Two defendants in Bob Morgan fraud case sentenced with no prison time
Daily Messenger (Canandaigua, NY)
The criminal case once alleged to be a $500 million mortgage fraud prosecution never reached a day when the allegations could be subjected to a trial.
"We've never really gotten into the merits of the case after four years," U.S. District Judge Elizabeth Wolford said Thursday in federal court in Buffalo, where two of those accused of roles in the alleged fraud were sentenced. Neither of the two - Frank Giacobbe or Michael Tremiti − will serve time in prison. Both pleaded guilty to misdemeanors.
On Friday, local developer Robert "Bob" Morgan and his son, Todd Morgan, are scheduled to be sentenced in Rochester. They, too, pleaded guilty to offenses that should, under their agreements, spare them from prison.
The prosecution was derailed by multiple instances in which prosecutors either did not turn over evidence to the defense, or did not review some digital materials that were seized in searches. Wolford once dismissed the indictment against the four, but decided the prosecution missteps were sloppy, but not intentional − a decision that allowed the four to be indicted again.
However, additional prosecutorial lapses led to new challenges by the defense, and Wolford was, at the request of defense attorneys, considering a dismissal of the new indictment. She could have dismissed that indictment "with prejudice," meaning prosecutors could not seek new charges on the same allegations.
Instead, facing a hearing about the internal machinations of the investigation, federal prosecutors this year offered the plea deals to the accused.
Wolford said in court Thursday that, based on the evidence she saw before the plea deals, there was a significant chance that she would have again dismissed the indictment − for good.
"This case and the handling of this case is not the way the criminal justice system is supposed to work," she said.
Speaking to Giacobbe, she said, "You never got the opportunity to test those allegations in court. How that would have ended up working out, I don't know. None of us can say."
Lawyers for Giacobbe and Tremiti said their lives had suffered because of the allegations. Even with pleas to misdemeanors, damage was done to the accused, said attorney Donald Thompson, who represented Tremiti.
"It's not nothing to be prosecuted by the federal government," Thompson said of the prosecution, which was once considered one of the largest mortgage fraud cases pursued by the Justice Department in New York.
Thompson said Tremiti had been eager to confront the original allegations at trial. "We were anxious to get to the merits and to challenges the merits of the government's claims."
Robert Morgan and his business associates were accused of fabricating information to receive more generous bank loans for rental properties and other developments. The $500 million figure was not an alleged loss by the banks, but the total of the loans at issue.
Tremiti was the vice-president of finance for Morgan's company, and Giacobbe, a Buffalo-based mortgage broker who helped arrange financing for Morgan properties.
Todd Morgan was project manager for his father's commercial development company.
Giacobbe admitted to inflated information in a bank loan for a Morgan-connected mortgage, and Tremiti admitted to falsifying information for a construction loan.