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United States v. Rocco P. Desimone

November 9, 2012



The opinion of the court was delivered by: Lynch, Chief Judge.

Before Lynch, Chief Judge, Boudin and Lipez, Circuit Judges.

Rocco DeSimone, a persuasive con man operating in Rhode Island, defrauded a number of investors, most neither wealthy nor experienced in investing, in a series of schemes which used the mails. He also laundered money he received from the fraud by buying himself a $180,000 sports car. He freely lied to his victims about three supposedly sizzling new inventions with purportedly huge market potential, well aware that his statements were false -- and then covered his lies with more lies. DeSimone's scheme involved the "DrinkStik," through which people in protective suits supposedly could drink; the "SONG Tube," intended for feeding patients unable to eat; and the "Disk Shield," which was supposed to protect CDs and DVDs. All told, investors lost about six million dollars.

A federal jury convicted DeSimone of seven counts of mail fraud and one count of money laundering. He was sentenced to 192 months imprisonment and ordered to pay $6,030,145 in restitution and to forfeit certain property. At the time he was 58 years old.

On appeal DeSimone challenges his conviction, arguing he must be given a new trial because of errors in evidentiary rulings and a failure by the court to declare a mistrial after the admission of evidence of his escape from prison following a separate conviction on tax charges. As to his sentence, DeSimone argues the district court incorrectly calculated the number of victims and the amounts of forfeiture and of restitution. His arguments lack merit.

We affirm DeSimone's convictions, deny his request for a new trial, and affirm his sentence.


DeSimone wisely does not argue the evidence was insufficient to support his conviction. We lay out the general story to provide a context for evaluating his claims. We describe the evidence presented at trial in the light most favorable to the jury's guilty verdict. See United States v. Manor, 633 F.3d 11, 12 (1st Cir. 2011).

A. Victim McKittrick and the DrinkStik and SONG Tube Frauds

In 2005, a medical doctor named Robert McKittrick invented and patented the "DrinkStik," a device meant to allow people wearing protective suits in contaminated areas to stay hydrated. His efforts to sell the invention failed.*fn1

One of McKittrick's friends, David Lindsay, was a martial arts instructor who taught private lessons to DeSimone. Lindsay introduced McKittrick to DeSimone in 2005. McKittrick had described the Drinkstik to Lindsay, who mentioned it to DeSimone. McKittrick then described the invention to DeSimone during their first meeting, at DeSimone's prompting.

In the spring of 2006,*fn2 DeSimone, McKittrick, and Lindsay met again, and DeSimone told McKittrick that he would like to take on selling the DrinkStik. DeSimone explained that his career involved selling high-value items, including paintings, to people of means to whom he had special access.

DeSimone falsely told McKittrick that he knew a man named Jimmy or Ned Johnson who was the owner of Fidelity Investments, that he and Johnson had done many art deals in the past, and that "they were very, very friendly, first name basis, you know, they went to dinner and knew each other very, very intimately." Several times, when McKittrick visited DeSimone's home, DeSimone received phone calls and told McKittrick that it was Johnson who was on the phone. DeSimone's wife, Gail DeSimone, also "[o]n more than one occasion" told McKittrick that Johnson "had been [to their house], that he was a nice guy. He was very interested in the project." None of this was true. Edward Johnson, III, is a real person who is head of Fidelity Investments, but DeSimone had never met Johnson and Johnson knew nothing of DeSimone or the DrinkStik.

DeSimone told McKittrick that: (1) Johnson had "guaranteed him [the DrinkStik] would be sold"; (2) "Mr. Johnson was purchasing it. It was already worked out. The lawyers were already putting papers together"; and (3) "the deal was done. He had shaken hands with Johnson." DeSimone said the sale would occur by September of 2006. Though McKittrick only wanted to give DeSimone a sales commission, DeSimone insisted that he needed a one-third ownership interest in the DrinkStik to show Johnson that the project was credible.

DeSimone convinced McKittrick that he knew Johnson, and that Johnson had offered to buy the DrinkStik. On May 29, 2006, McKittrick and DeSimone entered into an agreement giving DeSimone a one-third ownership interest in the parent company holding the patent rights to the DrinkStik. DeSimone set up a company -- Falcon, Limited -- that controlled his stake in the DrinkStik. This gave DeSimone a platform to fraudulently market the DrinkStik to other "investors." DeSimone later persuaded McKittrick to transfer an additional two percent interest in the DrinkStik to DeSimone in furtherance of his scheme to sell stock in the DrinkStik, purportedly to raise operating capital.

McKittrick had also received a patent for a second invention, called the SONG Tube, that was designed to make it easier to insert a feeding tube into patients' stomachs through their noses or mouths. After McKittrick transferred a one-third interest in the DrinkStik to DeSimone, DeSimone told him that he was also negotiating with Tyco Corporation to sell the SONG Tube. This was not true. McKittrick transferred a one-third interest in the SONG Tube to DeSimone, in reliance on this representation.

DeSimone told McKittrick that Johnson had offered $264 million for the DrinkStik and that the deal would take place in September of 2006. Just before September, DeSimone told McKittrick that the deal would be delayed because they needed to change the structure of the entities holding interests in the DrinkStik. DeSimone then told McKittrick that he had set up several meetings with Johnson. When none of these meetings took place, DeSimone claimed it was because of business that took Johnson abroad. Around Thanksgiving of 2006, DeSimone told McKittrick that a deal with Johnson was imminent, and that McKittrick needed to quit his medical residency in New Jersey and return to Rhode Island so he could sign the papers immediately if needed. Believing DeSimone, McKittrick did exactly that, to his regret.

DeSimone then informed McKittrick that the deal would close by February of 2007. But in February DeSimone said that the deal would once again be delayed because Johnson's daughter, Abigail, had been admitted to the hospital, and because of McKittrick's failure to obtain international patent protection for the DrinkStik.

DeSimone had McKittrick make presentations about the DrinkStik to Raytheon Corporation, purportedly to bid up the price by creating competition with Johnson. Raytheon never offered to purchase the Drinkstik.

DeSimone conceded at trial that Edward Johnson, III, the chief executive officer of Fidelity Investments, had never met DeSimone, did not know who DeSimone was, and had never socialized or spoken with DeSimone or been to DeSimone's house. DeSimone also stipulated that he never spoke with anyone at Fidelity Investments concerning the DrinkStik.

B. The DrinkStik Fraud and Victims Lindsay and His Circle

After DeSimone acquired his one-third interest in the DrinkStik, he asked Lindsay -- who was struggling financially and caring for a disabled daughter -- to speak to his friends and family about investing in the DrinkStik. DeSimone told Lindsay that a sale of the DrinkStik to Johnson was imminent, likely by September of 2006. Lindsay told his family and friends about "Mr. DeSimone's connections" and that "this was a very, very good opportunity." Most of these friends and family told Lindsay that they could not afford to invest. When Lindsay reported to DeSimone that "a lot of these people, because they're all blue collar workers, they just don't have the money to go and invest in something of this sort," DeSimone suggested that they purchase a painting and set it aside so that if the Drinkstik "doesn't sell, we'll sell the painting and then we can reimburse your friends." Based on this, some of Lindsay's friends eventually invested. DeSimone then persuaded Lindsay to take $10,000 out of his home equity line of credit to provide DeSimone with cash to purchase a Georgia O'Keefe painting that DeSimone had allegedly found in Newport. DeSimone then told Lindsay that the painting had been sent to be cared for, and later claimed that the painting had sold for $900,000. None of this was true.

Lindsay reported to his friends and family that he had purchased a painting which would protect their investments in the DrinkStik. He also relayed that DeSimone had told him that Raytheon, Tyco, and Fidelity were interested in the DrinkStik and that Johnson was a good friend of DeSimone. Based on these lies by DeSimone, Lindsay collected $100,000 from his family and friends, took out another $25,000 from his own home equity line of credit, and wrote a check for $125,000 to DeSimone. Lindsay's sister separately invested $5,000.

Around August of 2006, DeSimone falsely informed Lindsay that Johnson had agreed to buy the DrinkStik for $260 million. Lindsay then told an acquaintance, Michael Malone, that DeSimone had stated that the DrinkStik "was going to be sold shortly" for $300 million. Based on this, Malone invested $25,000 in the DrinkStik.

In September of 2006, DeSimone persuaded John Agostini -- who had already contributed $50,000 of the $125,000 Lindsay previously entrusted to DeSimone -- to invest another $25,000 in the DrinkStik "because it's sold" and "the more money you get in, the more money you're going to make." DeSimone falsely told another friend of Lindsay's, Paul Gregson, that Raytheon was "very interested in purchasing" the DrinkStik and that "they had purchased the item"; he also told Gregson that he personally knew Johnson and that Johnson was interested in the DrinkStik. DeSimone added that any investment would be covered by the purchase or acquisition of a painting. Based on this, Gregson invested $25,000 in the DrinkStik with DeSimone. The total sum of the investments that DeSimone fraudulently procured from Lindsay and his friends and family for the DrinkStik was $205,000.

In late 2006 or early 2007, DeSimone told Lindsay that Raytheon had offered to buy the DrinkStik for $280 million and that the closing date was February 15, 2007. DeSimone also told Gregson, Agostini, and Malone that Raytheon had bought the DrinkStik, and that they were millionaires. None of this was true. Lindsay called his friends and family and related these reports of good news. When the purported closing date of February 15, 2007 came and went, DeSimone told Lindsay, Gregson, Agostini, ...

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