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.
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.
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.
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