Biaggi Guilty of Extorting Wedtech Stock
A federal court jury found 10-term Rep. Mario Biaggi guilty Thursday of extorting $3.6 million of stock from the Wedtech Corp. in exchange for using his political influence to obtain military contracts for the South Bronx defense firm, which President Reagan once hailed as a symbol of free enterprise.
As the jury rendered its verdict, the 71-year-old New York Democrat took off his glasses and bowed his head, listening as five of six co-defendants were also found guilty of a variety of charges that included racketeering, conspiracy, extortion, bribery, mail fraud and income tax evasion. The jury had deliberated for six days.
Biaggi’s 39-year-old son, Richard, was convicted of bribe-taking, mail fraud and the illegal receipt of a gratuity, but he was acquitted on the racketeering charges.
The congressman, a former highly decorated New York City police officer, was found guilty of extorting Wedtech stock and $50,000 in cash from the company, filing false income tax returns to hide his gains and filing false financial disclosure statements required by the Ethics in Government Act.
“Obviously, we’re displeased with the verdict, and we plan to appeal the decision,” said James M. LaRossa, the congressman’s lawyer.
Biaggi had little to say as he slowly made his way out of the fifth floor courtroom with the aid of a cane. When pressed for comment, he responded: “I think the attorney told you.”
U.S. District Judge Constance Baker Motley set sentencing in the case for Nov. 18. All of the defendants remain free on bail.
Although the congressman previously had been sentenced to 30 months in prison in another case, he is running for reelection to his 11th term. The New York state Board of Elections ruled Thursday that Biaggi could remain on the ballot, despite the convictions.
Earlier this year, the staff of the House Ethics Committee recommended that Biaggi be expelled for the earlier conviction, but action on the recommendation was postponed until he could defend himself.
The House now is scheduled to begin debate Sept. 7 on whether to expel Biaggi. That is a week before the New York primary.
In the Wedtech case, Biaggi faces penalties of up to 20 years in prison and a fine of $250,000 for racketeering and 20 years and $250,000 as well for racketeering and conspiracy.
Family Gives Support
Biaggi and his son hugged and kissed after all the verdicts were read. Biaggi’s other family members then came forward to give support. “My father and my brother are innocent people,” said Jacqueline Biaggi, the congressman’s daughter.
Later, Biaggi, exhausted and appearing to be close to tears, sat on a bench outside the courtroom. Still later, he was taken to a nurse’s office in the courthouse and examined by his personal physician after experiencing chest pains. Biaggi left the building through a side entrance to avoid photographers.
Alan Kaufman, the lawyer for Ronald Betso, the only defendant who was completely acquitted, said: “We’re just grateful the jury did what it did. We are upset he had to sit here for five months. We don’t think he should have been included in this case.”
Betso, a former New York City police officer, was charged with being a front in the receipt of Wedtech stock for Peter Neglia, the former acting director of the Small Business Administration, who was also found guilty of charges including conspiring, aiding and abetting the racketeering scheme. During the trial, witnesses testified that Neglia falsely validated Wedtech as a minority enterprise in exchange for a $100,000-a-year job with Biaggi’s law firm, plus Wedtech stock options.
The other three defendants, Biaggi’s former law partner, Bernard Ehrlich, former Bronx Borough President Stanley Simon and Wedtech founder John Mariotta were also found guilty of turning Wedtech into a racketeering enterprise that handed out millions of dollars in bribes to win no-bid defense contracts set aside for minority owned businesses.
Phone Records Introduced
During the five-month trial, in which 138 witnesses were called, prosecutors introduced telephone records showing that Biaggi sought to help Wedtech by calling Sen. Alfonse M. D’Amato (R-N.Y.) and the late Rep. Joseph P. Addabbo of Queens, to try to enlist their aid in getting federal contracts.
Prosecutors also charged that Wedtech abused the system set up to give contracts to deserving minority owned businesses by falsely structuring ownership of the company so it could compete for SBA loans, then used its political clout to kill off competition and undermine the entire minority contracting program.
Wedtech, which began in 1965 as a machine shop, grew to become the South Bronx’s biggest employer. The company’s former chairman, Mariotta, was honored by President Reagan as a “hero for the 80s” before the company filed for bankruptcy.
Lawyers for Biaggi contended that Wedtech did not need his help to gain lucrative no-bid defense contracts because company executives enjoyed access to the Reagan Administration through Atty. Gen. Edwin Meese III; E. Robert Wallach, who was Meese’s longtime friend and personal lawyer; Lyn Nofziger, President Reagan’s former political adviser, and W. Franklyn Chinn, Meese’s former financial adviser.
Chinn, Wallach and R. Kent London, an associate of Chinn, are scheduled to be tried in January on racketeering charges. They are accused of using funds from Wedtech to try to influence Meese.
Meese Was Not a Witness
Meese did not appear as a witness during the current trial. Judge Motley agreed with the prosecution that his testimony was unnecessary. A special prosecutor who investigated Meese did not seek an indictment of him in the Wedtech case, concluding that insufficient evidence existed that the attorney general had committed an offense under anti-gratuity and bribery laws.
In his rebuttal to the defense’s closing arguments, Assistant U.S. Atty. Howard Wilson likened the defense strategy to the defense used by a squid that squirts black ink into the sea when attacked. “Everything gets cloudy, everything gets muddy,” Wilson told the jury. “It is impossible to see the creature and he escapes.”
Another prosecutor, Edward Little, charged in his summation that Meese “was a sleaze” but that his activities did not pertain to the guilt or innocence of Biaggi and the other defendants. He attacked Biaggi as “a thug in a congressman’s suit” who extorted millions of dollars in stock from Wedtech.
Little charged that the congressman asked for 5% of Wedtech’s stock and disguised his ownership under the name of his son, Richard. The stock allegedly was in exchange for helping to further Wedtech with federal agencies.
Wrote Letters to Officials
The company hired Biaggi’s law firm in 1979 after the congressman had spent a year writing letters to government officials on behalf of Wedtech. Prosecutors charged that Biaggi used the firm as a front to hide his Wedtech stock--worth $3.6 million--and sought to disguise the stock as payment for legal fees.
After the verdict was announced Thursday. U.S. Atty. Rudolph W. Giuliani held a press conference, during which he defended Little’s use of the word “sleaze” to describe Meese. Giuliani said that any criticism for Little’s remarks should be directed at him.
“All of his (Little’s) arguments and comments were authorized by me and approved by me, including some that drew some criticism from the Department of Justice,” Giuliani told reporters. “Those comments were authorized and approved by me in advance. It’s as if I said them.”
