Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 1 of 36 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA _______________________________ UNITED STATES OF AMERICA vs. Criminal Action No. 07-344 ALFONSO ANTONIO COSTA Defendant _________________________________ PROCEEDINGS Transcript of SENTENCING commencing on THURSDAY, MARCH 20, 2008, United States District Court, Pittsburgh, Pennsylvania, before Honorable GARY L. LANCASTER, U.S. District Judge. APPEARANCES: For the Government: UNITED STATES ATTORNEY'S OFFICE By: JAMES Y. GARRETT, ESQ. For the Defendant: DAVID ARMSTRONG, ESQ. Reported by: Patricia Sherman Official Court Reporter Room 5380 USPO & Courthouse Pittsburgh, Pennsylvania 15219 (412) 281-6855 Proceedings recorded by mechanical stenography. produced by computer-aided transcription. Transcript Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 2 of 36 2 1 I N D E X 2 3 GOVERNMENT WITNESSES 4 5 DEFENDANT WITNESSES 6 Jerome Bettis Page 12 7 Benjamin S. Carson, Sr., M.D. Page 16 8 Severin Russo Page 21 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 * * * * * Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 3 of 36 3 1 P R O C E E D I N G S 2 THE COURT: This is the time set for the colloquy 3 for sentence in the matter captioned United States of America 4 versus Alfonso Antonio Costa at Criminal No. 07-344. 5 6 Mr. Costa, will you come to the lectern with your attorney, please. 7 The record should reflect the defendant appeared 8 before the Court and entered a plea of guilty to count one at 9 Criminal No. 07-344 on September 26, 2007. 10 11 12 13 14 Mr. Palus, will you place Mr. Costa under oath, please. * * * * * ALFONSO ANTONIO COSTA, the defendant, having been first duly sworn, testified as follows: 15 THE DEFENDANT: I do. 16 THE COURT: The probation office has conducted a 17 presentence investigation, prepared a presentence report dated 18 November 28, 2007 and an addendum to that report dated 19 December 27, 2007. Both the report and addendum were 20 forwarded to the defendant and his counsel. 21 Sir, have you read the presentence report? 22 THE DEFENDANT: Yes, Your Honor. 23 THE COURT: Has your attorney reviewed it with you? 24 THE DEFENDANT: Yes, Your Honor. 25 THE COURT: Neither the government, nor the Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 4 of 36 4 1 defendant has filed any objections to the report. 2 The record should also reflect that I have received 3 and reviewed the defendant's memorandum in aid of sentencing 4 and the government's response thereto. 5 6 I have also received and reviewed the numerous letters of family and friends in support of the defendant. 7 8 Counsel, are you aware of any other materials I should have received before sentencing but did not? 9 10 MR. ARMSTRONG: That is all that we have filed with the Court, Your Honor, yes, sir. 11 THE COURT: Is the government aware of any other 12 materials I should have received prior to sentencing but did 13 not? 14 MR. GARRETT: No, Your Honor. 15 THE COURT: The record should also show that I have 16 17 reviewed the presentence report. In light of the United States Supreme Court's 18 decisions, commonly known as Booker and Fan Fan, the 19 sentencing guidelines have been deemed to be advisory in 20 nature. They are still, however, a factor I am required to 21 consider in imposing sentence. 22 23 Therefore, based on the report, the lack of objections, I will make the following sentencing calculation: 24 The base offense level is six. 25 Under the guidelines, if the loss suffered was Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 5 of 36 5 1 between 40,000 and 70,000, five points are to be added to the 2 base offense level. Here, defendant has stipulated that the 3 relevant conduct applicable here was in excess of $44,000. 4 This amount falls within that range. Therefore, this increase 5 is warranted. Defendant's offense level is adjusted to an 11. 6 Two points will be added to the base offense level 7 if more than minimum planning was involved in the commission 8 of the offense. In this case, defendant has stipulated that 9 minimum planning is deemed present. In the case involved 10 here. Defendant's conduct involved nearly 50 acts over a 11 period of several years and defrauded not less than nine 12 victims; therefore, more than minimal planning was present in 13 the case, and the increase is warranted raising the 14 defendant's offense level to 13. 15 Defendant was a licensed dentist in the Commonwealth 16 of Pennsylvania. It's through this position that he was 17 expected by health care benefits programs to perform the 18 actual services for claims which he had submitted. In this 19 case, the Court finds that the defendant violated the position 20 of trust, and in fact, defendant has stipulated so. Such 21 conduct warrants an enhancement of two levels raising 22 defendant's offense level to an adjusted total of 15. 23 The offense level will be reduced two points for 24 timely acceptance of responsibility lowering the offense level 25 to 13. Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 6 of 36 6 1 2 3 Defendant has a criminal history score of zero which results in a criminal history category of Roman numeral I. Under the guideline provisions, a total offense 4 level of 13 and a criminal history category of I carries a 5 guideline range of 12 to 18 months incarceration. 6 The Supreme Court also teaches that I am to consider 7 the factors set forth in 18 U.S.C. Section 3553. 8 Specifically, the Court shall impose a sentence sufficient but 9 not greater than necessary to comply with the purposes set 10 forth in paragraph two of that section. In this regard, I am 11 to consider, first, the nature and circumstances of the 12 offense which are as follows: 13 The offense was not violent in nature. 14 The offense was, however, ongoing in nature. 15 The offense was motivated to a larger pattern of 16 17 criminal activity. There are victims of this offense, several insurance 18 carriers, totaling a loss in excess of $40,000. 19 I am also to consider the history and 20 characteristics of the defendant. I've taken into 21 consideration the following: 22 Defendant was 39 years old when he committed the 23 offense of which he is convicted. Therefore, this cannot be 24 attributed to youthful indiscretion. 25 Defendant is a lifelong resident of Pittsburgh, Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 7 of 36 7 1 raised by his parents and four siblings. Defendant maintains 2 regular and positive contact with family members. 3 Defendant has been married for more than 20 years, 4 has four children, three of which are in college, and he 5 continues to reside in the Pittsburgh area with his wife and 6 minor child. 7 Defendant is in good physical and mental health. 8 There is no history of any form of abuse in 9 defendant's background. 10 Defendant has no criminal history. 11 Defendant reports no history of illegal drug use or 12 alcohol abuse. 13 Defendant has a doctor of dental medicine degree, 14 opened his own dental practice. He sold the practice, 15 however, to an associate in 1998, practiced only sporadically 16 thereafter, and has not practiced since 2001. 17 18 19 His license to practice medical dentistry has expired. Defendant is presently the chairman of Costa Land 20 Company, a real estate management and investment company. He 21 started that business himself in '91. Defendant has 22 significant assets and cash flow. Indeed, he is a 23 multi-millionaire; however, his wealth was not derived from 24 criminal conduct of this crime or any other. It was derived 25 from his successful practice as a real estate developer. Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 8 of 36 8 1 I am also to consider the need for the sentence 2 imposed to reflect the seriousness of the offense, promote 3 respect for the law, and provide just punishment for the 4 offense. 5 Here, defendant has pled guilty to health care 6 fraud. This offense carries a statutory maximum sentence of 7 10 years, although defendant's guideline range is only 12 to 8 18 months imprisonment. The guideline range is based in part 9 on the concept of relevant conduct. Yet, there is no 10 disagreement between the government and the defendant that 11 much of this conduct was performed by dentists other than the 12 defendant. Indeed, even though he stipulated to relevant 13 conduct occurring from August of '96 to June of '01, he 14 actually sold the business in 1998 and again worked there only 15 sporadically thereafter. Were the relevant conduct loss to 16 the insurance companies just $4,500 less, his guideline range 17 would be zero to six months imprisonment. The amount of money 18 involved was not substantial. 19 Furthermore, the guideline range was enhanced by the 20 application of Section 3B1.3 and his abuse of a position of 21 trust, which was stipulated to, and under the guidelines is 22 not unwarranted. Yet, all fraud, by definition, carries with 23 it a violation of trust. 24 Given the fact that the total loss, relevant 25 conduct, over five years was approximately $44,000, we Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 9 of 36 9 1 recognize, however, although any felony offense is serious, 2 under the circumstances of this case, we consider the 3 seriousness of the offense to be merely moderate. 4 I am also to afford adequate deterrence of 5 defendant's criminal conduct. Here, defendant has no prior 6 involvement in the criminal justice system. Aside from this 7 infraction, he has led a crime-free life before and since. 8 I am to protect the public from further crimes of 9 this defendant. Here, defendant has no history of criminal 10 conduct, and according to the statistics provided by the 11 Sentencing Guidelines Commission, an individual of defendant's 12 age, sex, and criminal history category, the rate of 13 recidivism is less than seven percent. There is no 14 substantial need to protect the public from further crimes of 15 this defendant. 16 I am to consider the need to provide defendant with 17 needed educational, vocational training, medical care or other 18 correctional treatment in the most efficient manner possible. 19 Here, defendant has no need for such services. 20 I am also to consider the kinds of sentences 21 available including federal prison, house arrest, probation 22 and fines. 23 Finally, I am to consider the need to avoid 24 unwarranted sentence disparities among defendants with similar 25 records who have been found guilty of similar conduct. Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 10 of 36 10 1 These factors generally weigh in favor of sentencing 2 a defendant within the guideline range. However, this need to 3 avoid unwarranted sentencing disparities also gives me enough 4 leniency to understand there are differences and those 5 differences have to be taken into account. 6 In this case, given defendant's lack of any criminal 7 history, his involvement in exceptional charitable work and 8 community activity, and his timely acceptance of 9 responsibility, including for losses caused by others, we find 10 that a guideline sentence in this case is mitigated by the 11 factors set forth in Section 3553. 12 13 14 15 Mr. Costa, is there anything you would like to say to me before I impose sentence? THE DEFENDANT: I'd like to say, Your Honor, that I'm very sorry for what I've done. 16 Words cannot express the pain and sorrow that I have 17 felt for what I have caused my family, my wife, and especially 18 my four wonderful children. They absolutely deserve better. 19 I can honestly tell you that it broke my heart when I had to 20 tell my four kids that their father was going through this. 21 I have worked all my life to gain the respect of 22 others and respect others and all that has been taken away 23 from me now. 24 25 I can promise you that nothing like this will ever happen again, and that I will work the rest of my life to try Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 11 of 36 11 1 to gain that respect back. 2 I also want to apologize to my friends and my 3 employees for all that they have had to go through through 4 this whole situation. 5 That's it, Your Honor. 6 THE COURT: Thank you. 7 Mr. Armstrong. 8 MR. ARMSTRONG: Your Honor, if we may, we would like 9 to call a few witnesses and keep them brief. 10 THE COURT: How many would you like to call? 11 MR. ARMSTRONG: I was afraid you'd ask because I'd 12 like to call seven. 13 14 THE COURT: Would you really? But really, let's go with your best three. 15 MR. ARMSTRONG: Pardon me? 16 THE COURT: Your best three. 17 MR. ARMSTRONG: They are all so wonderful. 18 THE COURT: So are you. 19 MR. ARMSTRONG: Thank you. 20 THE COURT: Mr. Costa, you can have a seat. 21 Mr. Armstrong, who do you want to call? 22 MR. ARMSTRONG: Yes, Your Honor. 23 Mr. Bettis. Mr. Bettis, will you come forward and 24 25 be sworn. Are you going to swear him here? Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 12 of 36 12 1 2 THE COURT: No, we never swear them. He can stand right there. 3 MR. ARMSTRONG: Right here? I'm sorry. I was 4 getting the witness stand all ready for the witnesses before 5 Your Honor came out. 6 THE COURT: Mr. Bettis. 7 EXAMINATION OF JEROME BETTIS 8 BY MR. ARMSTRONG: 9 Q We don't know who you are. Who are you? 10 A My name is Jerome Bettis. 11 Q We knew what you did when you played marvelous football. 12 What do you do now? 13 A Now I'm an analyst for NBC Television in New York. 14 Q When did you come to Pittsburgh to play for the Steelers? 15 A I came to Pittsburgh in 1996. 16 Q 1996. 17 How long have you known Al Costa? 18 A Since the end of '96, beginning of '97. 19 Q Is he a good friend of yours? 20 A He's a great friend of mine. 21 Q How close a friend is he? 22 A Kind of like a brother and in a lot of ways since he's 23 not only been a mentor to me but a confidant. But more 24 importantly, a really, really good friend of mine. 25 Q Do you know his family? Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 13 of 36 13 1 A I know his family very well. 2 Q What kind of a family does he have? 3 A He has an incredible family. Having two young children 4 now of my own, I greatly appreciate his family. It's harder 5 to appreciate a family when you don't have one. But now 6 having a family, I totally respect him as a father, and his 7 wife is incredible. They actually kept my first born child 8 before my mother did. That's how much I respect and the 9 admiration I have for him and his family. 10 Q What kind of a husband and father is he? 11 A He's been incredible. I think that's part of the 12 mentoring that he's been giving me in terms of how to be a 13 good husband, but more importantly, how to be an incredible 14 father because his kids have turned out to be incredible kids. 15 So, I just would like for my children to be as nice. 16 Q Wouldn't we all. 17 A Exactly. 18 Q Does he -- is he charitable in nature at all? 19 A He is. I mean, he's helped with my foundation. He now 20 does a lot with the Carson Foundation, but before that, he was 21 very instrumental in helping me with my foundation early on 22 in -- at the onset, financially, obviously. 23 But he was there for me, whenever I needed him, in 24 terms of if I was coming in from the airport or anything like 25 that, he would pick me up. If I needed anything done, he was Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 14 of 36 14 1 always there to do it, and he used to always say he didn't 2 have a job so he could help me out whenever I needed him. So, 3 he was my runner in the sense not that many times you get a 4 multi-millionaire to run your errands for you, but so, he was 5 very, very helpful. 6 Q 7 has contributed his own time? 8 A 9 more than I value money because we can all stroke a check and 10 give money to one foundation or to the next. But to give your 11 time, I think that is the most important thing that you can 12 give because we don't have that much of it. 13 Q 14 doesn't it? 15 A 16 really provide opportunities for children, you know. 17 In addition to all the money that he has contributed, he His time. In the profession that I'm in, I value time Your foundation, The Bus Stops Here, concerns children; Yes. We work with underprivileged and at-risk kids. We I grew up in an underprivileged community and there 18 wasn't a lot of money, there was a lot of love, and we 19 realized that if we could just try to do something, try to 20 help and give back, I think that's been the most important 21 thing in terms of my foundation. Just trying to provide that 22 opportunity and show kids that we do care and we're all about 23 trying to help. 24 Q Al Costa similarly helps children? 25 A No question about it. He's helped with my foundation, Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 15 of 36 15 1 but even more important, in helping with my foundation, he 2 became a great friend of Dr. Carson who I'm sure you know. 3 Q I'm bringing him up. 4 A But seeing his work with that foundation and seeing him 5 get behind it just motivated me to do more in my foundation 6 but also to help the Carson Foundation as well to see someone 7 so committed. It's easier for you to give yourself if you 8 know that it's meaningful and that they are sincere about it. 9 That was really important for me. 10 Q Is he nice to everybody? 11 A He's nice to everybody that I see. He's tough on me 12 sometimes because he asks me for autographs and stuff because 13 he can't say no to anybody. So, he puts a lot of pressure on 14 me but other than that. 15 Q Do you like him? 16 A No question. I love him. He's a great man. 17 Q Is he a good man? 18 A He really is. 19 Q You wrote a letter to Judge Lancaster and it's in the 20 record. In fact, the Judge has read it. The Judge had read 21 your letter. 22 A Yes. 23 Q Is every word in that letter true and correct? 24 A Absolutely true. 25 Q Thank you. Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 16 of 36 16 1 Did you come all the way from the West Coast last 2 night to be here today? 3 A 4 lighter but still intact. 5 Q To be here; is that why you came? 6 A Yes, sir. I flew in from Las Vegas last night. Pocket's a lot 7 MR. ARMSTRONG: Thanks so much. 8 THE COURT: Any questions, Mr. Garrett? 9 MR. GARRETT: I have no questions, Your Honor. 10 Thank you. 11 THE COURT: Thank you, Mr. Bettis. 12 THE WITNESS: Thank you, Your Honor. 13 MR. ARMSTRONG: Thank you. Really appreciate it. 14 THE COURT: Mr. Armstrong. 15 MR. ARMSTRONG: Dr. Carson. 16 EXAMINATION OF BENJAMIN S. CARSON, SR., M.D. 17 BY MR. ARMSTRONG: 18 Q 19 time. I know the Judge has read your letter. 20 I was going to get you your letter, but I won't take the Your name, sir? 21 A Benjamin Solomon Carson, Sr. 22 Q Mr. Costa keeps telling me that you are one of the 23 greatest medical physicians in the world. What is he talking 24 about? What do you do? 25 A Well, you know, I don't know that I'm one of the greatest Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 17 of 36 17 1 in the world. 2 Q Sorry to embarrass you. Tell us, what do you do? 3 A I am director of pediatric neurosurgery at Johns-Hopkins, 4 have been in that position for the last quarter of a century. 5 I also am involved in multiple academic activities 6 as well as educational activities around the country. 7 Q 8 pediatric neurosurgery, at Johns-Hopkins; aren't you? 9 A That's correct. 10 Q You're a professor in four different disciplines? 11 A Correct. Neurosurgery, plastic surgery, pediatrics and 12 oncology. 13 Q Johns-Hopkins, that is in Baltimore; isn't it? 14 A That's correct. 15 Q You made the trip here yesterday just to be here to talk 16 to the Judge today? 17 A That's correct. 18 Q And why did you do that? 19 A Well, I feel very strongly, obviously, about Al Costa. 20 You know, he's one of my closest if not my closest friend. We 21 were -- we became friends about a decade ago. We found that, 22 you know, our value systems were almost identical. And you 23 know, it's very hard to find people like that these days who 24 some people think that I am very straight-laced and very 25 conservative, but I don't know that it's so much that as I You are the top director of neurosurgery for children, Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 18 of 36 18 1 just believe in -- I'm a strong believer in God. I'm a strong 2 believer in truth and being fair to people. 3 Q You were an inner city boy, too; weren't you? 4 A I grew up in inner city Detroit and Boston. 5 Q You became a director of Johns-Hopkins at the age of 6 thirty what? 7 A Thirty-three. 8 Q Thirty-six? 9 A Thirty-three. 10 Q Thirty-three years old. Incredible. 11 Where did you go to school? 12 A I went to Yale undergraduate. University of Michigan for 13 medical school. Did my internship and residency at 14 Johns-Hopkins, spent a year in Australia, came back and joined 15 the faculty. 16 Q 17 many honorary and other awards and recognitions; isn't that 18 true? 19 A That's true. 20 Q In fact, your letter references you're one of 89 Living 21 Legends by the Library of Congress. I have read your CV. I can't believe it. You've had so 22 THE COURT: Mr. Armstrong, Dr. Carson is well known. 23 MR. ARMSTRONG: Please forgive me. 24 BY MR. ARMSTRONG: 25 Q Do you know the family, Mary, his wife, and the four Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 19 of 36 19 1 children? 2 A I know them all very well. 3 Q What do you think of them? 4 A Well, if I had to pick an ideal American family, that's 5 who it would be. Just wonderful people, loving, caring. I 6 have never seen such well-behaved young people in my life. 7 They are the nicest, most considerate. They do things for 8 other people. Don't look for attention for doing so. 9 You know, when I first met them, I said, are they 10 for real, but over the years, I've come to realize, they are. 11 Q Is he a good father and husband? 12 A Wonderful father and husband. He really moved more 13 toward the real estate investment area so that he could spend 14 more time with the kids, so that he could come to their games, 15 come to their activities. I don't know of anybody who is a 16 more supportive father and husband. 17 Q 18 Scholar Foundation in Pittsburgh and Pennsylvania? 19 A 20 children in this area who have won the scholarship. This is a 21 scholarship that recognizes children for outstanding academic 22 activity and humanitarian qualities. Unless they care about 23 other people, they can't win it. 24 25 Has he done anything about establishing the Carson Yes. He is the spearhead behind the more than 250 He has not only been the driving force here but has been a very important figure in our national program, and in Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 20 of 36 20 1 fact, was national vice president, unfortunately, had to 2 resign because of what's happening here. 3 But he'll continue to work extremely hard because he 4 is very dedicated to the concept of elevating education in 5 this country and helping us to particularly close the gap in 6 science and math so that we can remain competitive on the 7 world stage. 8 Q 9 not available to continue working on the local Carson Scholar Some of the letters to Judge Lancaster say that if he's 10 Fund, that it will fail? 11 A 12 You know, the interesting thing about it is he spends 13 inordinate amounts of his time behind the scenes doing things 14 that he would never get any credit for. 15 I think that's true. He's the essential component of it. I just find it amazing, but you know, we've had many 16 discussions about what we can do, you know, to get kids 17 stimulated and motivated, and he spends a lot of time thinking 18 about this. 19 Q So, he doesn't seek recognition? 20 A No, he doesn't. 21 Q He doesn't do it for his ego? 22 A I know of many circumstances where there have been young 23 people who have needed things, and he would go to the coach 24 and say, I will pay for the trip but please do not tell them 25 who did it. That's the kind of person he is. Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 21 of 36 21 1 Q I take it you like him? 2 A I love him. 3 4 MR. ARMSTRONG: Thank you very much. No further questions, Your Honor. 5 6 MR. GARRETT: I have no questions for Dr. Carson. Thank you. 7 THE COURT: Thank you, sir. 8 One more witness, Mr. Armstrong. 9 MR. ARMSTRONG: Would you extend that to two, Your 10 Honor? 11 THE COURT: Not if you know me. 12 MR. ARMSTRONG: Somebody is going to get real mad at 13 me now. 14 THE COURT: Blame it on me. 15 MR. ARMSTRONG: I'll just call -- the next one I had 16 listed, not meaning that person is any better or any worse 17 than anyone else -- Mr. Russo was next on my list. 18 THE WITNESS: Good morning, Your Honor. 19 EXAMINATION OF SEVERIN RUSSO 20 BY MR. ARMSTRONG: 21 Q What is your name? 22 A Severin Russo, S-E-V-E-R-I-N. 23 Q What is your profession? 24 A I'm an attorney. 25 Q And do you know Alfonso Costa? Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 22 of 36 22 1 A I've known Al for now about 16 years. 2 Q In what way do you know him? 3 A Well, I know him as a -- he's a client obviously, and I 4 know him more so as a friend. That we've developed a 5 friendship over the last 16 years or so. 6 Q 7 business? 8 A 9 very early, probably around 1991 or so, maybe 1990, 1991, but And do you -- how long has he been in the real estate I think, when I met him, probably in the early 1990's, 10 I met him, I think, in about '91. 11 Q 12 in 1990. 13 A That was actually before me. 14 Q He bought that before you became his lawyer? 15 A Right. Exactly. 16 Q Have you been his real estate lawyer ever since then? 17 A As far as I know. I think so, yes. 18 Q Well, he has other lawyers. Some of them are here. 19 A Yes. Exactly. 20 I think some of the letters say he bought that building No, I have been his real estate attorney for the 21 entire time. 22 Q You handle all those transactions? 23 A I've handled them all, I believe, yes. 24 Q Is he trustworthy? 25 A Absolutely. As I stated in my letter, I represent a lot Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 23 of 36 23 1 of real estate developers, real estate companies, you know, 2 for shopping malls, shopping centers, developments. And one 3 thing I could always know about Al is if Al told me something 4 or said something, and it was to be communicated to the other 5 side of a transaction, he never reneged on his word. Never. 6 Q Never reneged? 7 A No. 8 Q Do you know of any situation -- now, let's start in '91 9 and this is what, 17 years? 10 A About that. 11 Q Seventeen years? 12 A Right. 13 Q Tell the Court if you know of one single time, I don't 14 care what it was, that somebody said Al did something wrong or 15 didn't do what he said or what he -- 16 A No. 17 Q Not once? 18 A Not once. No. Never in a transaction. 19 As a matter of fact, I can think of instances where 20 some large box tenants like an Old Navy or Bed, Bath and 21 Beyond had had discussions with Al regarding improvement 22 allowances or those type of things. And they had 23 inadvertently left them out of leases or agreements and then 24 maybe an attorney from New York would call me and say, hey, we 25 left out a $200,000 credit and I'd say I'd check. I'd call Al Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 24 of 36 24 1 and say, these guys said you're going to give them $200,000 2 credit, and I said, but it's not in the agreement. He said, 3 no, I said it. That's fine. Do it. That was it. 4 Q He said it, you do it? 5 A It didn't need an agreement most of the time. 6 Q Now, he's the chairman of Costa Land Company; isn't he? 7 A Yes, he's the president, chairman, whatever. 8 Q President, chairman. He's the head? 9 A Right. 10 Q He founded it? 11 A Oh, yes. 12 Q Now, he has a number of subsidiary companies owned by him 13 or his wife all of which have the children's names, brothers 14 and sisters' names, all that. 15 A Sure. 16 Q Do those exist because the big lenders, the Citibanks and 17 the Wachovias, require that there be a separate corporation 18 when they make a major mortgage loan? 19 A 20 purpose entity, special purpose entity. So, they are all 21 formed for that -- each for a special purpose. 22 Q 23 subsidiaries -- Maria? 24 A 25 business. It's the way business has to be done. Sure. Most of those conduit-type loans require a single Is there anything improper about having all those No. Absolutely not. That's just the nature of the Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 25 of 36 25 1 Q You know that Costa Land Company has employees; don't 2 you? 3 A Absolutely. 4 Q You know that those subsidiaries have employees and 5 contractors? 6 A 7 maintain properties and provide services for those properties 8 for his portfolio. A lot of -- require a lot of ancillary services to 9 So, yes, a lot of people depend on the viability of 10 those companies and those projects. 11 Q 12 will not call now, Ms. Piccone -- 13 A Yes. 14 Q -- and also the manager of the property, Ms. Samantha 15 Hirshberg, they've both written to Judge Lancaster. He's read 16 those letters and they state over a hundred people work one 17 way or another for the company, the subsidiaries, the 18 contractors, or on the property. Do you know anything about 19 that? 20 A 21 that's the case. 22 Q Do you know about running the business? 23 A I know that it would be a very difficult business to run. 24 It takes special expertise and I've been doing this for 30 25 years and I wouldn't be comfortable doing it. His chief operating officer, whom I was going to call but I don't know the exact number but I wouldn't doubt that Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 26 of 36 26 1 I think it takes a special skill and I think Al has 2 that skill, and I don't really know many other people, if any, 3 that could do what he's done with his real estate career in 4 the last 16 years. 5 Q 6 wasn't available to run the businesses, that they would fail? 7 A 8 operator. He makes all of the decisions. He's, you know, 9 without him, I don't know how the -- I would be very much Do you think if he were incarcerated and couldn't -- I think that they would fail because he's a very hands-on 10 concerned that, over a period of time, those operations would 11 fail. 12 Q Are you familiar with whether he's charitable? 13 A Sure. I know about his charitable activities. Even 14 prior to Jerome's foundation, prior to Dr. Carson, I knew him 15 to be quite charitable, very good to his family, extended 16 family. 17 Q That's both in money and hands-on activities? 18 A Yes, I always tease him. I agree with what Ben said or 19 whoever said it. I always tease him, he doesn't work. He has 20 a lot of time and he gives that time a lot to charity. Sure. 21 Q Of course, you know the family as well; don't you? 22 A Oh, yes. I know the family. As a matter of fact, I knew 23 Al's wife before she knew him, when she was a little girl, 24 because she grew up in my neighborhood next to one of my 25 aunts. Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 27 of 36 27 1 Q This is Mary sitting there? (Indicating.) 2 A Mary. 3 Q Right in the -- 4 A Mary Fazio. 5 Q With her four children? 6 A With the kids. 7 Q Joey -- 8 A Right. Joe, Alfonso, Kristin and Maria. 9 Q Maria. Two of them are in Yale and one in Fordham, one 10 in Shadyside Academy. 11 Al has been very supportive of his children? 12 A Oh, beyond belief. He'd do anything for those kids. 13 Q Do you think they like him? 14 A Oh, that's an understatement for sure. 15 MR. ARMSTRONG: No further questions, Your Honor. 16 THE COURT: Thank you. 17 MR. GARRETT: I have no questions for Mr. Russo. 18 THE COURT: Mr. Costa, step to the lectern, please. 19 MR. ARMSTRONG: May I summarize, Your Honor? 20 THE COURT: I misspoke before. The guideline range 21 if the losses were below $40,000 is ten to 16 months, not six 22 months. 23 Yes. Mr. Armstrong. 24 MR. ARMSTRONG: Tell me if I'm taking too long, Your 25 Honor, just tell me to shut up. I don't want to impose on the Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 28 of 36 28 1 Court's time. 2 3 THE COURT: You're here to do your job and you do it well. 4 MR. ARMSTRONG: We are asking that the Court give 5 probation, and not incarceration here as a downward variation 6 under 3553 and Your Honor is much more familiar with all that 7 than I am. You know all the cases and all the law and so 8 forth. 9 But just to make the point, when you start with the 10 nature and circumstances of the crime, and Your Honor 11 correctly points out the distinction between what he pled to. 12 That occurred in February of 2001. I know the payment was 13 made on March 30, but he saw -- he was an oral surgeon then 14 and he does a lot of surgery. He doesn't just brush your 15 teeth. He pulls teeth and he saw that patient February of -- 16 seven years ago. That's the one he pled to. On that day, the 17 patient had four impacted wisdom teeth. Now, impacted means 18 that they haven't extruded. They haven't erupted. They 19 haven't come out yet. 20 If you remove impacted wisdom teeth, you get $90 21 more per tooth than if you were to extract an erupted one. 22 So, he extracted all four. He put in a claim for four 23 impacted, fully impacted, and he sent this x-ray. 24 (Indicating.) He sent the x-ray that he took to the insurance 25 company and they paid for the four. It now appears that two Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 29 of 36 29 1 of the four are not considered impacted. And so, he should 2 have gotten $90 less on those two for a total of $180. The 3 loss attributable to the one he pled to is $180. He's not 4 practiced dentistry since and never will again. He's let his 5 license expire. 6 Now, Your Honor discussed the relevant conduct and 7 made it very clear you understand that far better than I ever 8 will and just will remind the record that the other defendant, 9 that Your Honor has that as a related case. Your Honor has 10 Dr. Michienzi's case. He's pled. He's entered his plea. He 11 became a dentist in Al's office in '96. 12 The relevant conduct period runs from '96 until the 13 agents showed up in March of '01, seven years ago. Al had 14 become semi-retired by '97. So, he was doing one day a month, 15 and as Your Honor pointed out, sold the business to 16 Dr. Michienzi in '98. So, the $44,000, which we've stipulated 17 to, of relevant conduct loss which gives those five points 18 concerned Dr. Michienzi and others, Your Honor. 19 Now, in terms of the character of the defendant, you 20 know I'd say this but I mean it, this is an incredibly 21 wonderful human being. He's 46 years old. Mary and he met in 22 high school or in school and married 23 years ago and have the 23 four children. His parents came over from Italy. They were 24 both immigrants from Italy, although his dad served in World 25 War Two as a very young man, and they lived in the Larimer Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 30 of 36 30 1 section of East Liberty. I know about that because I lived at 2 a Pitt dormitory and met my wife at the Kingsley House on 3 Larimer Avenue. So, I know that that was an Italian immigrant 4 community and I lived there in 1950. One of the exhibits 5 shows the family photo on Larimer Avenue and he's the little 6 boy in the middle. 7 His father has a high school equivalency and they 8 raised five children who became professionals, two medical 9 doctors, a pharmacist, a lawyer. They have a lawyer, 10 unfortunately, she's the young lady who died because of her 11 pregnancy. The baby survived and Al and his mother kept that 12 baby alive. Al's mother is 82. She is old, can't be here 13 today. She now lives in Morningside. His dad died in '03. 14 His sister died in '04. 15 He's suffered terribly tragic events since the 16 agents arrived in March. And when you think of his life, he 17 used to work evenings and Saturdays in the pizza shop. His 18 dad finally got a pizza shop. He was a shoemaker, worked for 19 Horne's, worked for Gimbel's, got his own shoe shop right 20 there in that area and then got the pizza shop. 21 Al would work evenings and weekends in the pizza 22 shop, got a full scholarship, a math scholarship, a full -- he 23 played football with Dan Marino at Central Catholic. In fact, 24 he was Dan's rushing back. If Dan couldn't pass the ball, he 25 would hand it off to Al and the coach said what a wonderful Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 31 of 36 31 1 student Al was even then. He earned a scholarship to Pitt, 2 got his undergraduate degree in four years, scholarship, got 3 his dental in an accelerated seven years, opened his dental 4 practice in '86. He bought that house in Monroeville in '90, 5 started Costa Land in '91, stopped practicing dentistry except 6 one day a month. He did that because he liked it. He enjoyed 7 it. He's a wonderful oral surgeon. His patients love him. 8 Not only is he great and fast and secure and takes the time, 9 he doesn't even have the operations for his cancer when he 10 should have it because he's determined to take care of his 11 patients first who wrote to you. They tell you, when they 12 need to see him, he saw them. He used to work 24/7. Believe 13 it or not, he would see people on Sunday. The real estate 14 began to develop and he did that one day a month starting in 15 '97 until he stopped in '01 when he learned what was going on. 16 He's continued with the real estate. 17 Now, I meant to ask Mr. Russo, are these challenging 18 times in America for all of us in financial, credit, and 19 mortgages? Your Honor knows the answer to that one. We all 20 know the answer to that one. Yet, from all of the letters and 21 so forth, the business is prospering because of Al Costa's 22 hard work, dedication and hands-on every day operation of that 23 business. He has given millions of dollars to over 50 24 charities listed on page 34 of our memorandum, and he's given 25 more of his time than his money. Incredible amount of time. Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 32 of 36 32 1 Usually it's children. He takes them to Pirate games. He and 2 his children buy and wrap gifts and give them to them on 3 Christmas. Case after case after case. 4 The Carson Scholar Foundation which he started and 5 runs and which will die if he's not there to continue running, 6 he makes all those Steelers come and give autographs. He 7 makes everybody he knows come and give money, support those 8 things. 9 10 11 THE COURT: Thank you, Mr. Armstrong. MR. ARMSTRONG: He's just very wonderful. Thank you, Your Honor. 12 THE COURT: Mr. Garrett. 13 MR. GARRETT: Your Honor has already gone through a 14 15 discussion of the sentencing factors that you must consider. So, I only want to say that with respect to the 16 nature and circumstances of the offense, to the extent that 17 Mr. Armstrong's remarks minimize the defendant's 18 responsibility for that, I think that the evidence which we 19 would marshal, if we were in a trial setting, would paint 20 quite a different picture. 21 But Your Honor has, obviously, given a lot of 22 thought to the sentencing factors, and I don't believe that 23 that comment that Mr. Armstrong made has the significance of 24 this proceeding. So, I don't think I need to go any further. 25 THE COURT: Thank you. Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 33 of 36 33 1 2 MR. GARRETT: I would just ask you to consider that as part of the factors. 3 THE COURT: Thank you. 4 It is the judgment of the Court at Criminal 5 No. 07-344 that the defendant, Alfonso Antonio Costa, is 6 placed on probation for a period of three years. 7 The first year he shall be placed on home 8 confinement, and he will be permitted to leave the home for 9 religious services, employment, medical appointments, and 10 11 other activities approved in advance by the probation office. It's further ordered that defendant shall make 12 restitution in the amount of $44,579.47 to all victims in the 13 amounts referred to in the Court's judgment order. This 14 amount of restitution must be paid in full within 15 days of 15 this order. Restitution shall be paid jointly and severally 16 with any co-defendant found to be responsible for payment of 17 the same restitution. 18 In addition, the defendant shall pay the United 19 States a fine of $250,000. Again, this fine shall be paid in 20 full within 15 days of this order. 21 While on probation, defendant shall not commit 22 another federal, state or local crime, shall comply with the 23 standard conditions of supervision that have been adopted by 24 this Court, and shall comply with the following additional 25 conditions: Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 34 of 36 34 1 2 3 4 5 6 7 8 9 He is to donate 100 hours of community service to a program approved by the probation office. Defendant shall not possess a firearm or other destructive device. Defendant shall not unlawfully possess a controlled substance. Defendant shall provide the probation officer with access to any requested financial information. The Court finds that this offense is not drug 10 related and the defendant has no current or past history of 11 substance abuse. Therefore, the required periodic drug 12 testing is hereby suspended. 13 The mandatory special assessment of $100 was imposed 14 on the defendant at the time he entered his plea. The clerk's 15 records indicate that the amount has been paid. 16 The reason for the sentence is as follows: 17 There are several factors raised by the defendant 18 that the Court noted in fashioning the sentence, his 19 charitable works and deeds, his lack of criminal history, his 20 close family ties, and the relative minor amount of loss 21 suffered. However, a review of the presentence investigation 22 report, presentence report, portrays the defendant as a 23 successful individual, both intelligent and talented, all of 24 which makes this offense that much more troubling. The 25 defendant obviously could have enjoyed a comfortable Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 35 of 36 35 1 lifestyle, provide for his family. It makes no sense to me 2 why he would commit such an offense, especially noting one of 3 the arguments for departure that his income was derived not 4 from any crime. 5 However, I do not think in this case a period of 6 incarceration is needed to protect society or to deter further 7 criminal conduct. 8 In the Court's view, along with this period of 9 probation, I have imposed the maximum period of supervision, 10 maximum period of -- strike that -- along with this period of 11 probation, I have imposed 100 hours of community service, 12 along with financial sanctions, including restitution and a 13 payment of the maximum fine available under the law. 14 In the Court's view, the sentence and resulting 15 embarrassment, uncertainty, and anguish he has inflicted on 16 his family, himself, and his reputation will address the 17 sentencing goals of punishment, deterrence and rehabilitation. 18 Sir, you have a right to appeal this sentence. If 19 you want to appeal the sentence, you must do so within 10 20 days. If you cannot afford the cost of an attorney, you can 21 apply to appeal in forma pauperis. If you cannot afford an 22 attorney to represent you, I'll appoint one to represent you 23 without cost. 24 Do you understand your appeal rights? 25 THE DEFENDANT: Yes, Your Honor. Case 2:07-cr-00344-GLL Document 55 Filed 04/15/11 Page 36 of 36 36 1 2 THE COURT: Any other matters to be brought to the Court's answer attention? 3 MR. GARRETT: No, Your Honor. 4 MR. ARMSTRONG: No, Your Honor. 5 THE COURT: Good luck, sir. 6 7 * * * * * I certify my original signature herein that the 8 forgoing is a correct transcript from the record of 9 proceedings in the above-entitled matter. 10 11 12 s/Patricia Sherman Official Reporter APRIL 5, 2011 13 14 15 16 17 18 19 20 21 22 23 24 25 *****NOT CERTIFIED WITHOUT ORIGINAL SIGNATURE*****