06.13.2011

Day 7: Amid Tales Of Piles Of Cash, Prosecution Prepares To Rest Its Case Today

BY JOE McDONALD AND BORYS KRAWCZENIUK (STAFF WRITERS)

A $50,000 pile of cash stuffed in a little red box.

Another $2,000 passed in the men’s room at a country club.

A $700,000 real estate deal for a luxurious home disguised as a $350,000  transaction and cross-country trips to the Playboy Mansion in California paid  for with taxpayer money.

And, Robert C. Cordaro in the middle of all of them, witnesses testified  Tuesday at the federal corruption trial of the former Lackawanna County  commissioner and Commissioner A.J. Munchak, who are accused of shaking down  vendors for large amounts of cash in exchange for county contracts.

With Mr. Munchak expected to testify in his defense and prosecutors expected  to wrap up their case today, they spent much of Tuesday connecting the dots of  evidence presented the last six days, using mountains of documents and testimony  from tax experts and others.

In the morning, the jury listened to the unusual way Mr. Cordaro structured  the purchase of his home on Tiffany Drive, perched on a mountainside overlooking  the valley.

Real estate trail

The arrangements were so unique that even the seller, Shawn Tuffy, whose  brother, Brian, actually owned the home, said there were aspects that made no  sense, especially paperwork that showed the seller was holding a mortgage, even  though that was not true.

And, there was the requirement that Mr. Cordaro did not want the deed  recorded until after the November 2007 election. The deed was not recorded until  Aug. 7, 2008.

Mr. Tuffy testified he sold the home for $700,000, but the deed actually  recorded with the county showed a $350,000 sale price.

Apparently, the failure to record the deed led to a delinquent property tax  bill of $3,736.16. Mr. Tuffy said Mr. Cordaro paid the bill.

Mr. Cordaro also wanted the home’s furniture and they negotiated a $150,000  sale price for that. Mr. Tuffy said Mr. Cordaro gave him a red cardboard box  with $50,000 in cash while they walked through the home and he explained its  systems for controlling lights, a drop-down television screen and other  electronics, Mr. Tuffy testified.

After federal agents began nosing around and asking about the deal, Mr. Tuffy  recalled calling Mr. Cordaro to find out why.

Mr. Cordaro, Mr. Tuffy testified, said he had been under investigation for  “several years,” assuring Mr. Tuffy that it was “politically motivated” by his  neighbor across the street, Senior U.S. District Court Judge William J.  Nealon.

Mr. Cordaro told him the judge “has a vendetta against him,” adding “Judge  Nealon has a lot of juice,” Mr. Tuffy said. But Mr. Cordaro also made a remark  to him that he took to mean “Don’t mention the cash” when he spoke to the  FBI.

Under cross-examination, Mr. Tuffy acknowledged he is under federal  investigation for mortgage fraud in an unrelated case involving his current  home.

‘Stolen money’

Mr. Tuffy was not the only witness who had problems with law enforcement.

Jurors heard from Marc Boriosi, who was partners in a company, Executive  Claims Administration, with Mr. Cordaro’s boyhood friend, Charles A. “Chuckie”  Costanzo, who was convicted of looting the county workers’ compensation fund of  $650,000.

Last week, Mr. Costanzo, who is serving a federal prison sentence, turned  down a chance for a reduced sentence in exchange for his testimony at the  Cordaro/Munchak trial.

In Mr. Boriosi, prosecutors got the next best thing.

Mr. Boriosi ran through his guilty plea and accompanying 10-month jail  sentence in that case. He then outlined how he and Mr. Costanzo set up the  Executive Claims, how Mr. Costanzo chased him out of the firm, how Mr. Costanzo  called him back because he did not have the expertise to run the firm, how they  set up a fake detective agency, Endless Mountain Investigations, as partners and  how they freely spent the money Mr. Costanzo looted from the workers’  compensation fund.

They took trips to the Playboy Mansion in June 2004 – that one cost $12,000  to $15,000 – and March 2005 – that cost $30,000, including $10,500 for four  people to enter a golf tournament. Mr. Boriosi said he paid for it with his  credit cards and Mr. Costanzo reimbursed him from Executive Claims’ money.

He, Mr. Cordaro and Mr. Costanzo made the first trip, and former Tax Claim  Bureau Director Thomas Harrison joined them on the second. Prosecutors showed a  picture of Mr. Cordaro and Mr. Costanzo at the Playboy Mansion behind several  “bunnies.”

Later, they took a trip to New York City for “The Big Smoke,” a cigar  convention. The quartet were joined by then-county Chief of Staff Paul D.  Taramelli and then-county personnel director Anthony Bernardi. Executive Claims  reimbursed him $3,000 for that trip, Mr. Boriosi said.

Mr. Boriosi also told the jury about the day he followed Mr. Cordaro to the  bathroom at the Glenmaura Country Club during a Munchak-Cordaro fundraiser with  an envelope stuffed with $2,000 in $100 bills.

“This is from me and Chuckie,” Mr. Boriosi said he told Mr. Cordaro, who  responded, “Thank you.”

Under cross-examination, Mr. Boriosi acknowledged he never told prosecutors  about the $2,000 cash payment until about a month ago, despite cooperating in  FBI investigations of Mr. Costanzo.

“Everything else was about Mr. Costanzo, not Mr. Cordaro,” Mr. Boriosi said.  “They definitely never asked if I ever gave him cash.”

Asked if he ever filed a tax return reporting the $650,000 he and Mr.  Costanzo stole, Mr. Boriosi said no.

“I did not know how to file taxes on stolen money,” he said.

Mr. Boriosi told Mr. Munchak’s lawyer, attorney Christopher T. Powell, that  Mr. Munchak never had anything to do with the trips.

The next witness, Edward A. Kollar, senior manager at the Parente Beard  accounting and consulting firm, took the stand to explain Mr. Cordaro’s tax  returns for 2005 and 2006. Mr. Cordaro and Mr. Munchak are charged with filing  false tax returns and tax evasion.

After outlining the returns, Mr. Kollar was asked if they reported any income  from P.J. McLaine, Al Hughes, Don Kalina, Mr. Boriosi and Tom Cummings. They are  the men accused of paying bribes, kickbacks or other payments to Mr.  Cordaro.

“No,” he replied when asked about the first four men.

“Nothing,” Mr. Kollar said when asked how much income from Mr. Cummings was  listed.

IRS: Hughes to Cordaro

Internal Revenue Service criminal investigator Denise Cole said she traced  checks written by Mr. Hughes to Mr. Cordaro’s bank account or found Mr. Cordaro  had cashed them. Mr. Hughes testified the checks were money from bribes paid  monthly by Acker Associates officials to keep their county engineering  contracts. He acted as the conduit for the bribes, he testified. He said the  checks were written when Mr. Cordaro was demanding money quickly, his bank was  closed and he could not withdraw cash as he usually did when paying Mr.  Cordaro.

Ms. Cole outlined four checks for $10,000, including one that bounced, one  for $6,500 and one for $3,500.

Copies of two $10,000 checks from Mr. Hughes deposited in Mr. Cordaro’s bank  account and obtained from his bank showed a watermark of a horse which made  distinguishing the source of the check difficult. Ms. Cole said she suspects the  marks appeared because of the way the bank scanned the checks into its computer.  But she was able to match check numbers and other data from those checks to  copies of checks obtained from Mr. Hughes’ bank, she said.

Ms. Cole also added up how much cash Mr. Cordaro plunked down to pay for  various goods and services from 2004 to 2007 – $701,559.57.

The cash spending more than quintupled from 2004 to 2005 when other witnesses  testified bribes really started to flow and doubled again in 2006.

The cash spending included: $220,349.07 in payments on lines of credit;  $98,800 on new vehicles; $67,844 for tuition for his children at Scranton  Preparatory School and the University of Rochester; the $50,000 he gave Mr.  Tuffy for furniture; and $75,053 for child support, she said.

Evasion issues

The day’s final witness, IRS revenue agent Ray Eppley, said Mr. Cordaro  evaded $98,856 in taxes in 2005 and 2007 by failing to report $408,500 in bribes  and kickbacks. Mr. Cordaro did not evade taxes in 2007 because he reported an  overall loss, but filed a false return by not reporting $134,000 of the payments  in 2006, he said.

Mr. Eppley said Mr. Munchak evaded $12,946 in taxes in 2005 by not reporting  $60,000 in bribes and $42,000 in income from New Hope Healthcare, the company  hired by him and Mr. Cordaro to run the county nursing home for $30,000 a  month.

Mr. Munchak, who ran a billing service for doctors, sold his client list to  New Hope for $42,000, but never reported the income.

On cross-examination, Mr. Powell, through his questioning, tried to convince  Mr. Eppley the $42,000 was partial repayment of a $90,000 loan that Mr. Munchak  made to New Hope.

Mr. Eppley said the $42,000 ended up in Mr. Munchak’s personal account, but  should have been paid to Mr. Munchak’s billing service, Northeast Billing,  because the company owned the client list.

Mr. Powell said Mr. Munchak was the sole owner of the billing service so he  just had the service’s $42,000 paid directly to him for the loan.

Mr. Eppley said it should have been paid to the billing service, which should  have then issued Mr. Munchak a check that should have been reported on his tax  return. Mr. Powell said a loan repayment would not have to be reported as  income.

On cross-examination by Mr. Powell and Jerry Johnson, Mr. Cordaro’s lawyer,  Mr. Eppley acknowledged the alleged unreported bribes would not be a problem if  the jury decides the bribes did not happen.

Contact the writers:  jmcdonald@timesshamrock.com,  bkrawczeniuk@timesshamrock.com

Read more: http://thetimes-tribune.com/day-7-amid-tales-of-piles-of-cash-prosecution-prepares-to-rest-its-case-today-1.1162231#ixzz1QbkHwH00

Request a Free Consultation

Contact Us