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Special Report: No deal for Monus, bad deal for fraud victims
Sunday, September 17, 2000 By Bill Moushey, Post-Gazette Staff Writer
YOUNGSTOWN, Ohio -- Timothy Fraelich wanted to know where his mom's money was.
It had been more than two years since a jury ruled against a northeastern Ohio doctor and hospital in the death of Fraelich's father, Paul.
For most of that time, Fraelich, himself a lawyer with the Cleveland firm of Jones Day Reavis and Pogue, believed the stories that Richard Goldberg, the family's personal-injury lawyer, was telling:
The money, now more than $1 million with interest, was tied up in appeals. Or an insurance carrier that was supposed to cover the hospital's loss was broke.
Be patient, the 55-year-old Goldberg said.
The Fraelichs had hired Goldberg on his reputation in the personal-injury game, where justice is measured by the dollar. The family didn't yet realize that Goldberg had equal skills as a con man.
Finally, in April 1999, Fraelich learned that most of the judgment had been paid to Goldberg two years earlier. Fraelich went to the FBI.
The man who wore a full-length fur coat and owned a jet and a fleet of classic cars had stolen the money and is now imprisoned.
The judgment that was to have gone to Fraelich's 74-year-old mother, Dorothy, was part of at least $4.5 million Goldberg stole from 23 clients between 1993 and 1999.
What Fraelich would later learn about Goldberg would stun him as much as discovering that his mother's money was gone.
A year and a half earlier, a paralegal in Goldberg's office, Mary Ciferno, had alerted federal authorities about the attorney's actions, but, apparently, nothing was done to stop him.
Ciferno went to the government after telling her fiance (and now husband), Mickey Monus, that she feared she had broken the law in carrying out Goldberg's orders.
Monus, 53, was in prison for defrauding the Phar-Mor drug store chain of which he had been president. He wanted to stop the fraud while helping himself and his soon-to-be wife.
In 1995, a jury had found Monus guilty of tampering with the company's books and of looting its coffers to support his failed World Basketball League and an extravagant lifestyle.
The guilty verdict on all 109 counts was a major victory for the federal government, which had set out to prove that Monus had masterminded one of the biggest frauds in U.S. history.
The prosecution had cost the government heavily in time and money in three trials.
While officials in the U.S. Attorney's Office for the Northern District of Ohio showed initial interest in Ciferno's claims, they ultimately refused to deal with her.
Why?
Monus saw Goldberg as a path to reducing his 191/2-year prison sentence. Ciferno would provide information about Goldberg's thievery, and Monus would get any sentence-reduction consideration that Ciferno earned.
The federal government allows friends and relatives of criminals to do that.
But not in this case. The feds doubted his credibility, particularly at a time when they still were prosecuting him on a charge of tampering with the jury in his first trial.
He later would be acquitted of that charge, and that seemed to further strengthen the government's resolve not to listen to Ciferno.
That inaction, Monus now contends, allowed Goldberg to continue to steal from disabled clients and the families of others who died, including the Fraelichs.
"All they had to do back then to find out whether what I was talking about was true or not was call Mr. Fraelich on the phone and ask him if he got his check yet," Monus said in an interview at a federal prison camp in Elkton, Ohio.
"This is not rocket science, this is not something that doubts Mickey Monus' credibility. ... We had the facts of a major crime that they could have found out about with a two-minute telephone call.
"This thing doesn't get to my credibility, it gets to the point that they didn't want to give Mickey Monus credit, so therefore they didn't stop the crime," Monus said.
Timothy Fraelich said he was astounded that the government took no action while there was still a chance to preserve some of his mother's money.
"You like to believe your government works. Then this kind of stuff happens, and you don't know."
William Edwards, first assistant U.S. attorney in Cleveland, said the government could not discuss the matter "due to ongoing litigation involving a number of the individuals" in the Goldberg case.
Last week, in an answer to Monus' latest appeal, federal prosecutors repeated the government's position that Monus provided no help in the Goldberg matter and already has received all the consideration he deserves.
A wrongful death
Paul D. Fraelich of Newton Falls, went into Northside Hospital in Youngstown in late 1991 for coronary-bypass surgery.
He died Jan. 14, 1992, of complications from a stroke caused by a blood clot after the surgery.
In April 1994, the Fraelichs hired Goldberg to sue the hospital, the Western Reserve Care System that owned it, and Dr. John Agnone, the surgeon.
Goldberg took the case on a 50 percent contingency fee, meaning he'd get half of any judgment.
In November 1996, a jury awarded the Fraelichs $864,774.
Ciferno said the verdict sparked an emotional scene at the firm's office.
"It was a very hard case, and everyone worked very hard on it, so we celebrated," Ciferno said.
A month later, the surgeon made a payment of $432,387 to the law firm.
The check was payable to Goldberg and Andrew Fraelich, Timothy's brother and executor of his father's estate. Andrew Fraelich would later sign a sworn statement saying he never endorsed the check.
Ciferno said she signed Fraelich's name on the check. She said Goldberg told her he had authority from the Fraelichs to deposit the money into his client trust account.
The Fraelichs were in constant contact with Goldberg, who sent them legal briefs about the case.
One document they said they never saw was a January 1997 filing in a Mahoning County court stating that the doctor's portion of the judgment had been satisfied.
In February 1997, the damage award was increased to $951,804 on Goldberg's successful argument on the calculation of damages. The Western Reserve Care System appealed the amount to Ohio's Seventh Circuit Court of Appeals.
In his sworn statement to the FBI two years later, Timothy Fraelich said Goldberg told his family that "as a result of the appeal, both defendants had decided not to pay any portion of the judgment."
In April 1997, a check for $266,738 was sent to Goldberg from the hospital, again payable to him and Andrew Fraelich. That brought to $742,640 the amount Goldberg had collected in the case.
Again, Andrew Fraelich said he knew nothing about it. Ciferno signed his name to that check, too. It was at that point, she said, that she began to realize something wasn't right.
"The clients didn't know the money was in. Since they didn't know it was in, they didn't know enough to ask for the money," she said.
Loyalty, combined with what she said was Goldberg's overbearing personality, kept her from saying anything. She also needed her $30,000-a-year job.
"He had a way of mesmerizing people. By the time he was done with you, he could convince you of anything."
The Fraelichs instructed Goldberg to file a motion for post-judgment interest so the settlement sum would grow as if it had been in an interest-bearing account.
Goldberg said he would do that, but he had more bad news. He told the family the hospital owner was stepping up the fight with still another appeal. Goldberg sent Timothy Fraelich a copy of an appeal brief filed by the Western Reserve Care System.
It did not include any mention of the payments already made, Ciferno said, because Goldberg had instructed her to delete it.
"The part I retyped had no reference to any money," she said.
She was certain now that Goldberg was stealing. She said it began affecting her, both physically and mentally.
Finally, in November 1997, she turned to her new love, the imprisoned Monus. She had met him years before as Monus prepared his defense against the 109-count indictment charging him with defrauding Phar-Mor investors.
Goldberg and Monus weren't friends, but Goldberg knew Monus' brother, and they had other mutual acquaintances. So Goldberg lent Monus office space and the aid of Ciferno and other paralegals to craft a trial strategy.
Despite their 18-year age difference, Ciferno and Monus grew close as she helped with his case. After his conviction, with her own marriage faltering and his second one over, they became lovers and were married in the Federal Correction Institution at Elkton on Nov. 10, 1998. She now goes by her married name, Mary Ciferno Monus.
It was a year earlier, during a visit to the prison, that Ciferno told Monus of her suspicions about Goldberg.
During his time in the office, Monus came to admire Goldberg, a hulking 6-foot, 4-inch, 275-pound man who used hard work and an intense courtroom presence to build a reputation as one of Ohio's best personal-injury lawyers.
Goldberg wore tailor-made suits and had 60 cars, including a $250,000 bullet-proof Chevrolet Suburban once owned by Sylvester Stallone and two Ferraris once owned by boxer Mike Tyson.
He lived in Youngstown's Liberty suburb in a house that had a gym, an indoor pool and outdoor tennis courts. He was a partner in an auto dealership and a condominium development in Florida and invested in apartment complexes in Youngstown and Hermitage, Pa.
Ciferno told Monus that Goldberg was financing that lifestyle with money owed to clients and other lawyers.
"She gave me examples. The first example she gave me was the Fraelich example," he said.
She also claimed Goldberg was giving money to at least one judge. She has a copy of a $20,000 check drawn on Goldberg's account on Feb. 2, 1998, made out to "Ed Cox."
Based in Youngstown, Judge Edward A. Cox is a member of Ohio's Seventh Circuit Court of Appeals.
Cox subsequently told investigators that the check was a loan from Goldberg, his friend of more than 25 years. Cox said in a recent interview that he needed the money to pay off personal debts.
According to financial disclosure statements filed with the Ohio Ethics Commission, Cox did not report the loan until this year, almost a year after Goldberg's crimes became public knowledge.
While Cox said during an interview that he had been cleared of criminal wrongdoing, he acknowledged that accepting the loan was in violation of judicial ethics and said the Ohio Judicial Disciplinary Counsel was dealing with the matter.
He said he had yet to satisfy the loan because he was waiting for his attorneys to determine who should receive the repayment.
John Coughlan, disciplinary counsel for Ohio, said no public action had been taken against Cox.
Let's make a deal
Monus told Ciferno that her participation in Goldberg's activities left her open to prosecution, too.
"She didn't realize she had culpability, [she told me] 'Well, I'm just doing what he said.'
"I said, 'You're just following instructions? If he told you to go kill someone, would that be OK? These things are criminally wrong, this is a big problem.'"
Monus called Peter Goldberger, his appellate attorney from suburban Philadelphia, who immediately hooked Ciferno up with attorney Caroline Roberto of Pittsburgh.
They hatched a three-point plan: Get Ciferno immunity from prosecution in return for her cooperation with investigators; stop Goldberg's thievery; and get Monus' sentence reduced.
In early 1998, Goldberger approached the two federal prosecutors handling Monus' case and said a client had evidence of ongoing fraudulent activity. He said he never used Monus' name, but government officials quickly realized that Monus was his only client in northern Ohio.
Goldberger said the government wasn't interested in any information from Monus.
Then William Byer, whom Monus had hired to represent him in the jury-tampering case, became the point man.
As the former U.S. Attorney for the Northern District of Ohio, Byer knew the government frequently cut sentence-reduction deals like the one Monus and Ciferno sought.
During his years in prison, Monus had seen a constant stream of convicts barter their way to freedom with information about others. He knew that under U.S. sentencing guidelines, one of the only ways to win a sentence reduction was to provide "substantial assistance" to investigators.
Waiting for one court appearance, he was put in a cell next to Lenine Strollo, a long-time La Cosa Nostra figure in Youngstown, who was pleading guilty to racketeering in exchange for a cooperation deal.
Strollo admitted to corrupting public officials, lawyers and others as well as to involvement in at least one murder. Facing a life term, Strollo was sentenced to 10 years in prison and was allowed to keep millions in illegally gained assets because of his assistance, which resulted in almost 60 arrests.
Monus, a non-violent criminal, hoped the government would cut his sentence for getting Ciferno to expose Goldberg's fraud.
Byer spoke with Assistant U.S. Attorneys John D. Sammon and James V. Moroney, who had won the Phar-Mor conviction against Monus.
Byer, too, never mentioned Monus' name, but the prosecutors knew who he was talking about. Byer left the meeting optimistic that the government was interested in talking.
But after Sammon and Moroney went to Matthew Cain, chief of the criminal division in the Cleveland office, Byer was told the government wanted nothing to do with Monus.
The government also said the accusations against Goldberg were a matter for Ohio state prosecutors, not the federal government.
Ciferno refused to go to the local district attorney. Goldberg was so connected in Youngstown legal and political circles that she feared he would learn of any investigation as soon as she started talking.
"I knew I couldn't go to the local authorities, so I figured if the feds didn't want to act on it, then so be it," she said.
As 1998 rolled on, Monus was increasingly desperate for a deal. Not only had he received 19 1/2 years for the Phar-Mor fraud convictions, he still faced the jury-tampering charges in connection with his first trial, which had ended with a hung jury.
Monus acknowledges that he rubbed federal agents and prosecutors the wrong way during his trials.
In fact, he acted in court like he did in the business world. At Phar-Mor, Monus earned a reputation as a relentless and often abrasive bully.
In a last-ditch effort, Goldberger, Monus' appellate attorney, wrote a letter in February 1998 to Marshall Jarrett, associate deputy U.S. attorney general in Washington, D.C.
He expressed dismay that the government seemed uninterested in "having information we could proffer [about an] ongoing multimillion-dollar fraud now being actively perpetrated by a personal-injury attorney in the Northern District of Ohio.
"How can it be in the public interest to dismiss this kind of offer out of hand?"
Jarrett responded about a month later: "The United States Attorney's office had exercised its decision appropriately ....[The local office] has made a considered and proper evaluation of your client's proffer and its ultimate usefulness when compared to his previous conduct."
A few breaks
With no knowledge of the Ciferno-Monus offer to the federal government, Timothy Fraelich continued to hound Goldberg about the status of his family's judgment.
On Jan. 13, 1998, Goldberg told Fraelich that P.I.E. Mutual Insurance Co., which provided coverage for the doctor and hospital in the case, was thrust into state control. In a letter typed by Ciferno, Goldberg said there were questions "as to whether or not there is sufficient money in the insurance company's possession to pay all of the claims that are now outstanding."
In prison, Monus had his hands full, too.
His appeal on what he claimed was an illegal and harsh sentence in the Phar-Mor conviction was coming up, and he also was preparing for his jury-tampering trial.
Plus, he continued to worry that Ciferno would be caught up in Goldberg's crimes.
Desperation slowly began changing into a little jubilation.
In March 1998, Monus was acquitted in the jury-tampering case after taking the stand in his own defense.
The jury found him more credible than the witnesses against him, including a former football player at Youngstown State University. That man said Monus, an ardent supporter of YSU sports, had given him money, an apparent violation of NCAA rules.
But the government thought its ace was the fact that the man had fathered two children with a woman who was the lone holdout juror when his first Phar-Mor case ended in a hung jury. Prosecutors, however, could not convince a jury that Monus had been able to affect the outcome of that case.
Then, an appeals court agreed with Monus that the government's calculations on monetary losses in the Phar-Mor case were incorrect. That case was sent back to the trial court for resentencing.
In February 1999, Monus and his attorneys raised the Goldberg fraud issue again during a five-hour resentencing hearing.
Senior U.S. District Judge George White reduced Monus' sentence by 40 percent, to 11 years, on the condition that Monus give up his rights to appeal.
Monus had hoped to get the sentence reduced to five years. But he was heartened by the fact that the government said, for the first time, that it would consider further reductions if Monus provided substantial assistance in any other criminal matters.
He would never hear from them on that topic.
Goldberg falls
As Monus maneuvered in court, the Fraelichs still were looking for their money. By their calculation, based on court-ordered 10 percent annual interest rates, their judgment had grown to at least $1.2 million.
On March 22, 1999, Goldberg called Timothy Fraelich to say Ohio's Seventh Circuit Court of Appeals had affirmed the jury verdicts, but that the defendants would probably appeal to the state Supreme Court, further delaying any payment of the judgment.
Timothy Fraelich would later say in a sworn affidavit to the FBI that Goldberg urged the family to accept a lesser amount to end the appeals and "allow your family to put this matter behind you so you can get some closure."
Fed up, Fraelich, on April 12, 1999, contacted attorneys for the health system his family had sued and learned that $742,640 of the judgment had been paid two years earlier.
Fraelich went to the FBI, nearly a year and a half after Monus' representatives had made their first overtures to the federal government.
The FBI launched an investigation, but instead of going to Ciferno, agents spent two months trying to draw Goldberg into a sting.
According to an affidavit an FBI agent later filed with the court, the government secured the help of someone else in Goldberg's office. The identity of that informant has not been revealed.
As word leaked out that federal investigators were finally after Goldberg, Ciferno's attorney, Caroline Roberto, realized the crimes Ciferno repeatedly tried to report might be turned against her. She, after all, had signed checks and done other questionable things at Goldberg's behest.
"At that point, we knew they weren't going to do anything for me, but we wanted to protect Mary," Monus said.
In late April 1999, Roberto contacted a Pittsburgh-based special agent from the Internal Revenue Service.
Again, she did not specifically mention the names of her clients, but she said the agent immediately realized she was talking about Ciferno and Monus when she provided specifics of the ongoing, multimillion-dollar Goldberg fraud. The agent initially told her a deal probably could be cut.
On May 20, 1999, the government agreed to give Ciferno immunity in exchange for a confidential statement about Goldberg's crimes. The agreement explicitly excluded any help for Monus.
But the government didn't seem to want to know everything she was willing to reveal.
Investigators were more interested in Goldberg's jet, the location of a gun he owned, and whether he was preparing to flee.
"The government never requested a full debriefing from [Ciferno] on the crimes committed at the Goldberg office which were within her knowledge and of which she possessed documentary evidence," Roberto wrote later to the government.
Goldberg was arrested May 21, 1999, and charged with one of the thefts. By June 1999, he faced a 10-count indictment charging him with fraud, bank fraud, mail fraud and related charges in connection with the $4.5 million stolen from 23 clients.
On Aug. 27, 1999, Goldberg cut his own deal in federal court. He pleaded guilty to eight counts of the indictment, crimes that could net him 30 years in prison and $1 million in fines.
He agreed to cooperate with investigators and to establish a trust fund to hold proceeds from the liquidation of his assets. That money would go to his clients.
In exchange, Goldberg received a 41-month prison sentence.
While his cars have been sold and assets amounting to about $500,000 have been recovered, the federal court has yet to pay a nickel to any of the swindled clients.
At his sentencing hearing, Goldberg apologized and asked for additional time to account for his assets.
He reported to prison 30 days later, on Dec. 16. The sentence was increased by six months after Goldberg was found in contempt of court for attending parties while he was supposed to be on home detention.
While federal prosecutors were waiting for Goldberg to establish the trust fund, Mahoning County Probate Judge Timothy P. Maloney hired investigators to examine evidence in 15 of the cases involving Goldberg clients.
After a surprise search of Goldberg's home and the examination of documents seized, Maloney found more than $1.3 million in various accounts. That has provoked suspicion that the now-disbarred lawyer hid assets between his arrest and plea, in violation of his agreement with the federal government.
Maloney also discovered that after Goldberg pleaded guilty but before he was sentenced, he did legal work and opened and closed bank accounts without the supervision of a court-ordered monitor.
In one case before Maloney, Goldberg persuaded clients to let him handle the proceeds from their $400,000 personal-injury settlement.
Maloney found the actions so egregious that he has already issued eight civil judgments against Goldberg and sentenced him to 21 months in the Mahoning County Jail on contempt of court charges. That sentence will begin after Goldberg is released from federal custody.
Several other probate cases are pending, and the Mahoning County district attorney's office is considering whether to file criminal charges against Goldberg related to them. Goldberg did not respond to written questions.
Monus fights on
Monus hasn't given up. He has filed a motion to compel the government to reduce his sentence based on his and his wife's cooperation.
The motion included a narrative of everything Ciferno had done or tried to do for the government, dating to late 1997.
Because of the sensitive nature of the information about Ciferno, both Goldberger and Roberto asked for it to be sealed to ensure no one would know what she had done in the case.
Usually, the government agrees to such action to protect its informants. But the government took no position on the motion to seal documents, and a judge refused to grant the order.
Within days, Ciferno's name was in the local media, identified as an informant.
If that wasn't damaging enough, Assistant U.S. Attorney David Sierleja stated in his motion opposing Monus' sentence reduction that Ciferno did not come forward until after the Goldberg case was concluded.
Oddly, that statement is in opposition to what Sammon, a fellow assistant U.S. attorney, wrote in a letter to Monus' prison camp administrator.
Sammon, who prosecuted Monus in the Phar-Mor case, recommended in August 1999 that Monus be transferred to a prison camp near Las Vegas, Nevada.
"In recent months, [Ciferno] has cooperated with and provided substantial information to this office and the Federal Bureau of Investigation in connection with the investigation of a prominent Youngstown attorney. That investigation led to an indictment of that attorney for theft of clients' funds totaling more than $1 million dollars," said Sammon.
Roberto finally wrote to the Cleveland U.S. attorney's office about the chain of events:
"We are very disappointed with your office's response to Mary's predicament. I have practiced law for 15 years and have never experienced such callous disregard for a confidential informant's safety and integrity. Your office truly hung her out to dry."
The losers
Ciferno lost her job after Goldberg went to jail. She's now working for about half what Goldberg paid her.
Goldberg is in the federal prison in Morgantown, W.Va., and, according to the deal he struck with the government, he must cash out his remaining assets to repay his clients.
Timothy Fraelich finds that laughable. He has paid close attention to the evidence as it piles up in Judge Maloney's probate court. He writes letters to Goldberg's sentencing judge almost every time assets Goldberg did not divulge show up.
Fraelich believes the imprisoned Goldberg has "made no effort to make good" on his pledge to repay his clients.
Some of those clients spoke at Goldberg's sentencing.
There was the woman whose father died at the hands of doctors. She hasn't seen a penny of the settlement.
There was the single mother of a child severely disabled from oxygen deprivation at birth who has no money to pay for proper care.
And there was Rob Plaskin of Mineral Ridge, Ohio.
His father, Philip, of Warren, Ohio, was severely injured in an auto accident, leaving large medical bills the family planned to pay with his $94,000 settlement.
"My father was a simple man and he didn't have credit cards; [he] paid his bills on time. When he went back to live on his own he was getting hit with phone calls daily, receiving mailings looking for payment on these excessive medical bills," said Plaskin.
"It really, really affected him and, unfortunately, we didn't see the depressive state as to what it really was.
"My father took out a gun and committed suicide. Had he known that money was there, he would probably be alive today. We could talk, you know, about money. Who cares? That won't bring my father back."
Goldberg cashed the last of Philip Plaskin's settlement checks a month after his death.
Monus, like Goldberg, sits in prison while his appeal to force the government into reducing his sentence is considered.
If he loses, he will not walk free until just shy of his 60th birthday in 2004.
"The way I looked at all of the series of events that have happened, I wanted the truth to prevail," Monus said. "Mary and I felt this is not the way it is supposed to happen. They ruined Mary's life by the way they've handled it.
"They could have stopped the thing and saved several of the million dollars that should have gone to the victims. I want them to publicly know this is not the way things are supposed to happen."
Bill Moushey can be reached via e-mail at: bmoushey@post-gazette.com.
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