Source: http://openjurist.org/605/f2d/260
Timestamp: 2014-03-10 00:15:52
Document Index: 408843398

Matched Legal Cases: ['§ 1961', '§ 1962', '§ 1962', '§ 843', '§ 842', '§ 1341', '§ 2314', '§ 922', '§ 922']

605 F2d 260 United States v. Sutton | OpenJurist
605 F. 2d 260 - United States v. Sutton	Home605 f2d 260 united states v. sutton
605 F2d 260 United States v. Sutton 605 F.2d 260
UNITED STATES of America, Plaintiff-Appellee,v.Carl SUTTON, Jr., Joseph Spinoza Elkins, Dyeatra Ann Carter,Edwin Arthur Adams, Otis Hensley, Prince AlbertRankin, Samuel Lee Harris, CharlesEdward Craven, Viola Holmes,Defendants-Appellants.
Nos. 78-5134 to 78-5139, 78-5141 to 78-5143.
Argued Dec. 1, 1978.Decided Sept. 4, 1979.
Engel, Circuit Judge, filed a dissenting opinion.
Eugene D. Smith, Cincinnati, Ohio (Court-appointed), for defendants-appellants in 78-5134.
James C. Cissell, U. S. Atty., Terry Lehman, Asst. U. S. Atty., Dayton, Ohio, Paul J. Brysh, c/o T. George Gilinsky, Washington, D. C., for U. S. in all cases.
James R. Willis, Cleveland, Ohio, for defendants-appellants in 78-5135 and 78-5136.
Willis, Whitehead, Character, Adrine, Childs, Blackwell & Davison, Cleveland, Ohio, for defendants-appellants in 78-5135.
John Carson, Cleveland, Ohio, for defendants-appellants in 78-5136.
Philip L. Pleska, Lebanon, Ohio (Court-appointed), for defendants-appellants in 78-5137.
James D. Ruppert, Franklin, Ohio (Court-appointed), for defendants-appellants in 78-5138.
Calvin W. Prem, Cincinnati, Ohio (Court-appointed), for defendants-appellants in 78-5139.
Andrew B. Dennison, Cincinnati, Ohio (Court-appointed), for defendants-appellants in 78-5141.
Henry E. Sheldon, Cincinnati, Ohio (Court-appointed), for defendants-appellants in 78-5142.
Ronald A. Lipez, Cincinnati, Ohio (Court-appointed), for defendants-appellants in 78-5143.
This case raises issues of first impression in our court concerning the scope of the federal enterprise racketeering statute, 18 U.S.C. §§ 1961-68 (1976). The law was enacted as Title IX of the Organized Crime Control Act of 1970 and is popularly known as RICO, an acronym for "Racketeer Influenced and Corrupt Organizations," the heading under which it appears in the criminal code. RICO's central aim is to prevent and punish the financial infiltration and corrupt operation, through patterns of racketeering activity, of "legitimate business operations affecting interstate commerce." Iannelli v. United States, 420 U.S. 770, 787 n. 19, 95 S.Ct. 1284, 1294, 43 L.Ed.2d 616 (1975). The question in this case is whether the statute may also be applied to persons engaged in racketeering activity unrelated to any legitimate organization but in furtherance of something the government terms "a criminal enterprise." We hold that it may not.
After a jury trial in the United States District Court for the Southern District of Ohio, on an indictment containing 329 counts, the nine appellants Carl Sutton, Jr., Joseph Elkins, Dyeatra Carter, Edwin Adams, Otis Hensley, Prince Albert Rankin, Samuel Harris, Charles Cravens, and Viola Holmes were each convicted of conducting the affairs of an "enterprise" affecting interstate commerce through a pattern of racketeering activity, 18 U.S.C. § 1962(c), and of conspiracy to commit that offense, 18 U.S.C. § 1962(d). Each was also convicted of one or more counts of using the telephone to facilitate drug offenses, 21 U.S.C. § 843(b), and of various substantive drug offenses, primarily possession and distribution of heroin, 21 U.S.C. § 842(a)(1). In addition, Adams was convicted of seven counts of mail fraud, 18 U.S.C. § 1341, and of transporting and receiving stolen property in interstate commerce, 18 U.S.C. §§ 2314-15; and, Hensley was convicted of eight counts of mail fraud, thirteen counts of receipt by a convicted felon of firearms shipped in interstate commerce, 18 U.S.C. § 922(h), and of unlicensed dealing in firearms, 18 U.S.C. § 922(a).
The government's evidence showed both a significant heroin distribution business and a large-volume stolen property fencing operation. They were centered in the Cincinnati, Ohio area, and involved many of the same participants.
The central figures in the narcotics distribution business were appellant Sutton and Herschel Weintrub, who was not tried in the instant prosecution. Sutton, with the aid of appellant Holmes, purchased heroin from Elkins and Carter in Cleveland with money supplied by Weintrub. The drugs were redistributed by appellants Rankin, Craven, Adams, Hensley and Harris.
Weintrub, Hensley and Adams comprised the fencing operation. Weintrub's role again was apparently that of financier. Adams and Hensley actually marketed the stolen property, principally household goods. There was evidence that the goods were supplied by several burglary rings over which Hensley and Adams once claimed control to an undercover government agent.
It was the government's theory of the case that these were not discrete criminal ventures but were merely separate departments of a unitary "criminal enterprise" under the management and control of Weintrub and Sutton. For example, there was evidence that Adams often sold both heroin and stolen property to a single customer in the same transaction. Adams told one such buyer, a government informant, that the stolen goods he had on hand stoves in that instance had been provided by Hensley and that the heroin he was selling was supplied by "Carl" (Sutton) and "Herschel" (Weintrub). Weintrub, Hensley, Harris, and Sutton were often observed by government surveillance agents visiting Adams' place of business, a jewelry store, from which the heroin and stolen property were usually sold. During court-authorized electronic surveillance Adams and Hensley, and Adams and Weintrub, frequently were overheard discussing both the narcotics and the fencing operations in a single telephone conversation.
The telephone interceptions also revealed that Adams and Weintrub assisted Hensley in obtaining false receipts for jewelry, appliances, and other items of personal property which Hensley had reported stolen from his home in a burglary. Hensley used the receipts to collect insurance money on the items, and the mailings made in connection with the insurance claims formed the basis of the mail fraud counts. The proceeds of the fraud apparently were applied to a debt Hensley owed Weintrub for narcotics.
A warrant-authorized search of Hensley's residence during the closing days of the investigation uncovered several ledger books documenting transactions in firearms and stolen property. Entries in one of the ledger books formed the basis for Hensley's convictions of receipt by a convicted felon of firearms that had been shipped in interstate commerce.
Appellants' main contention is that RICO was intended to proscribe only the infiltration and operation of legitimate enterprises through patterns of racketeering activity, something the government concedes was not involved in this case.1 Appellants argue that the statute does not reach a group of individuals like themselves, who "merely" have committed a series of racketeering offenses. To say the least, the argument lacks surface appeal, for it asks us to embrace the rather ironic proposition that racketeers should be immune from criminal liability under the statute so long as they keep their activities wholly Illegitimate. We suspect that largely explains the hostile treatment the argument has received in the other courts of appeals that have considered it. United States v. Rone, 598 F.2d 564 (9th Cir. 1979); United States v. Elliott, 571 F.2d 880 (5th Cir.), Cert. denied sub nom. Delph v. United States, 439 U.S. 953, 99 S.Ct. 349, 58 L.Ed.2d 344 (1978); United States v. Altese, 542 F.2d 104 (2d Cir. 1976), Cert. denied, 429 U.S. 1039, 97 S.Ct. 736, 50 L.Ed.2d 750 (1977); United States v. Morris, 532 F.2d 436 (5th Cir. 1976); United States v. Hawes, 529 F.2d 472 (5th Cir. 1976); United States v. Cappetto, 502 F.2d 1351 (7th Cir. 1974), Cert. denied, 420 U.S. 925, 95 S.Ct. 1121, 43 L.Ed.2d 395 (1975). Upon analysis, however, we do not find appellants' proposed construction of RICO quite as unusual as it might seem at first blush. Indeed, we think there are compelling reasons to adopt it.
Our analysis begins with the language of the statute. Section 1962(c), under which appellants were convicted, provides in pertinent part:
It shall be unlawful for any person employed by or associated with any Enterprise * * * to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a Pattern of racketeering activity. . . . (emphasis added)
"Racketeering activity" is defined in section 1961(1) as including numerous federal offenses and, in addition, any offense involving murder, kidnapping, gambling, arson, robbery, extortion or drugs punishable under state law by imprisonment for more than one year. A "pattern of racketeering activity" is defined by section 1961(5) as requiring at least two acts of racketeering committed within ten years of each other.
The government's argument is straightforward and relies entirely upon the text. The government first notes that the statute on its face does not distinguish between "legitimate" and "illegitimate" enterprises but instead, by its express terms, applies to "Any enterprise." "Enterprise," the government then points out, is defined broadly in section 1961(4) to include "Any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." These provisions dispose of appellants' claim, according to the government, since the evidence demonstrates that appellants were a "group of individuals associated in fact" and that each committed the required number of racketeering offenses while in that association. To summarize the government's theory of the case, the evidence showed the existence of a "single enterprise operated for the purpose of making money from repeated criminal activity."2
Of course, it is beyond dispute that the statute must be read to cover "any enterprise." But what does that mean? The flaw we see in the government's approach lies in its deceptively literal treatment of the statutory definition of the term "enterprise." What parades under the guise of rigorous fidelity to the text turns out, upon examination, to read the "enterprise" element entirely out of the statute.
The dictionary meaning of "enterprise" is any "undertaking" or "project," I. e., some activity, and the term is also commonly used to describe a unit of organization established to perform any such undertaking or project. The statute defines "enterprise" only in the latter sense. Section 1961(4) catalogues the kinds of organizational units that may, for statutory purposes, qualify as an "enterprise" anything from legal entities such as corporations or partnerships, to entities without formally recognized legal personalities such as "any union or group of individuals associated in fact," even to "any individual." However, the statutory definition is silent regarding what attributes or activities these units must assume or undertake before they may be deemed an "enterprise" in any meaningful sense. Obviously, every "individual" or "group of individuals," considered in the abstract, is not an "enterprise." Individuals and groups do not become "enterprises" except in relation to something they do. The statutory definition of "enterprise" contained in section 1961(4) is incomplete because it does not tell us what that "something" is.
The government would finesse the problem, and its theory of this case neatly illustrates the point: appellants were a "group of individuals associated in fact" around numerous patterns of racketeering activity and therefore constituted a statutory "enterprise," organized for the purpose of profiting from racketeering activity. Thus, in the government's view, the "something" this group of individuals did to transform themselves into an "enterprise" is provided by their racketeering activity. In short, appellants' enterprise was racketeering.
The government has successfully applied the statute in the same fashion on numerous other occasions. For example, in United States v. Cappetto, supra, the defendants were charged with engaging in a pattern of racketeering activity "consisting of participating on two or more occasions in an illegal gambling business" in the conduct of the affairs of an enterprise, "Viz., an illegal gambling business." 502 F.2d at 1355. In United States v. Morris, supra, the "enterprise" was described as "a group of individuals associated in fact to defraud in illegal card games persons who had travelled to Nevada," and the racketeering activity through which the enterprise's affairs was conducted consisted of running the fraudulent card games and recruiting victims to travel to Nevada. 532 F.2d at 442. In United States v. Hansen, 422 F.Supp. 430 (E.D.Wis.1976), Aff'd, 583 F.2d 325 (7th Cir.), Cert. denied, 439 U.S. 912, 99 S.Ct. 283, 58 L.Ed.2d 259 (1978), the enterprise was "for the purpose of defrauding insurance companies by the use of the mails and committing acts of arson," and the racketeering activity consisted of defrauding insurance companies through the mails and arson. 422 F.Supp. at 433. And, in United States v. McLaurin, 557 F.2d 1064 (5th Cir. 1977), Cert. denied, 434 U.S. 1020, 98 S.Ct. 743, 54 L.Ed.2d 767 (1978), the defendants were convicted of operating a "lucrative commercial enterprise specializing in prostitution" through a pattern of various prostitution offenses. 557 F.2d at 1066, 1073.
It requires no great insight to recognize that applying the statute in this fashion renders the "enterprise" element of the crime wholly redundant and transforms the statute into a simple proscription against "patterns of racketeering activity." Under the approach reflected in these cases, every "pattern of racketeering activity" becomes an "enterprise" whose affairs are conducted through the "pattern of racketeering activity." Plainly, that is not the statute Congress has written.
The language Congress did use makes it unlawful "for any person employed by or associated with any enterprise . . . to conduct . . . such enterprise's affairs through a pattern of racketeering activity." Surely, the draftsmen would not have opted for so complex a formulation if the legislative purpose had been merely to proscribe racketeering, without more. A straightforward prohibition against engaging in "patterns of racketeering activity" would have sufficed, and there would have been no need for a reference to "enterprises" of any sort. Although the government reminds us that the Organized Crime Control Act of 1970 "is a carefully crafted piece of legislation," Iannelli v. United States, supra, 420 U.S. at 789, 95 S.Ct. at 1296, it would have us treat section 1962(c) as a purposeless circumlocution, written in terms of "enterprises," and persons "employed" by them to conduct their "affairs," but in reality directed at anyone who commits two acts of racketeering. Under this construction an individual or a group who robs two banks "for the purpose of making money"3 commits a RICO offense.
Common sense, not to mention the first principle of statutory construction, leads us to reject the government's reading and to seek a construction that gives some content to each element of the crime set forth in the text. The plain meaning of the words in context indicates that the reference to "enterprise" was included to denote an entity larger than, and conceptually distinct from, any "pattern of racketeering activity" through which the enterprise's "affairs" might be conducted. If the "enterprise" element of the crime is to have independent meaning, but is still to encompass "criminal enterprises" as the government contends, then a "criminal enterprise" must involve something more than simply an individual or group engaged in a pattern of racketeering activity.
The problem is thus to discover what the distinction might be for statutory purposes between simple patterns of racketeering activity, which we think are outside RICO's purview, and a "criminal enterprise," which the government insists is