Another Morgan case, another cellphone controversy [The Buffalo News, N.Y.]

Oct. 4—There's another controversy over a cellphone in the criminal case involving Rochester developer Robert C. Morgan.

For the second time in two separate federal fraud cases, the attorneys for Morgan are once again crying foul over prosecutors' handling of a personal cellphone related to one of the defendants, and the evidence contained on it.

This time, the phone in question belongs to the girlfriend of one of the defendants, Buffalo mortgage broker Frank Giacobbe. And again it's being used to argue misbehavior by prosecutors, as the defense now wants the entire case to be thrown out permanently — before any of it is heard on the merits.

Morgan, his son, his finance chief and Giacobbe are accused of orchestrating a wide-ranging mortgage and insurance fraud scheme in which they falsified documentation to deceive lenders, as well as government-sponsored entities Fannie Mae and Freddie Mac. Prosecutors assert the defendants conspired to provide fake rent rolls, financial reports, appraisals and other information to trick banks into loaning more on apartment properties than they were worth.

In March 2021, prosecutors filed a new 104-count indictment against Morgan and his son Todd, as well as Giacobbe and Michael Tremiti, after the original complaint against them was dismissed in a way that allowed for new charges to be filed.

The latest charges are similar to the first go-around, accusing the four of conspiring with Kevin Morgan, Patrick Ogiony, Scott Cresswell and others "to fraudulently obtain funds from financial institutions," by submitting inflated and false rent rolls, with non-existent tenants and boosted rents to bolster a property's income.

The defendants allegedly told lenders they were getting fake fees, such as for cable service, and also "reduced and improperly capitalized expenses in order to make the property appear to generate more income" to "justify a larger mortgage loan than they would otherwise qualify for," according to the announcement from the U.S. Attorney's Office. And they allegedly sought to conceal the fraud by making units appear occupied during inspections.

Since March, the case has wound through the typical "discovery" process, including technical issues related to the massive data dump of 5.6 million documents provided to defense attorneys in June.

But now Morgan's attorneys are calling for the federal judge handling the case, Elizabeth A. Wolford, to reconsider her earlier "dismissal without prejudice." They argued that the government has again misrepresented its disclosures.

At issue is a reportedly new disclosure by the government that it has material from a cellphone belonging to Julia Besant — Giacobbe's girlfriend — that it has had in its possession since February 2018, when it seized the phone under a court-ordered search warrant that specifically mentioned Morgan by name.

Defense attorneys said prosecutors never previously revealed either the cellphone's existence nor the affidavit filed in support of that original warrant. Both should have been disclosed under discovery in the first criminal case, they said. And they concluded that the failure to do so and the government's "blatant misrepresentations to the court" mirrors prosecutors' prior problems that led to the original case being dismissed.

The government, for its part, claims it never considered Besant's cellphone to be part of the evidence it needed to disclose, and it's only now doing so out of extra caution to make sure it complies fully with the requirements. Hence, the 5.6 million documents that have been disclosed this time, a 50% increase over the 3.8 million files provided to the defendants last time.

Last time, during the first prosecution of Morgan that began three years ago, Morgan and his attorneys demanded the return of the developer's phone, saying prosecutors had possessed it since the FBI raided Morgan's offices in May 2018, but hadn't done anything with it. And they claimed Morgan's privacy and property interests in the phone outweighed the prosecutors' needs.

Prosecutors countered that they had been trying but couldn't access the cellphone — despite three forensic labs and two software programs — because Morgan used a six-digit passcode and additional security features, and wouldn't cooperate with the government by allowing them access. So they had to test two to three randomly generated codes every hour for 19 months. That was in late 2019 and early 2020.

In October 2020, Wolford threw out the entire 114-count indictment against Morgan and three co-defendants, because prosecutors had been moving too slowly in producing and providing evidence to the defense as required. Agreeing with repeated defense complaints, she said prosecutors had mishandled the discovery process and blew past court deadlines, violating Morgan's right to a speedy trial.

But she determined that the government's "lackadaisical approach" was not intentional or willful, so she dismissed the case "without prejudice," allowing the prosecution to refile their indictment. She also noted the seriousness of the charges and significant potential penalties if the case were proven, saying that outweighed any harm to the defendants from the delays.

___

(c)2021 The Buffalo News (Buffalo, N.Y.)

Visit The Buffalo News (Buffalo, N.Y.) at www.buffalonews.com

Distributed by Tribune Content Agency, LLC.