Source: http://openjurist.org/219/f3d/1271
Timestamp: 2013-05-25 20:24:56
Document Index: 187862805

Matched Legal Cases: ['§ 1962', '§ 1962', '§ 1963', '§ 1962', '§ 1962', '§ 1963', '§ 1962', '§ 1962', '§ 1963', '§ 982', '§ 1962', '§ 1963', '§ 1962', '§ 1961', '§ 1341', '§ 1962', '§ 1961', '§ 1961', '§ 1962', '§ 1962', '§ 1962', '§ 1962', '§ 1962', '§ 1341', '§ 371', '§ 1956', '§ 371', '§ 1962', '§ 1962']

219 F3d 1271 United States of America v. Goldin Industries Inc Goldin of Alabama Inc et al. | OpenJurist
219 F. 3d 1271 - United States of America v. Goldin Industries Inc Goldin of Alabama Inc et al.	Home219 f3d 1271 united states of america v. goldin industries inc goldin of alabama inc et al.
219 F3d 1271 United States of America v. Goldin Industries Inc Goldin of Alabama Inc et al. 219 F.3d 1271 (11th Cir. 2000)
UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,v.GOLDIN INDUSTRIES, INC., GOLDIN OF ALABAMA INC., ET AL., DEFENDANTS-APPELLANTS.
Goldin Industries, Inc. ("Goldin Mississippi")1, Goldin of Alabama, Inc. ("Goldin Alabama"), and Goldin Industries Louisiana, Inc. ("Goldin Louisiana") (collectively the "Goldin Corporations"), appeal their convictions for racketeering activities in violation of the Racketeer Influenced and Corrupt Organizations Statute ("RICO"), 18 U.S.C. § 1962(c), and conspiracy to engage in such activities in violation of RICO § 1962(d). The Goldin Corporations also appeal from the final judgment of forfeiture and order mandating restitution under 18 U.S.C. § 1963(a)(1) and (a)(3) of all proceeds obtained from the racketeering activity.
Ultimately, the jury acquitted the individual Goldin defendants but convicted all three Goldin corporations of racketeering in violation of 18 U.S.C. § 1962(c) (Count 1)2 and racketeering conspiracy under 18 U.S.C. § 1962(d) (Count 2).3 Pursuant to 18 U.S.C. § 1963(a)(1) & (3), which provide that any person convicted of violating any provision of § 1962 must forfeit to the United States any interest acquired or maintained in violation of § 1962, the government sought to obtain forfeiture judgments and restitution awards reflecting the amounts that each corporation had derived from its schemes.4 After the subsequent one-day forfeiture trial, the district court sentenced all three corporations to five years probation. In addition, Goldin Alabama was fined $560,000.00, ordered to forfeit $219,849.22 and to pay restitution of $219,849.22 under RICO, 18 U.S.C. § 1963, ordered to forfeit $25,387.94 under the money laundering statute, 18 U.S.C. § 982(a)(1), and assessed $3800.00. Goldin Mississippi was fined $1,000,000.00, ordered to forfeit $419,835.18 and to pay restitution of $419,835.18 under RICO, and assessed $400.00. Goldin Louisiana was fined $1,000,000.00, ordered to forfeit $47,712.74 and to pay restitution of $47,712.74 under RICO, and assessed $400.00. The Goldin Corporations now appeal both their convictions under 18 U.S.C. § 1962(c) and (d) and the forfeiture and restitution judgments under 18 U.S.C. § 1963.
Thus, as the trial court correctly instructed the jury, to convict under § 1962(c), the government must prove: (1) the existence of an enterprise which affects interstate or foreign commerce, (2) that the defendant associated with the enterprise; (3) that the defendant participated in or conducted the enterprise's affairs; and (4) that the participation in or conduct of the enterprise's affairs was through a pattern of racketeering activities. See United States v. Weinstein, 762 F.2d 1522, 1536 (11th Cir.1985), quoting United States v. Phillips, 664 F.2d 971, 1011 (5th Cir. Unit B 1981).
A "pattern" of racketeering activity requires that a defendant commit two acts of racketeering activity within a ten-year period. 18 U.S.C. § 1961(5). Racketeering activity is defined as the commission of certain federal crimes, including for our purposes here, the crime of mail fraud pursuant to 18 U.S.C. § 1341. The terms "person" and "enterprise" in the statute have been specifically defined by Congress. A person liable under § 1962(c) is "any individual or entity capable of holding a legal or beneficial interest in property." 18 U.S.C. § 1961(3). An "enterprise" under the statute is "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4). Moreover, under our case law, a RICO enterprise need not possess an "ascertainable structure" distinct from the associations necessary to conduct the pattern of racketeering activity. Weinstein, 762 F.2d at 1537, n. 13 (rejecting the holding in United States v. Bledsoe, 674 F.2d 647, 665 (8th Cir.1982), requiring that the enterprise possess such a structure, distinct from the pattern of racketeering activities).
The Supreme Court has held that the existence of an enterprise "is proved by evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit." United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 ( 1981). We have held that Turkette left intact this Circuit's holding in United States v. Elliott, 571 F.2d 880 (5th Cir.1978),5 that the definitive factor in determining the existence of a RICO enterprise is the existence of an association of individual entities, however loose or informal, that furnishes a vehicle for the commission of two or more predicate crimes, that is, the pattern of racketeering activity requisite to the RICO violation. Id. at 898. See also United States v. Hewes, 729 F.2d 1302, 1311 (11th Cir.1984) ( "a RICO enterprise exists where a group of persons associates, formally or informally, with the purpose of conducting illegal activity"); United States v. Cagnina, 697 F.2d 915, 920-21 (11th Cir.1983) (upholding Cagnina's RICO conviction for his participation in an "informal criminal network engaged in racketeering activity").
In this case the Goldin Corporations argue that because each corporation is named as a defendant and is also included in the named enterprise, their convictions under 1962(c) must be vacated. We bifurcated the issues in this appeal so that the en banc court could consider the continued viability of United States v. Hartley, 678 F.2d 961, 988 (11th Cir.1982), which held that the same person or entity could be named as both the RICO person and the RICO enterprise under § 1962(c). Hartley has now been overruled by the en banc court. United States v. Goldin Industries, Inc., 219 F.3d 1268 (11th Cir.2000) (en banc ). Thus, to the extent that a defendant is both the "person" and the "enterprise," a conviction of that defendant under § 1962(c) now cannot stand.
Initially, we recognize that a defendant can clearly be a person under the statute and also be part of the enterprise. The prohibition against the unity of person and enterprise applies only when the singular person or entity is defined as both the person and the only entity comprising the enterprise. See Goldin Industries, Inc., 219 F.3d 1268; Yellow Bus Lines, Inc. v. Drivers, Chauffeurs & Helpers Local Union, 639, 883 F.2d 132 (D.C.Cir.1989), rev'd in part on other grounds, 913 F.2d 948 (D.C.Cir.1990) (en banc ); Puckett v. Tenn. Eastman Co., 889 F.2d 1481 (6th Cir.1989); Garbade v. Great Divide Mining and Milling Corp., 831 F.2d 212 (10th Cir.1987); Bishop v. Corbitt Marine Ways, Inc., 802 F.2d 122 (5th Cir.1986); Schofield v. First Commodity Corp., 793 F.2d 28 (1st Cir.1986); Bennett v. United States Trust Co. of New York, 770 F.2d 308 (2nd Cir.1985); B.F. Hirsch v. Enright Refining Co., Inc., 751 F.2d 628 (3rd Cir.1984); Haroco, Inc. v. American Nat'l Bank and Trust Co. of Chicago, 747 F.2d 384 (7th Cir.1984), aff'd on other grounds, 473 U.S. 606, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985); Rae v. Union Bank, 725 F.2d 478 (9th Cir.1984); United States v. Computer Sciences Corp., 689 F.2d 1181 (4th Cir.1982), overruled in part, Busby v. Crown Supply, Inc., 896 F.2d 833 (4th Cir.1990); Bennett v. Berg, 685 F.2d 1053 (8th Cir.1982). To find that a defendant cannot be part of the enterprise would undermine the purposes of the RICO statute. Indeed, RICO requires that the person be "employed by or associated with" the enterprise. 18 U.S.C. § 1962(c). Thus, a § 1962(c) defendant may be simultaneously a RICO person and a member of the RICO enterprise. Cullen v. Margiotta, 811 F.2d 698, 730 (2d Cir.1987). Although RICO forbids the imposition of liability where the enterprise is nothing more than a subdivision or a part of the person, the requirement does not run the other way. Davis v. Mutual Life Ins. of New York, 6 F.3d 367, 378 (6th Cir.1993). Thus, the fact that each corporation was a defendant "person" and also part of the union of corporations which was the enterprise does not as a matter of law preclude a conviction.
The Goldin Corporations argue, however, that because all of the corporate defendants were offshoots of the initial Goldin corporation and had overlapping ownership, they were in reality only one entity and therefore the alleged enterprise was not distinct from the defendant persons. The Goldin Corporations argue that the circumstances here are like those in Discon, Inc. v. NYNEX Corp., 93 F.3d 1055 (2nd Cir.1996), and accordingly, we should hold, as the Second Circuit held in Discon, that the three corporations are in reality one and the same.
In Discon the defendants were NYNEX Corp., a holding company, and two of its wholly-owned subsidiaries, MECo, and NYTel. The enterprise alleged was the union of all three corporations. The factual basis for the complaint was an alleged scheme whereby MECo would purchase telephone removal services on behalf of NYTel at inflated prices. NYTel would then overcharge its customers on the basis of these inflated prices. However, at the end of the year, MECo would receive a secret "rebate" from the seller which it would then pass on to NYTel. This scheme enabled MECo and NYNEX to generate increased revenues derived from NYTel's telephone monopoly. Id. at 1057-58. In that case, however, the Second Circuit found that MECo was not only a wholly owned subsidiary of NYNEX, but its only purpose was to serve as the purchasing agent for NYTel. Unlike other intermediaries such as wholesalers, who may transfer goods and services to a number of different purchasers, MECo did not resell removal services to any other telephone company. Thus, MECo did not compete in the overall market "but only in the 'market' for a single buyer." Id. at 1060. This arrangement, the court found, was analogous to that of an internal purchasing agent. The court noted that had MECo been organized as a purchasing department within NYTel rather than as a separate corporate entity, it would be undisputed that MECo did not compete with Discon. In this context the court held that the corporations were "acting within the scope of a single corporate structure, guided by a single corporate consciousness," id. at 1064, and ruled that "[i]t would be inconsistent for a RICO person, acting within the scope of its authority, to be subject to liability simply because it is separately incorporated." Id.7
Rather, we find the more analogous case in the Second Circuit to be Securitron Magnalock Corp. v. Schnabolk, 65 F.3d 256 (2nd Cir.1995).8 There, the Second Circuit found that notwithstanding common ownership and a common officer and agent, each distinct corporation could be indicted individually as a person under § 1962(c) while also being considered jointly as constituting the enterprise. Id. at 263. Charles Schnabolk was the President and owner of Kalon, one of the corporate defendants. He was also the principal owner of the other corporate defendant, Andra, later selling his controlling interest to undisclosed individuals and served as Andra's Vice President. Kalon employed between six and 15 people; Andra had three. The two companies shared office space and all of the racketeering acts were performed by Schnablock representing one or the other of the corporations. Unlike MECo in Discon, which functioned only to serve as the purchasing agent of NYTel, the corporations in Securitron were, as the Second Circuit put it, active, operating, ongoing businesses, each with a presence in the marketplace, "rather than two stacks of stationery." Id. at 263. Here, as in Securitron, each Goldin corporation is a separate and distinct corporation. Each is incorporated in a separate state. Each is a separate ongoing business with a separate customer base. Each is free to act independently and advance its own interests contrary to those of the other two corporations.
Sufficiency of the evidence is a question of law to be reviewed de novo. United States v. Suba, 132 F.3d 662, 671 (11th Cir.1998). In this case, we review the evidence to determine whether "a reasonable jury, viewing the evidence and all reasonable inferences therefrom in the light most favorable to the Government could find the Defendant[s] guilty as charged beyond a reasonable doubt." United States v. Navarro-Ordas, 770 F.2d 959, 966 (11th Cir.1985).10
Goldin Alabama was also convicted of mail fraud in violation of 18 U.S.C. §§ 1341 and 2 in connection with five mailings to Scott Paper (Counts 9-13); conspiracy to commit mail fraud against Scott Paper in violation of 18 U.S.C. § 371 (Count 14); money laundering in violation of 18 U.S.C. § 1956(a)(1)(A)(i) and (a)(1)(B)(i), consisting of payments to Scott Paper's scrap yard manager, James Denson, through a fictitious Goldin Alabama account (Counts 15-24); and conspiracy to commit the same money laundering in violation of 18 U.S.C. § 371 (Count 25). Goldin Alabama does not challenge these convictions on this appeal, nor does it challenge the forfeiture it was ordered to pay in connection with its money laundering convictions.
In Bonner v. Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc ), the Eleventh Circuit adopted as binding precedent all Fifth Circuit decisions handed down prior to the close of business on September 30, 1981.
In Fogie v. THORN Americas, Inc., 190 F.3d 889, 898 (8th Cir.1999), the Eighth Circuit held that a number of wholly-owned subsidiary corporations cannot be RICO defendants where the parent corporation is named as the enterprise, because a subsidiary cannot be sufficiently distinct from its parent or other related subsidiaries so as to satisfy § 1962(c)'s distinctiveness requirement. On the other hand in Haroco, 747 F.2d at 402-403, the Seventh Circuit held in a civil RICO case that a subsidiary corporation could be liable under § 1962(c) for conducting the affairs of its parent corporation through a pattern of racketeering activities. As this case does not involve wholly-owned subsidiaries conducting a pattern of racketeering activity through an enterprise comprised only of themselves and the parent corporation, we take no position on this question.
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