Source: http://ny.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19720713_0040197.C02.htm/qx
Timestamp: 2016-12-08 06:21:29
Document Index: 413530251

Matched Legal Cases: ['§ 894', '§ 9', '§ 894', '§ 186', '§ 894', '§ 894', '§ 894', '§ 371', '§ 894', '§ 892', '§ 894']

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,v.JESSE SMITH AND ROCCO LAURIA, DEFENDANTS-APPELLANTS
These are appeals from judgments of conviction entered in the United States District Court for the Eastern District of New York on April 5, 1972. Appellants Jesse Smith and Rocco Lauria were convicted of conspiring to use extortionate means to collect an extension of credit in violation of the federal loan sharking statute, 18 U.S.C. § 894,*fn1 and each was sentenced to three years imprisonment. The appellants waived their right to a jury trial and stipulated that the court could consider the statements of the government witnesses plus exhibits referred to in the statements as all of the evidence in the case as if the same had been presented in open court at a trial before the court sitting without a jury. The apparent reason for this procedure was that the defendants did not contest the facts but relied on the contention that the prosecution violated the ex post facto clause of the constitution (Art. I, § 9 cl. 3) and the due process provision of the fifth amendment. Judge Anthony J. Travia in his Findings of Fact and Conclusions of Law, United States v. Carvelli, 340 F. Supp. 1295 (E.D.N.Y.1972), found the defendants guilty of the conspiracy count but dismissed the eight substantive counts.*fn2 We affirm the judgments of conviction.
After Howard Clyde purchased an auto repair shop, he encountered serious financial problems and soon became the victim of a sordid loan sharking operation in October, 1967. He initially borrowed $1250 from Lauria whose collector was Carvelli.*fn3 The "vig" (vigorish or excessive interest) was $1000 with weekly payments scheduled to terminate in February, 1968. Clyde was still deeply in debt and in January, 1968 he was advised by one Lombardi, who initially acted as a collector for appellant Smith, that a $2000 loan might be possible if Smith was agreeable. Carvelli was disturbed by the prospect of losing this business, and the problem was solved by Carvelli providing Clyde with $2000 with Lauria and Smith each providing a $1000 investment. The terms of this deal were that the hapless Clyde was to pay back $6000 over a 40 week period so that the "vig" was a mere $4000. Carvelli gradually emerged as the sole collector for both Lauria and Smith, visiting Clyde's shop every week in February and March of 1968 accompanied by either one of the appellants. On April 10, 1968 Smith and Lauria accompanied Carvelli to Clyde's shop, and Lauria claimed that he was still owed an installment on his half of the loan. Both Lauria and Smith threatened at this time to burn down Clyde's shop as well as his home if he didn't pay. The appellants further stated that Carvelli was to collect all future payments in cash. Mrs. Clyde came into the shop and was menaced by Lauria. Clyde at this point was financially desperate. He was forced to sell his shop and find other employment which he sought to hide from the appellants.
Up to this point, no matter how revolting and repugnant the conduct of the appellants and even though criminal under state law,*fn4 it was not violative of any federal law. The Consumer Credit Protection Act did not become effective until May 29, 1968. In view therefore of the ex post facto problem it becomes crucial to examine the events which transpired after the effective date of the statute.
The principal contention of the appellants here is that since the agreement between Smith and Lauria with Clyde as well as the actual threats made by them against the Clydes, all predated the effective date of the statute and hence were federally "innocent", their poststatutory behavior was insufficient to establish a conspiracy to violate 18 U.S.C. § 894. We cannot agree.
The contention that the agreement by Lauria and Smith to make loans at usurious rates was entered into prior to the effective date of the statute while true, is not pertinent. The appellants were not charged or convicted of entering into an illicit agreement but rather of conspiring to collect extensions of credit by extortionate means. Mr. Justice Holmes a long time ago distinguished between the transitory character of an agreement and the continuous nature of the conspiracy which follows. In differentiating between a contract in restraint of trade and a conspiracy in restraint of trade, he pointed out, "A conspiracy is constituted by an agreement, it is true, but it is the result of the agreement, rather than the agreement itself, just as a partnership, although constituted by a contract, is not the contract, but is a result of it. The contract is instantaneous, the partnership may endure as one and the same partnership for years. A conspiracy is a partnership in criminal purposes." United States v. Kissel, 218 U.S. 601, 608, 31 S. Ct. 124, 126, 54 L. Ed. 1168 (1910). The distinction between the agreement giving rise to the enterprise and the conspiracy which ensues and is continuous until the criminal purpose has been achieved is well understood. Pinkerton v. United States, 328 U.S. 640, 646-647, 66 S. Ct. 1180, 90 L. Ed. 1489 (1946); Hyde v. United States, 225 U.S. 347, 369, 32 S. Ct. 793, 56 L. Ed. 1114 (1912); Developments in the Law -- Criminal Conspiracy, 72 Harv.L.Rev. 920, 926 (1959).
It is well established that evidence of the prestatutory behavior of the conspirators even though innocent is admissible. In United States v. Ferrara, 458 F.2d 868 (2d Cir. 1972) this court considered an appeal from a conviction of a conspiracy to violate a 1959 Taft-Hartley Act amendment, 29 U.S.C. § 186. The court held,
Accord, United States v. Binder, 453 F.2d 805, 808 (2d Cir. 1971), cert. denied, 407 U.S. 920, 92 S. Ct. 2458, 32 L. Ed. 2d 805 (U.S.1972); United States v. Russo, 442 F.2d 498, 501 (2d Cir. 1971), cert. denied, 404 U.S. 1023, 92 S. Ct. 669, 30 L. Ed. 2d 673 (1972).
The pre-enactment behavior here was hardly innocent; it was malum in se and violated state law. Nyquist v. United States, 2 F.2d 504 (6th Cir. 1924), cert. denied, 267 U.S. 606, 45 S. Ct. 508, 69 L. Ed. 810 (1925) is closely in point. The defendants there were charged with conspiring to violate the National Motor Vehicle Theft Act (Dyer Act) which became effective on October 29, 1919. There was no federal legislation at all in this area prior to this enactment. In rejecting the argument that pre-enactment evidence violated the ex post facto doctrine the court said:
The appellants further urge that their convictions should be reversed because there is no evidence they made any threats to the person or property of the Clydes after May 29, 1968, the effective date of the statute. The gravamen of the § 894 offense, the argument runs, is the use of extortionate means in the course of loan collections, and since there is no proof in this case of any threats since the April and early May incidents, they are, in effect, being punished for threats made prior to the time it was illegal to do so. Once again we find the argument to be without merit.
The case upon which appellants place major reliance for the proposition that the use of extortionate means represents the corpus delicti is United States v. Biancofiori, 422 F.2d 584 (7th Cir.), cert. denied, 398 U.S. 942, 90 S. Ct. 1857, 26 L. Ed. 2d 277 (1970). We do not quarrel with the proposition at all but point out that in that case the defendant was charged with the completed crime under § 894 and not the conspiracy to violate § 894 which is also made criminal by that section. The distinction between the use of extortionate means (the completed crime) and the conscious planning and conniving in partnership to employ such means (the inchoate crime of conspiracy) is basic. See Carbo v. United States, 314 F.2d 718, 740-741 (9th Cir. 1963), cert. denied, 377 U.S. 953, 84 S. Ct. 1625, 12 L. Ed. 2d 498 (1964).
In the first place, this was not an indictment under the general conspiracy section, 18 U.S.C. § 371, which requires the proof of overt acts in a prosecution under that section. This was an indictment under 18 U.S.C. § 894 which provides both for the completed crime as well as the conspiracy and under such a statute there is no necessity to set forth overt acts in the indictment. Singer v. United States, 323 U.S. 338, 340, 65 S. Ct. 282, 89 L. Ed. 285 (1945); United States v. Tolub, 187 F. Supp. 705, 709 (S.D.N.Y.1960), aff'd, 309 F.2d 286 (2d Cir. 1962). That overt acts were unnecessarily pleaded here does not add to appellants' argument, since the function of the overt act in a conspiracy indictment and trial is simply to manifest that the conspiracy is at work. The overt act pleaded need not even be criminal. Yates v. United States, 354 U.S. 298, 334, 77 S. Ct. 1064, 1 L. Ed. 2d 1356 (1957). The court, in any event, is not limited in its examination of post-enactment conduct to that set forth in the indictment in determining whether appellants adhered to their initial agreement. See United States v. Armone, 363 F.2d 385, 400-401 (2d Cir.), cert. denied, 385 U.S. 957, 87 S. Ct. 391, 17 L. Ed. 2d 303 (1966).
We refuse to read Section 894 as requiring that each collection be accompanied by an overt threat.*fn5 We have already established that the pre-en-actment conduct of the conspirators is admissible to explain the intent and purpose of their subsequent behavior. Here there were unquestioned brutal threats made upon Clyde, his family and his property. They were made to effectuate their repayment of a loan which required weekly collections well after the statute was effective. We think that the evidence abundantly establishes that the June and July payments were prompted by the April and May threats and that certainly this is all the statute requires for a conspiracy violation.
That the statute embraces post-enactment actions motivated by a pre-enactment threat which remains efficacious was recently the holding of United States v. Annoreno, 460 F.2d 1303 (7th Cir. May 26, 1972), which dealt with a conspiracy to violate 18 U.S.C. § 892. The court states,
The case before us is in fact stronger since the pre-enactment threats here related not to another transaction but to the very loan which extended into the post-enactment period. The latest were made only 21 days before the statute was enacted.*fn6
Thus we finally arrive at the crux of the matter -- was the trial judge correct in determining that there was sufficient proof beyond a reasonable doubt that there was a criminal conspiracy in violation of § 894 in effect on May 29, 1968 which continued from that date until it was frustrated by the flight of the Clydes in late July, 1968. There is no doubt in our minds that this proposition was clearly established.
The initial agreement and burgeoning partnership to extort the collection of the loan and vigorish are not left to the inferences which becloud the search in other conspiracy cases. Chief Judge Friendly in United States v. Borelli, 336 F.2d 376, 384 (2d Cir. 1964), cert. denied, 379 U.S. 960, 85 S. Ct. 647, 13 L. Ed. 2d 555 (1965) commented upon the difficulty in determining what agreement can be inferred in a narcotic conspiracy case even where there is a repeated pattern of purchases. No such problem is created by the loan sharking conspiracy. Once it is established, and it is not controverted here, that a $2000 loan was made in January, 1968 with vigorish computed at $4000, with weekly installments of $150 to be made over a 40 week period to Carvelli, acting for Lauria and Smith, there is no difficulty in attributing the post-enactment payments to the initial arrangement which necessitated a continuing relationship. The subsequent collections cannot be viewed in isolation as separate or unrelated transactions. See United States v. Kissel, supra, 218 U.S. at 607, 31 S. Ct. 124, 54 L. Ed. 1168.*fn7
The post-enactment transactions here demonstrate the continuing criminal partnership of Smith and Lauria who had designated Carvelli their collector. Eight payments of principal and vigorish were made with regularity by Mrs. Clyde at the cocktail lounge, as prearranged, from May 30 to July 17, 1968. Carvelli admitted turning over the money to either Smith or Lauria whoever appeared first at the bar. Smith complained about being shortchanged and each of the appellants separately advised Carvelli that they would have to get together to straighten the matter out. On learning that Clyde had fled, Smith lamented to Carvelli that he had been left "holding the bag." The same dirty game with the same cast and the same rules was being played after May 29th as before. The continuing use of the common collector, the sharing of the collections and the expressed desire of each conspirator to get together to straighten the matter out, can only be referable to a "continuous co-operation of the conspirators to keep it up", United States v. Kissel, supra, 218 U.S. at 607, 31 S. Ct. 124, 126, 54 L. Ed. 1168. There was "continuity of action" here sufficient to indicate that the conspiracy was continuous. Fiswick v. United States, 329 U.S. 211, 216, 67 S. Ct. 224, 91 L. Ed. 196 (1946). There is no suggestion of withdrawal by either, no abandonment of the venture, only the frustration caused by the flight of the Clydes.