ever more vague, excessively broad federal statutes with which to ensnare and abuse fundamentally law-abiding public servants, acting in accordance with the dictates of local law and culture.

  The American Bar Association (ABA) noticed the same troubling trend in 1993. The ABA complained, in a report issued by its Committee on Government Standards, about statutes that are interpreted and enforced “in broad and uncertain sweep” in areas “outside the core of bribery, extortion and illegal gratuities.” Such enforcement actions taken under these statutes, criticized the ABA report, “unfairly burden employees with the fear of unwittingly committing a federal crime.”17 “This is an area,” concluded the ABA, “in which we should be especially wary of introducing the threat of criminal sanctions.” When state and local statutes, ordinances, and traditions do not clearly outlaw a practice, bringing federal prosecutions under general “fraud” statutes surely unfairly catches municipal workers by surprise, and then endangers those higher on the ladder.