Accused of Mob Ties Man Fights To Clear His Name, Company
The parcel intercepted at the bustling FedEx Super Hub in Memphis didn’t have the proper paperwork, U.S. Customs officials said.
Jerry Marchelletta Jr., president of The Circle Group, was convicted -- along with his father -- of tax fraud in 2007. In December, the federal appeals court reversed the convictions and prosecutors are deciding whether to retry the father and son.
Inside it, they found $1.5 million in checks being sent to the Bahamas from a Alpharetta construction company.
That find in 2001, agents say, triggered a federal investigation into Jerry Marchelletta Jr., president of that company, The Circle Group, a fast-growing business that helped build some of Atlanta’s signature buildings.
Marchelletta, who grew up in Long Island, had been dropping thousands of dollars at the Gold Club, the former Atlanta strip club the feds believed was laundering money for the Gambino crime family. Was Marchelletta working for the Mafia? The FBI apparently suspected so, and launched a probe into money laundering and La Cosa Nostra (organized crime) ties.
That investigation fizzled, but prosecutors ultimately convicted Marchelletta and his father for tax evasion in 2007.
Now Marchelletta, who won an appeal of the conviction, is waging an offensive against the government, alleging an overreaching prosecution, rampant subterfuge and even ethnic stereotyping. “It’s reprehensible,” he said in a recent interview.
His attorney, Robert Bernhoft, said the feds investigated Marchelletta after seeing he was a big spender who looked like he might be connected.
“Jerry Marchelletta looks Italian. He wears nice suits. He’s from New York. He’s in construction. He must be a mobster,” Bernhoft said, mocking prosecutors.
The feds had another motive, too, Bernhoft said. At the time, the government’s money-laundering case against the owners of the Gold Club and its attempts to prove mob ties — despite a parade of testimony from strippers, sports stars and hit men — had been a bust.
The 2001 Gold Club trial ended with fines, short sentences and acquittal of reputed Gambino captain Michael “Mikey Scars” DiLeonardo. “The government struck out big time in the Gold Club case,” Bernhoft said. “The government got a black eye.”
‘We’ve been violated’
After the FBI investigation of Marchelletta stalled, federal authorities — led by Customs and the IRS — kept after him. In 2007, a federal jury convicted Marchelletta and his father, Jerry Sr., of conspiracy and evading more than $1.5 million in income taxes.
Prosecutors did not address the defense allegations but said jurors heard two weeks of evidence and convicted them. In trial, prosecutors argued the Marchellettas set up a sophisticated system to “wash” money by moving it through several company accounts, sending it offshore and concocting fake loans that went unpaid. The Gold Club visits, for example, were written off as vehicle expenses, prosecutors said.
The Marchellettas weren’t living the American Dream, they were defrauding it, Assistant U.S. Attorney Justin Anand said at the Marchellettas’ sentencing hearing.
But last December, a federal appeals court overtured the convictions. Prosecutors are asking the court to reconsider its decision.
Marchelletta recently sat for an interview at The Circle Group’s stylish headquarters. It’s a more sedate place these days; the company has fewer than 200 workers, a sixth of the total in the company’s heyday. He said he wanted to speak publicly, despite the risk he could still be retried, because “people need to know what was done here.”
“We’ve been violated. You don’t grow up thinking, ‘This is the way the system is.’
“Thank God we had the financial wherewithal to fight this,” he added. The Marchellettas have spent more than $4 million in legal fees since 2001, their attorney estimates.
Growing with Atlanta
Marchelletta’s father was an estimator for a New York construction company, working on jobs like the World Trade Center. As a boy, Marchelletta added up dad’s spreadsheets and eventually joined the business. But he soon decided to look for success elsewhere.
He researched business and demographic trends and realized Atlanta, with an Olympics in its future, “was ready to go through a population boom.”
In 1993, he started out in an 10- by 12-foot office on gritty Bankhead Highway and bid on “everything I could get my hands on.” Finally he won an $800,000 bid from Emory University and then some Olympics work, installing drywall at the athletes’ dorms downtown.
Drywall firms didn’t get much respect in the South, Marchelletta said. They were seen as practitioners of a low-skilled craft. But Circle Group did things differently. It paid benefits, which built worker loyalty, had workers perform tasks besides installing drywall and was among the first metro contractors to hire immigrants.
By 2001, Circle Group was generating $26 million a year. Jerry Sr. had moved south to join his son and they were building their dream homes.
The younger Marchelletta’s $1.9 million, 6,500-square-foot home had a $25,000 fountain out front and a Sistine Chapel ceiling mural in the foyer, facts prosecutors relished telling jurors. His father’s home was worth about $1.3 million.
It was during this time that the company checks, which Marchelletta said were to pay crews at the Atlantis resort in the Bahamas, were seized. How agents plucked that envelope from among the millions heading through the FedEx hub that day is still not clear.
Tax conviction
A year later, an IRS agent drove by Marchelletta Jr.’s home and wondered how his $150,000 annual income financed such a lavish lifestyle. A grand jury probe followed.
Prosecutors argued the Marchellettas used company funds to build the houses, buried the costs in company files, then hired an overwhelmed accountant to “audit” the hundreds of files, knowing he’d never find “the needle in a haystack.”
In his interview with the AJC, Marchelletta declined to comment on the tax charges. At trial, defense attorneys argued the Marchellettas were not hiding anything and had been late paying taxes because they followed the auditor’s advice. But in 2007, a jury found them guilty of tax evasion and conspiracy.
Marchelletta was sentenced to 36 months in prison, his father to 33 months — less than prosecutors sought. Both have remained free on bond. The appeals court ruled the judge should have allowed defense attorneys to tell jurors that the Marchellettas were relying on the auditor’s advice.
At the time of their sentencing, the Marchellettas ran the state’s largest wall and ceiling installer, with 1,200 employees and $88 million in revenue, according to Engineering News-Record, an industry magazine.
Circle Group’s client list is a road map of the region’s recent booms: InterContinental Buckhead, High Museum of Art, Home Depot headquarters, Gwinnett Center, World of Coca-Cola, The St. Regis Atlanta.
Union involvement?
As the non-union Circle Group expanded, it also drew the ire of the Southeastern Carpenters Regional Council, which has waged noisy protests at some buildings.
Court records say union members allegedly sent Valentine’s Day cards to Marchelletta’s children after the tax convictions, saying they should be ashamed of their family name.
The union declined comment. The Circle Group is suing the union, contending it is intimidating companies to scare them from doing business with it.
The Marchellettas also are suing the IRS and other agencies under the Freedom of Information Act, alleging the government has withheld documents their defense should have received at trial. The FBI’s La Cosa Nostra investigation is one example, said Bernhoft, an outspoken lawyer who has represented actor Wesley Snipes.
The union lawsuit has unearthed documents in which the union boasted it was “working side by side” with federal agents and prosecutors, according to court papers obtained by The Atlanta Journal-Constitution. A 2005 union document states: “The Feds are also concentrating on prosecuting Circle Industries, a large regional unscrupulous contractor with possible mob ties.”
At the Marchellettas’ sentencing in 2008, union protesters stood outside the courthouse with a banner: “Shame on you Jerry Marchelletta Sr.”
Work drying up
U.S. District Court Judge Timothy Batten called the union activities “below the belt.” The Marchellettas, he said, were hard-working “good people” and likable family men who were loyal to employees.
But theirs was among the largest tax-fraud cases in Atlanta in the past decade, and Batten said it deserved more than a slap on the wrist. “I mean, you don’t evade taxes to the tune of more than $1 million and not expect to go to prison,” he said.
With the case still pending, prosecutors must consider a recent ruling by Batten, who questioned the credibility of the chief IRS agent in the case. The judge noted the woman gave three versions of how she got involved in the grand jury investigation.
Marchelletta Jr. was at the company Christmas party when he learned the convictions were overturned. Though heartened by the turn of events, he said drumming up business is tougher than ever because of a “whispering campaign” about the criminal case.
“We’ve set a record for finishing second the last few years,” he said with a grimace.
http://www.ajc.com/news/atlanta/fighting-to-clear-his-861623.html
That find in 2001, agents say, triggered a federal investigation into Jerry Marchelletta Jr., president of that company, The Circle Group, a fast-growing business that helped build some of Atlanta’s signature buildings.
Marchelletta, who grew up in Long Island, had been dropping thousands of dollars at the Gold Club, the former Atlanta strip club the feds believed was laundering money for the Gambino crime family. Was Marchelletta working for the Mafia? The FBI apparently suspected so, and launched a probe into money laundering and La Cosa Nostra (organized crime) ties.
That investigation fizzled, but prosecutors ultimately convicted Marchelletta and his father for tax evasion in 2007.
Now Marchelletta, who won an appeal of the conviction, is waging an offensive against the government, alleging an overreaching prosecution, rampant subterfuge and even ethnic stereotyping. “It’s reprehensible,” he said in a recent interview.
His attorney, Robert Bernhoft, said the feds investigated Marchelletta after seeing he was a big spender who looked like he might be connected.
“Jerry Marchelletta looks Italian. He wears nice suits. He’s from New York. He’s in construction. He must be a mobster,” Bernhoft said, mocking prosecutors.
The feds had another motive, too, Bernhoft said. At the time, the government’s money-laundering case against the owners of the Gold Club and its attempts to prove mob ties — despite a parade of testimony from strippers, sports stars and hit men — had been a bust.
The 2001 Gold Club trial ended with fines, short sentences and acquittal of reputed Gambino captain Michael “Mikey Scars” DiLeonardo. “The government struck out big time in the Gold Club case,” Bernhoft said. “The government got a black eye.”
‘We’ve been violated’
After the FBI investigation of Marchelletta stalled, federal authorities — led by Customs and the IRS — kept after him. In 2007, a federal jury convicted Marchelletta and his father, Jerry Sr., of conspiracy and evading more than $1.5 million in income taxes.
Prosecutors did not address the defense allegations but said jurors heard two weeks of evidence and convicted them. In trial, prosecutors argued the Marchellettas set up a sophisticated system to “wash” money by moving it through several company accounts, sending it offshore and concocting fake loans that went unpaid. The Gold Club visits, for example, were written off as vehicle expenses, prosecutors said.
The Marchellettas weren’t living the American Dream, they were defrauding it, Assistant U.S. Attorney Justin Anand said at the Marchellettas’ sentencing hearing.
But last December, a federal appeals court overtured the convictions. Prosecutors are asking the court to reconsider its decision.
Marchelletta recently sat for an interview at The Circle Group’s stylish headquarters. It’s a more sedate place these days; the company has fewer than 200 workers, a sixth of the total in the company’s heyday. He said he wanted to speak publicly, despite the risk he could still be retried, because “people need to know what was done here.”
“We’ve been violated. You don’t grow up thinking, ‘This is the way the system is.’
“Thank God we had the financial wherewithal to fight this,” he added. The Marchellettas have spent more than $4 million in legal fees since 2001, their attorney estimates.
Growing with Atlanta
Marchelletta’s father was an estimator for a New York construction company, working on jobs like the World Trade Center. As a boy, Marchelletta added up dad’s spreadsheets and eventually joined the business. But he soon decided to look for success elsewhere.
He researched business and demographic trends and realized Atlanta, with an Olympics in its future, “was ready to go through a population boom.”
In 1993, he started out in an 10- by 12-foot office on gritty Bankhead Highway and bid on “everything I could get my hands on.” Finally he won an $800,000 bid from Emory University and then some Olympics work, installing drywall at the athletes’ dorms downtown.
Drywall firms didn’t get much respect in the South, Marchelletta said. They were seen as practitioners of a low-skilled craft. But Circle Group did things differently. It paid benefits, which built worker loyalty, had workers perform tasks besides installing drywall and was among the first metro contractors to hire immigrants.
By 2001, Circle Group was generating $26 million a year. Jerry Sr. had moved south to join his son and they were building their dream homes.
The younger Marchelletta’s $1.9 million, 6,500-square-foot home had a $25,000 fountain out front and a Sistine Chapel ceiling mural in the foyer, facts prosecutors relished telling jurors. His father’s home was worth about $1.3 million.
It was during this time that the company checks, which Marchelletta said were to pay crews at the Atlantis resort in the Bahamas, were seized. How agents plucked that envelope from among the millions heading through the FedEx hub that day is still not clear.
Tax conviction
A year later, an IRS agent drove by Marchelletta Jr.’s home and wondered how his $150,000 annual income financed such a lavish lifestyle. A grand jury probe followed.
Prosecutors argued the Marchellettas used company funds to build the houses, buried the costs in company files, then hired an overwhelmed accountant to “audit” the hundreds of files, knowing he’d never find “the needle in a haystack.”
In his interview with the AJC, Marchelletta declined to comment on the tax charges. At trial, defense attorneys argued the Marchellettas were not hiding anything and had been late paying taxes because they followed the auditor’s advice. But in 2007, a jury found them guilty of tax evasion and conspiracy.
Marchelletta was sentenced to 36 months in prison, his father to 33 months — less than prosecutors sought. Both have remained free on bond. The appeals court ruled the judge should have allowed defense attorneys to tell jurors that the Marchellettas were relying on the auditor’s advice.
At the time of their sentencing, the Marchellettas ran the state’s largest wall and ceiling installer, with 1,200 employees and $88 million in revenue, according to Engineering News-Record, an industry magazine.
Circle Group’s client list is a road map of the region’s recent booms: InterContinental Buckhead, High Museum of Art, Home Depot headquarters, Gwinnett Center, World of Coca-Cola, The St. Regis Atlanta.
Union involvement?
As the non-union Circle Group expanded, it also drew the ire of the Southeastern Carpenters Regional Council, which has waged noisy protests at some buildings.
Court records say union members allegedly sent Valentine’s Day cards to Marchelletta’s children after the tax convictions, saying they should be ashamed of their family name.
The union declined comment. The Circle Group is suing the union, contending it is intimidating companies to scare them from doing business with it.
The Marchellettas also are suing the IRS and other agencies under the Freedom of Information Act, alleging the government has withheld documents their defense should have received at trial. The FBI’s La Cosa Nostra investigation is one example, said Bernhoft, an outspoken lawyer who has represented actor Wesley Snipes.
The union lawsuit has unearthed documents in which the union boasted it was “working side by side” with federal agents and prosecutors, according to court papers obtained by The Atlanta Journal-Constitution. A 2005 union document states: “The Feds are also concentrating on prosecuting Circle Industries, a large regional unscrupulous contractor with possible mob ties.”
At the Marchellettas’ sentencing in 2008, union protesters stood outside the courthouse with a banner: “Shame on you Jerry Marchelletta Sr.”
Work drying up
U.S. District Court Judge Timothy Batten called the union activities “below the belt.” The Marchellettas, he said, were hard-working “good people” and likable family men who were loyal to employees.
But theirs was among the largest tax-fraud cases in Atlanta in the past decade, and Batten said it deserved more than a slap on the wrist. “I mean, you don’t evade taxes to the tune of more than $1 million and not expect to go to prison,” he said.
With the case still pending, prosecutors must consider a recent ruling by Batten, who questioned the credibility of the chief IRS agent in the case. The judge noted the woman gave three versions of how she got involved in the grand jury investigation.
Marchelletta Jr. was at the company Christmas party when he learned the convictions were overturned. Though heartened by the turn of events, he said drumming up business is tougher than ever because of a “whispering campaign” about the criminal case.
“We’ve set a record for finishing second the last few years,” he said with a grimace.
http://www.ajc.com/news/atlanta/fighting-to-clear-his-861623.html
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