Before: Honorable Sharon E. Grubin 
United States Magistrate Judge Southern District of New York 

SEALED COMPLAINT - Violation of 18 U.S.C. S 1341, 2 

UNITED STATES OF AMERICA 

- V - 

MARTIN DAVIS, County of Offense: 

New York and Elsewhere 

SOUTHERN DISTRICT OF NEW YORK, ss.: 

JOSEPH T. PHELAN, being duly sworn, deposes and says that he is a Special Agent with the Federal Bureau of Investigation ("F.B.I") and charges as follows: 

COUNT ONE: MAIL FRAUD 

1. Between in or about September 1996 and in or about February 1997, in the Southern District of New York and elsewhere, MARTIN DAVIS, the defendant, and others known and unknown, unlawfully, willfully and knowingly, having devised and intending to devise a scheme and artifice to defraud, and to obtain money and property by means of false and fraudulent pretenses, representations and promises, to wit, a scheme to embezzle money from the International Brotherhood of Teamsters ("IBT") to fund contributions to Ron Carey's 1996 campaign for reelection as President of the IBT ("the Carey campaign"), caused to be delivered by mail and private and commercial interstate carriers according to the direction thereon, matters and things to be sent and delivered by the Postal Service and such carriers, to wit, the defendant and others caused to be sent by mail and by private and commercial carriers two checks in the amounts of $45,000 and $50,000, respectively, to be used by the Carey Campaign.  

(Title 18, United States Code, Sections 1 and 2). The bases for deponent's knowledge and for the foregoing charges are, in part, as follows: 

Background 

5. I am a Special Agent with the FBI. I have been employed in that capacity for the last years. I am the case ad documents, and spoken with other agents involved in this investigation. Because this affidavit is submitted for a limited purpose, I have not included each and every fact learned during the investigation. Where actions, statements, or conversations are related, they are related in substance and in part, unless otherwise indicated. 

6. On on or about June 28, 1988, the government filed an action under the civil remedies provision of the Racketeer Influenced and Corrupt Organizations ("Rico") Act against the IBT, its General Executive Board, the members of the General Executive Board, the Commission of La Cosa Nostra and various members and associates of La Cosa Nostra. On or about March 14, 1989, the Honorable David N. Edelstein, United States District Judge for the Southern District of New York, signed an Order resolving the government's claim against the IBT defendants. Among other things, the Consent Decree provided that the Court would appoint an Election Officer to supervise the 1991, and at the election of the government, the 1996 IBT elections. Pursuant to the consent decree, the Court retained exclusive supervisory jurisdiction over the implementation of the Consent Decree and the authority and activities of the officers appointed pursuant to the Consent Decree. 7. On or about February 7, 1995, Judge Edelstein signed an order implementing several of the provisions of the Consent Decree with respect to supervision of the 1996 IBT election ("the 1995 Order"). Pursuant to the 1995 Order, powers and obligations previously conferred upon an Election Officer and an Independent Administrator with respect to the 1991 election by the Consent Decree were conferred upon an Election Officer and an Election Appeals Master. Among other things, the 1995 Order provided that the Election Officer was required to file reports with the Court; that the Election Officer and Election Appeals Master had the authority to make applications to the Court; and that the Court retained exclusive jurisdiction to supervise the activities of the Election Officer and Election Appeals Master and to decide all issues relating to their actions or authority. 

8. The Court-appointed Election Officer supervising the IBT election promulgated rules governing that election. These rules prohibited employers from contributing to the election campaign of any candidate, with limited exceptions. Also prohibited was the use of IBT funds to promote the candidacy of any individual. 

9. Ron Carey was among the candidates running for the President of the IBT in 1996. 

The Mail Fraud Scheme 

10. At all times relevant to this complaint, a witness who has agreed to plead guilty to conspiracy pursuant to a cooperation agreement ("CW 1") was the owner and Chief Executive Officer of a telemarketing concern located in Massachusetts. CW 1 also had as his "d/b/a," a consulting concern in a corporate name ("the d/b/a"). At all times relevant to this complaint, MARTIN DAVIS, the defendant, was an officer and an approximately 41% owner of the November Group, a direct mail concern located in Washington, D. C. According to submissions filed with the Election Officer by lawyers for the Carey campaign, and a deposition of MARTIN DAVIS taken by the Office of the Election Officer in March, 1997, in or about July, 1996, MARTIN DAVIS, on behalf of the November Group, entered into an agreement to provide direct mail services for the Carey Campaign during the fall of 1996, pursuant to which the Carey Campaign was to pay the November Group in installments over the following four months. 

11. In on or about September 1996, DAVIS asked CW 1 to solicit contributions for the Carey campaign. At the time, DAVIS told CW 1 of the rule prohibiting contributions from employers. 
 
12. On or about September 30, 1996, CW 1 met with MARTIN DAVIS, the defendant. During that meeting, DAVIS proposed a plan to circumvent the rule against employers' contributing to the campaign for IBT president. Pursuant to that plan, CW 2, who was not an employer, would contribute additional sums to the Carey campaign. MARTIN DAVIS would obtain a "no-work" contract for CW 1, the proceeds of which would be used to fund CW 2's contributions. 

14. In or about mid-to-late October, MARTIN DAVIS, the defendant, told CW 1 that CW 1 was going to get a large contract from the IBT to do a telemarketing "get-out-the-vote" drive for the November Congressional elections (the "GOTV" drive). DAVIS told CW 1 to use the profits on the contract to reimburse CW 2 for additional contributions she would make to the Carey reelection campaign. 

15. A managerial employee of CW 1's telemarketing company has confirmed that in the Fall of 1996, she was contacted by the IBT regarding conducting the GOTV drive. According to both CW 1 and the managerial employee, CW 1 negotiated the contract price with the Director of Government Affairs of the IBT. I have reviewed an October 22, 1996, invoice from CW 1's company sent to the IBT, which provided that the IBT would pay CW 1's company $97,175.00 in two installments of $48,587.50 due October 22 and November 6, respectively. In exchange, CW 1's company would make 149,500 contacts at a price of $.65 per contact. 

16. After negotiating the contract price, CW 1 informed MARTIN DAVIS, the defendant, that the contract was small, and would not generate a large profit to fund co-conspirator 2's contributions to the Carey campaign. MARTIN DAVIS, the defendant, then told CW 1 to "lose some of the calls." DAVIS further stated that the client, the IBT, knew of the plan, and wanted it done this way. CW 1 agreed that all of the calls would not be made. I have reviewed a summary of the calls made, which reflects a total of approximately 107,578 calls.  

17. On or about October 24, 1996, the IBT sent CW 1's company a check for $48,587.50, in payment of half of the October 22 invoice. On or about November 15, 1996 the IBT sent a second check to CW 1's company in the amount of $48,587.50. These sums constituted full payment of 149,149,800 contacts, as provided in the October 22, 1996 invoice. CW 1 deposited these checks into an account of his d/b/a. 

18. In or about October 1996, CW 1 asked CW 2 to contribute $45,000 to the Carey reelection campaign. CW 2 agreed to do so upon the representation from CW 1 that he would reimburse her. 

19. On or about October 31, 1996, CW 2 wrote a check to an entity called "Teamsters for a Corruption Free Union." My investigation has revealed that this entity was established to receive contributions to the Carey campaign from non-Teamsters. CW 2's check for $45,000 was sent to the Carey campaign's lawyers in the Southern District of New York by mail or by commercial carrier.  

20. In or about late October 1996, at the urging of an individual not named as a defendant herein, an organization ("the Organization") agreed to pay CW 1's company $75,000. I have been informed by CW 1 that this payment was to be used to fund additional contributions by CW 2. Based on my interview of CW 1, as well as my interview of the Deputy Director of the Organization pursuant to a proffer agreement, and my review of documents, I have learned that on or about November 13, 1996, CW 1 submitted an invoice from his d/b/a to the Organization, in the amount of $75,000, purportedly for consulting services performed by CW 1 during August, September and October, 1996. CW 1 has admitted that the services specified in the invoice were not in fact performed. The Organization paid this invoice on or about November 14, 1996. CW deposited the money to his d/b/a. 21. On or about November, 1996, CW 1 asked CW 2 to contribute an additional $50,000 to the Carey campaign. Based on CW 1's promises to reimburse CW 2, CW 2 agreed to make the contribution. On or about November 27, 1996, CW 2 wrote a $50,000 check payable to Teamsters for a Corruption Free Union, which was sent by mail to the Carey campaign's lawyers in the Southern District of New York.  

22. CW 1 has informed me that he used money he received form the Printing Company, the IBT and the Organization to reimburse CW 2's contributions. According to copies of checks and other records that I have reviewed, between on or about November 11 and on or about November 17, CW 1 withdrew $95,000 from his d/b/a account. On or about November 29, 1996, CW 2 deposited $90,000 into her investment account. CW 2 also has informed me that the $90,000 constituted reimbursement for her $95,000 contribution to the Carey campaign.  

23. I have reviewed documents submitted to the Election Officer for the 1996 IBT election by the Carey Campaign's lawyer. According to these submissions, the money raised through Teamsters for a Corruption Free Union, including the contributions of CW 1, were used to pay for the direct mail services performed for the Carey campaign by MARTIN DAVIS's company, the November Group. 

WHEREFORE, deponent prays that a warrant be issued for the arrest of the above-named individual, that he be arrested and imprisoned or bailed as the case may be, and this complaint be filed under seal. 

JOSEPH T. PHELAN Special Agent Federal Bureau of Investigation 

Sworn to before me this day of June, 1997. 

Sharon E. Grubin United States Magistrate Judge Southern District of New York