(WHAM) - After nearly two years under a federal investigation, prominent Rochester developer Robert Morgan and three others who were indicted on fraud charges have had their cases dismissed.
U.S. District Judge Elizabeth Wolford handed down an 83-page decision Thursday afternoon, dismissing the 114-count federal indictment against Morgan, his son Todd Morgan, Frank Giacobbe, and Michael Tremiti accusing them of a decade-long scheme to defraud banks and government financial institutions by giving them fake information, and overstating property incomes to get higher loans.
Giacobbe – who owns Aurora Capital Advisors – and Patrick Ogiony, one of Giacobbe’s employees, were accused of fraud related to financing of properties under Morgan Management. It was alleged Bob Morgan, Tremeti and Morgan’s nephew, Kevin Morgan, manipulated income and expenses to meet debt service coverage ratios of lending agencies.
Both Kevin Morgan and Ogiony have pleaded guilty to conspiracy to commit bank fraud.
In the decision, Wolford said it was "self-evident and cannot be reasonably disputed” that prosecutors mishandled evidence in their investigation.
“It is not clear whether the government’s missteps are due to insufficient resources dedicated to the case, a lack of experience or expertise, an apathetic approach to the prosecution of this case, or perhaps a combination of all of the above,” Wolford said in the decision.
Offering perspective on the case, Attorney Vincent Merante says despite criminal procedure law must always be followed. "In that law, there are time restraints," said Merante. "The prosecutor and the defense attorney has to follow those time restraints to a T. If not you're penalized."
Prosecutors executed a search warrant in May 2018 to obtain evidence, but failed to meet court-imposed deadlines of processing evidence and discovery items as outlined by the court. Multiple deadlines were set to allow prosecutors to hand over evidence to the defense ahead of the trial, but those deadlines came and went.
In August 2019, prosecutors handed over 2.1 million pages of discovery, but there seemed to be other issues as well that contributed to delays in the preparations for a trial.
Over the course of 14 months, prosecutors only processed 5 of 8 computers seized with search warrants. They also seized Todd Morgan’s iPhone in May 2018, but still have not processed it to date. The former chief financial officer for Morgan Management had a backup server in his basement and was going to get rid of it because he had cancer. Prosecutors were able to get the server, but did not use it and were unable to provide defense attorneys with access to it because it was taking too long to power up the server and get it back online.
All hearings were suspended between March and July due to the coronavirus pandemic.
During hearings that resumed in late July, computer analysis experts testified that missing metadata and problems with electronic processing were related to prosecutors processed the evidence. Defense attorneys asserted the prosecution used at least four different methods to analyze the evidence files, which made it difficult to sort through afterward.
Essentially, Wolford wrote, prosecutors “failed to effectively manage” the evidence they were processing and "because of its own negligence”, failed to meet deadlines set by the court.
Due to those failures, the "the statutory speedy trial clock” expired, leading for the judge to dismiss the indictment.
Wilford ruled, however, that the charges would be dismissed without prejudice, which could allow for charges to be reintroduced at a later point.
Merante says with a case this size, it's unlikely it will fall to the wayside. "So the celebration is going to be short-lived," said Merante. "I do have a feeling that even though the defense attorneys did a fine job, I believe the celebration is going to be short-lived and the case will be re-presented to a federal grand jury."
In a statement Thursday, U.S. Attorney James Kennedy said, "As the dismissal was without prejudice, charges may be re-filed. We are currently reviewing the decision and considering our options.”
Last month, the SEC said it reached a settlement with Bob Morgan. Under that proposed settlement, he would not be forced to pay a civil penalty.
In a statement Thursday, attorney for Todd Morgan, David Rothenberg said he was please with the decision and will "wait to see what happens next."