In the

United States Court of Appeals

For the Seventh Circuit

No. 98-3760

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

GREGORY SWAN,

Defendant-Appellant.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 97 CR 105-3--Charles R. Norgle, Judge.

Argued December 10, 1999--Decided August 10, 2000

 Before Easterbrook, Rovner, and Diane P. Wood, Circuit

Judges.

 Diane P. Wood, Circuit Judge. From 1987 until

1994, Gregory Swan worked for the City of

Chicago. During the last two years of that

period, his specific job was for 13th Ward

Alderman John Madrzyk. Unfortunately for the

City, neither Madrzyk nor Swan had its best

interests at heart. This case is Swan’s appeal

from his convictions for participating in a

racketeering conspiracy in violation of the

Racketeer Influenced and Corrupt Organizations

Act (RICO), mail fraud, theft of funds,

extortion, money laundering, obstructing the IRS,

failing to file tax returns, and using a false

social security card. The district court

sentenced him to five years’ imprisonment on

Counts 1 (racketeering), 2 (racketeering

conspiracy), 5 and 6 (theft of funds), 7 and 14

(extortion), and 8 (money laundering). He

received 12 months on counts 3 and 4 (mail

fraud), 9 (obstructing the IRS), 10, 12, and 13

(failure to file tax returns), and 15 and 16 (use

of a false social security card). All counts were

to run concurrently with each other. In addition,

the court ordered three years of supervised

release and ordered Swan to pay $100,000 in

restitution. 

 Swan’s appeal challenges the jury instructions

used to convict him on the RICO count; the
sufficiency of the evidence against him for

conviction on the RICO charges and the mail fraud

charges; and the district court’s admission of

evidence of his gambling and failure to complete

work that others had hired and paid him for. We

affirm all but Swan’s conviction on Count 1.

I

 Swan and Madrzyk cheated the City in a number

of ways. The two of them created four "ghost

jobs" enabling Swan, his son (Greg Swan), his

girlfriend (Sharon Nova), and another friend

(David Sipich) to receive paychecks and benefits

from the City of Chicago, without doing any

actual work. Madrzyk received a kickback from

each of the ill-gotten paychecks. Swan and

Madrzyk also referred people and companies who

came to Madrzyk seeking City assistance such as

rezoning and inspection help to Swan’s

"consulting" firm. These people then paid a

"consulting fee" to the firm, notwithstanding the

fact that neither Swan, the firm, nor Madrzyk did

anything more for them than the Alderman was

required to do as part of his position. Swan

attempted to cover up these schemes by failing to

report his income from the ghost jobs and the

consulting fees to the IRS. By 1994, as Swan

became more desperate, he lied to federal agents

about the sources of his income and began to use

false social security numbers for various

purposes. He also stopped using bank accounts in

a desperate effort to eliminate the paper trail

related to his income, and he used other people

as intermediaries for his illegal gains.

II

 Eventually, of course, federal authorities

caught up with him and brought the charges now

before us. Swan, Madrzyk, and two others were

charged in a superseding indictment with

violations of 18 U.S.C. sec.sec. 1962(c) (RICO),

1962(d) (RICO conspiracy), 1341 (mail fraud),

1951 (extortion), 1956 (money laundering), 666

(theft of funds), and 2 (aiding and abetting

various counts), as well as 26 U.S.C. sec.sec.

7212 (obstructing the IRS) and 7203 (failure to

file tax returns) and 42 U.S.C. sec. 408 (use of

a false Social Security card). (Madrzyk

eventually pleaded guilty and testified against

Swan under a grant of immunity.) To violate RICO

sec. 1962(c), a person employed by or associated

with an enterprise that is engaged in, or that

conducts activities that affect interstate or

foreign commerce, must conduct or participate,

directly or indirectly, in the conduct of that

enterprise’s affairs through a pattern of

racketeering activity or collection of unlawful

debt. In order to have conducted or participated
in the enterprise’s affairs under section

1962(c), the person charged must have had "some

part in directing those affairs." Reves v. Ernst

& Young, 507 U.S. 170, 179 (1993). In other

words, she must have participated in the

operation or management of the enterprise itself,

and she must have asserted some control over the

enterprise. See id. at 183; Goren v. New Vision

Int’l. Inc., 156 F.3d 721, 727-28 (7th Cir.

1998).

 Overlooking this requirement of control (perhaps

mistakenly relying on pre-Reves jurisprudence),

the government insisted upon and the court

permitted the following jury instruction on Count

1:

The terms "conduct" and "participate in the

conduct of the affairs of the enterprise" include

the performance of acts, functions or duties

which are necessary to or helpful in the

operation of the enterprise.

There was no additional instruction requiring a

finding of operation or management of the

enterprise. The court gave that instruction over

Swan’s objection. Swan both objected and asked

the court to instruct the jury that the simple

giving of directions and performance of tasks

necessary or helpful to the organization, without

more, was insufficient. The court rejected his

position because it thought that Reves applied

only to civil RICO prosecutions and thus that

Swan’s proposed instruction did not correctly

state the law.

 We review the trial court’s jury instructions

with deference, analyzing them as a whole to

determine if they accurately state the law. See

United States v. Kelly, 167 F.3d 1176, 1178 (7th

Cir. 1999). Even if we find that a jury

instruction was erroneous, we will reverse only

if we believe that the instruction confused the

jury and therefore prejudiced the defendant. See

id. at 1179.

 In this case, it is plain that the RICO jury

instruction was deficient. We reiterate: "simply

performing services for an enterprise, even with

knowledge of the enterprise’s illicit nature, is

not enough to subject an individual to RICO

liability under sec. 1962(c)." Goren, 156 F.3d at

728. The instruction the court gave could not

have given the jury any idea that it needed to

find that Swan participated in the management and

operation of the enterprise.

 The government argues that any error in the

instruction was harmless and thus does not

justify reversal. While we have no problem with
the general proposition that harmless error

analysis applies to jury instructions, see Neder

v. United States, 527 U.S. 1, 18 (1999), we do

not agree that this particular error could be

called harmless. To affirm the RICO conviction

here, we would have to find that it was "clear

beyond a reasonable doubt that a rational jury

would have found the defendant guilty absent the

error." Id.; see also Lanier v. United States,

205 F.3d 958, 964 (7th Cir. 2000). That we find

impossible to do on this record. It is true that

the jury found Swan guilty of conspiring to

violate sec. 1962(c), when it convicted him on

the charge in Count 2 of violating 18 U.S.C. sec.

1962(d). But this did not supply the missing

finding relating to participation in the

management and control of the enterprise--a

finding that the jury had no need to make under

the court’s instruction--for the simple reason

that a sec. 1962(d) conspiracy conviction does

not require the jury to find that the defendant

was an operator or manager of the enterprise. See

Brouwer v. Raffensperger, 199 F.3d 961, 967 (7th

Cir. 2000). To convict Swan on Count 2, the jury

needed only to find that he knowingly agreed to

facilitate the activities of those operators or

managers to whom sec. 1962(c) can apply (such as

someone like Madrzyk). See id. And the facts

established by the record (that Swan received a

ghost payroll check, took on clients referred to

him by Alderman Madrzyk, failed to file tax

returns, and used a false social security card)

do not prove that he managed or operated the

"enterprise" (which here was apparently the City

of Chicago itself). Because the record does not

contain overwhelming evidence that Swan managed

or controlled the enterprise, and because the

jury was not fully informed as to the elements of

a RICO violation, we reverse Swan’s conviction on

Count 1.

 This conclusion, we note, however, will have no

effect on the amount of time Swan spends in

prison, even though it will entitle him to a

modest adjustment of the special assessment he

must pay. Count 1 was grouped, for sentencing

purposes, with Counts 2, 5-6, and 8-16 under

U.S.S.G. sec. 3D1.2. The offense level determined

for the group depended not on Count 1, but on

Count 8, money laundering, because U.S.S.G. sec.

3D1.3 provides that the offense level for the

group is derived from the count with the highest

offense level, which was money laundering at an

offense level of 25. The total combined offense

level is therefore not affected by reversal of

the RICO charge.

III

 Swan argues next that there was insufficient
evidence to convict him of violating either the

racketeering or the mail fraud counts. Because we

are reversing his sec. 1962(c) conviction on

other grounds, we address only the sufficiency of

the evidence to support his mail fraud

conviction. As we constantly observe, the

governing standard of review makes success on

such a claim exceedingly hard. We must draw all

reasonable inferences in favor of the government,

and we affirm if any rational fact-finder could

have determined that Swan was guilty beyond a

reasonable doubt. See United States v. Yoon, 128

F.3d 515, 523 (7th Cir. 1997). 

 A mail fraud violation occurs when someone "for

the purpose of executing [a] scheme or artifice

[to defraud] or attempting . . . to do [so],"

places in the mails something to be delivered by

a mail carrier. 18 U.S.C. sec. 1341; see United

States v. Keane, 522 F.2d 534, 551 (7th Cir.

1975). Swan’s conviction rests on his use of the

mails to defraud the Hinsdale Orthopedic

Association. Around December 13, 1994, Blue

Cross/Blue Shield mailed a check for $171 to

Hinsdale Orthopedics to reimburse it for the

medical services it rendered to Nova, Swan’s

girlfriend. Swan had a hand in this mailing

because he helped procure the "ghost" job for

Nova that provided her with the Blue Cross/Blue

Shield insurance policy. Swan did not have to

mail the check himself to be guilty of mail

fraud. He only needed to cause it to be mailed or

to commit some act that would cause the mailing

of the check to be reasonably foreseeable. See

Keane, 522 F.2d at 551. When Swan got Nova the

ghost job, which came with pay and benefits, it

became reasonably foreseeable that Blue

Cross/Blue Shield would reimburse medical

institutions for her care.

 Swan claims that the check was not mailed "for

the purpose of executing [the fraud]," as sec.

1341 requires. He points out that United States

v. Maze, 414 U.S. 395, 402 (1974) held that mail

fraud charges were not supported where the

evidence showed that reimbursement checks had

been mailed by banks to hotels after the

defendant had already used stolen credit cards to

obtain services from the hotels. But the point of

Maze was that the defendant had already completed

the fraud when he left the hotels. Whether or not

the banks actually paid the hotel bills did not

affect the defendant. Here, in contrast, the Blue

Cross/Blue Shield check served an important

purpose in furthering the fraud: without the

check, the fraud would have been frustrated,

because Hinsdale would simply have turned to Nova

for payment. Nova would not have received

fraudulently obtained medical services for free.

She remained personally liable for the services
she had received until the bill was paid by

someone. The evidence of the Blue Cross/Blue

Shield mailing was sufficient to form the basis

for Swan’s mail fraud conviction.

IV

 Swan’s final quarrel is with the district

court’s decision to allow the government to

present evidence of his gambling and of his

failure to perform consulting services as

promised. We review the trial court’s evidentiary

decisions for abuse of discretion. See United

States v. Garcia, 986 F.2d 1135, 1139 (7th Cir.

1993). 

 Normally, evidence of prior bad acts is not

admissible to show character traits and

conformity with those traits. See Fed. R. Evid.

404(b). Such evidence is nonetheless admissible

where (1) it is relevant to establish some matter

in issue other than the defendant’s propensity to

commit the crime, (2) it shows that the defendant

actually committed the prior bad acts, and (3)

its probative value is not substantially

outweighed by the danger of unfair prejudice. See

Fed. R. Evid. Rules 404(b), 403; United States v.

Asher, 178 F.3d 486, 492 (7th Cir. 1999). The

government argued that the evidence here was

necessary to fill out the witnesses’ stories so

that they would make sense to the jury (see,

e.g., United States v. Gill, 58 F.3d 334, 337

(7th Cir. 1995)), and that the evidence helped to

explain Swan’s intent and motive to commit the

crimes. We do not find these grounds persuasive.

This is not a case like United States v. Mobley,

193 F.3d 492 (7th Cir. 1999), in which the

prosecution was allowed to introduce evidence of

gambling because the defense made the question of

cash flow relevant. Here, the references to

Swan’s gambling were gratuitous. None of Swan’s

fraudulent activity was inextricably related to

his gambling or failure to perform contractual

duties. Witnesses could have explained their

relationships with Swan without mentioning that

they met him while gambling, and they could have

discussed their giving Swan money for services

without adding that in the end he did not follow

through. Moreover, the fact that Swan gambled did

little to explain why he wanted to steal money.

Most people want money for a variety of reasons,

and the government did not attempt to show any

special circumstances such as a large gambling

debt hanging over Swan’s head that would have

provided him with a particularly weighty motive

to steal. The fact that Swan did not perform

services for some clients may evidence intent to

extort, but his actual taking of their money,

also introduced into evidence, proved that

intent. The non-performance of the services added
little or nothing. 

 Even though the admission of the evidence was

probably error under Rules 404 and 403 of the

Federal Rules of Evidence, we think it clear on

this record that any error was harmless. See

Garcia, 986 F.2d at 1139. The victims of Swan’s

extortion testified against him; several

witnesses testified that Swan set up the ghost

jobs and paid Madrzyk kickbacks; and Madrzyk

himself took the stand to testify against Swan.

There was overwhelming evidence that Swan was

part of a RICO conspiracy, and committed the

fraudulent acts with which he was charged. 

V

 In sum, we Affirm all of Swan’s convictions with

the single exception of the conviction under

Count 1, which we Reverse. The case is Remanded to

the district court for correction of the sentence

and the special assessment in accordance with

this opinion.