Fraud case reveals 'deal with devil'
Lawyers have admitted to federal felony charges
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By PETER CRABTREE Herald Staff - Published: February 10, 2005
BENNINGTON — The government indictment alleges that Andrew Capoccia defrauded the clients of the Law Centers for Consumer Protection and stole their money.
So prosecutors are seeking jail time for the flamboyant, disbarred New York lawyer and the forfeiture of about $2.9 million in cash and property.
That's the big picture.
The details are another matter.
For example, there's the masseuse who testified before a secret grand jury that Capoccia's wife had a maid smuggle documents out of her house in the midst of an FBI raid.
There's a lawyer who twice referred to doing business with Capoccia as "the deal with the devil."
And then there's the former Vermont state representative who once earned about $300,000 a year, but who is now so broke that he had to struggle to bury his mother-in-law.
Items like those — titillating, curious and sad — are contained in legal documents recently filed in U.S. District Court.
This week, two lawyers with the bankrupt debt-reduction firm, Howard Sinnott, 54, of Bennington and Thomas Daly, 43, of Clifton Park, N.Y., pleaded guilty to felony charges. They are expected to serve prison terms.
On Wednesday, defense and prosecuting attorneys picked a jury for Capoccia's trial, which is set to begin next month in Brattleboro.
Capoccia, 62, has pleaded innocent to the charges against him.
The U.S. attorney's office expects to prove that the Law Centers defrauded thousands of desperate clients of about $23 million.
About $3 million was embezzled directly from a client escrow account, according to the government. The rest of the money, consisting of retainer fees that the Law Centers had not earned, was allegedly misappropriated or misspent before the Bennington firm went out of business in 2003.
Before that happened, however, there took place what prosecutors have called a "surprising event."
In April 2001, Sinnott and Daly ousted Capoccia from the firm he had founded in 1997. They also fired several employees considered to be his loyalists. But Capoccia's exile lasted only about a month. In May, he was welcomed back as an adviser to the firm, according to the government.
"The precise reasons why Sinnott and Daly elected to re-embrace Capoccia are unknown, although Daly at least twice characterized the decision as 'the deal with the devil,'" Assistant U.S. Attorney Gregory Waples wrote in a trial brief.
Sinnott allegedly confided to a co-worker that Capoccia had promised to pay him and Daly $50,000 per month, using the firm's money.
Meanwhile, the Law Centers wired $200,000 to a Florida bank account maintained by Capoccia's wife, Carol. Sinnott and Daly received their bonuses, which by the end of 2001 totaled $177,500 each.
That was in addition to the $120,000 annual salaries they were paid.
When pleading guilty to fraud charges in U.S. District Court this week, Sinnott agreed to sell his house and other property if necessary to pay any restitution the court might order. He also agreed to forfeit the undisclosed contents of two investment accounts, including an IRA.
But court documents show that the retirement account last month only contained about $6,000. And that was before Sinnott received a judge's permission to withdraw $2,648 so he could take care of a "very time-sensitive" matter.
Sinnott's mother-in-law had died 11 days earlier, and although he had received financial help from social service agencies, she would not be buried until he paid the balance due on a funeral home bill, his lawyer told the court.
That grim detail seemed far removed from the testimony Alana Caprotti provided a grand jury, testimony that Capoccia's attorney recently tried but failed to suppress.
Caprotti said she went to the Capoccia residence in Guilderland, N.Y., to give free massages to the couple shortly after the FBI searched the house in 2002.
Carol Capoccia confided that the couple had money in "Florida, Ohio, maybe somewhere else. She said the Cayman Islands. She said if I would have known, I would have put it all in the Cayman Islands," Caprotti testified.
Carol Capoccia also allegedly bragged that she had enlisted a cleaning woman named Liz to smuggle documents out of the house in the bottom of a laundry bag.
"She made Liz walk out right in front of the FBI with the bag. That's how … stupid they are," Caprotti quoted Capoccia as saying.
A prosecutor asked Caprotti why she thought Capoccia had confided in her.
"I thought she was nuts," Caprotti replied. "I thought she was nervous. She had done something and she was jibber jabbering and she let it out."
Andrew Capoccia's attorney, William Dryer of Albany, N.Y., did not immediately return a telephone message Wednesday.
Contact Peter Crabtree at peter.crabtree@rutlandherald.com.
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