Source: https://law.justia.com/cases/federal/appellate-courts/F2/909/662/431492/
Timestamp: 2019-06-24 13:16:52
Document Index: 171267356

Matched Legal Cases: ['§ 637', '§ 637', '§ 1951', '§ 201', '§ 201', '§ 1341', '§ 1001', '§ 7206', '§ 1623', '§ 7201', '§ 1503', '§ 1962', '§ 1861', '§ 3161', 'in fine', '§ 201', '§ 201', '§ 208', '§ 1001', '§ 1961', '§ 1503', '§ 1962', '§ 1001', '§ 1503']

United States of America, Appellee, v. Mario Biaggi, Stanley Simon, Richard Biaggi, Peter Neglia,john Mariotta, and Bernard Ehrlich, Defendants-appellants, 909 F.2d 662 (2d Cir. 1990) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Second Circuit › 1990 › United States of America, Appellee, v. Mario Biaggi, Stanley Simon, Richard Biaggi, Peter Neglia,joh...
United States of America, Appellee, v. Mario Biaggi, Stanley Simon, Richard Biaggi, Peter Neglia,john Mariotta, and Bernard Ehrlich, Defendants-appellants, 909 F.2d 662 (2d Cir. 1990)
US Court of Appeals for the Second Circuit - 909 F.2d 662 (2d Cir. 1990)
Argued Aug. 28, 1989. Decided June 29, 1990
Undisputed Facts. Wedtech began its existence as Welbilt Electronic Tool & Die Corporation ("Welbilt"), a small sheet metal fabricating company located in the South Bronx. Welbilt changed its name to Wedtech in 1983 when it made a public offering of its stock. For convenience, we will refer to the company at all times as "Wedtech." Defendant John Mariotta founded the company and remained chairman until company officials ousted him in 1986. In 1975 Wedtech was accepted into the Small Business Administration's "Section 8(a)" program, under which minority-owned businesses are eligible for government contracts without competitive bidding. See 15 U.S.C. § 637(a) (1988). Mariotta is of Puerto Rican descent.
3. Benefits to Simon. The Government contended that Stanley Simon also made an extortionate demand upon Wedtech for $50,000, which the Government alleged was in connection with the Loop Drive lease. Neuberger testified that in June 1984 he attended a benefit for the Riverdale (New York) Hebrew Home for the Aged held at the Yonkers racetrack. At that function, according to Neuberger, Simon said to him that "he [Simon] is running a re-election campaign that is a very hard fought campaign and he needs help." When Neuberger asked, " [W]hat kind of help do you expect?", Simon replied $75,000 or $100,000. Neuberger thought these figures were ridiculous and observed that it was illegal for a corporation "to make a contribution to a campaign." Simon then said, " [W]ell, do it in the form of donations to synagogues, churches and some other expenses." Neuberger said the best he could do was $50,000 and "we settled for that."
4. The Section 8(a) Fraud. The Government contended that Wedtech's application for admission to the section 8(a) program and its subsequent retention in the program by the SBA were fraudulent. A company qualifies for the section 8(a) program if it is at least 51 percent owned by "one or more socially and economically disadvantaged individuals," 15 U.S.C. § 637(a) (4) (A) (i) (I), a phrase that includes members of groups subjected to racial or ethnic prejudice, id. Sec. 637(a) (5); see 13 C.F.R. Sec. 124.105(b) (1990) (Hispanic Americans). Mariotta is of Puerto Rican descent. When Neuberger became Mariotta's partner, they created false documents to make it appear that Mariotta owned 66 2/3 percent of Wedtech's stock, whereas each in fact owned 50 percent.
1. The Five Percent Stock Interest: extortion, 18 U.S.C. § 1951 (1988): Biaggi, Ehrlich bribery, 18 U.S.C. § 201(b) (1988): Biaggi, Ehrlich, Mariotta, Richard Biaggi gratuity, 18 U.S.C. § 201(c) (1988): Biaggi, Ehrlich, Mariotta, Richard Biaggi mail fraud, 18 U.S.C. § 1341 (1988): Biaggi, Ehrlich, Richard Biaggi false financial disclosure, 18 U.S.C. § 1001 (1988): Biaggi false tax return, 26 U.S.C. § 7206(1) (1988): Biaggi, Richard Biaggi 2. The $50,000 Loop Drive Payment: extortion: Biaggi, Ehrlich bribery: Biaggi, Ehrlich, Mariotta mail fraud: Biaggi, Ehrlich 3. Benefits to Simon: $50,000 payment: extortion: Simon grand jury perjury, 18 U.S.C. § 1623 (1988): Simon tax evasion, 26 U.S.C. § 7201 (1988): Simon Job for Bittman: extortion: Simon grand jury perjury: Simon Lawrence kickbacks: extortion: Simon tax evasion: Simon grand jury perjury: Simon Fogliano tile work: tax evasion: Simon grand jury perjury: Simon 4. The Section 8(a) Fraud: mail fraud: Biaggi, Ehrlich, Mariotta 5. The Slush Fund: tax evasion: Mariotta 6. The Neglia Bribe: bribery: Ehrlich, Neglia gratuity: Ehrlich, Neglia obstructing justice, 18 U.S.C. § 1503 (1988): Neglia
Most of these substantive offenses were also charged as racketeering acts for purposes of RICO substantive and conspiracy offenses, 18 U.S.C. § 1962(c), (d) (1988). The jury found that Biaggi, Ehrlich, and Mariotta committed two or more RICO predicate acts and convicted these three defendants of RICO substantive and conspiracy offenses. In addition, Biaggi was convicted of grand jury perjury for falsely denying that he contacted the Government on behalf of Wedtech.
Prison Term Fine Biaggi eight years $242,000 Ehrlich six years $222,000 Simon five years $ 70,000 Mariotta eight years $291,000 Richard Biaggi two years $ 71,000 Neglia three years $ 30,000
Judge Motley initially denied Simon's motion for severance, ruling that Rule 8(a) governed and that these counts were of "the same or similar character," Fed. R. Crim. P. 8(a), as other extortion counts in the indictment. United States v. Biaggi, 672 F. Supp. 112, 124 (S.D.N.Y. 1987). Simon renewed his motion after this Court's decision in United States v. Turoff, 853 F.2d 1037, 1043 (2d Cir. 1988), which appeared to state that claims for severance of counts in a multi-defendant case are to be governed by the standards of Rule 8(b). In a thoughtful opinion, drawing upon the equally thoughtful opinion of Judge Sand in United States v. Clemente, 494 F. Supp. 1310 (S.D.N.Y. 1980), aff'd on other grounds sub nom. Fiumara v. United States, 727 F.2d 209 (2d Cir.), cert. denied, 466 U.S. 951, 104 S. Ct. 2154, 80 L. Ed. 2d 540 (1984), Judge Motley ruled that Turoff should be understood to apply Rule 8(b) standards to the claim of a defendant in a multi-defendant trial only when he seeks severance of counts in which he and at least one of his co-defendants are charged, and that Rule 8(a) standards apply to a defendant in a multi-defendant trial who seeks severance of counts in which he is the only defendant charged. United States v. Biaggi, 705 F. Supp. 852 (S.D.N.Y. 1988). However, Judge Motley also ruled that Counts 21 and 23 were properly joined even under the standards of Rule 8(b). Id. at 855-56, 862-64.
Without resolving the issue of whether Turoff should be limited in the manner suggested by Judges Motley and Sand, we agree with the District Court that joinder of Counts 21 and 23 was proper even under Rule 8(b). Though the Lawrence extortion (Count 21) did not involve the same victim as Simon's extortion of Wedtech, the Lawrence extortion was within "the same series of acts or transactions," Fed. R. Crim. P. 8(b), as the extortions charged to Simon's co-defendants. Simon used Lawrence as the means of obtaining many of the benefits he derived from Wedtech, notably the $10,000 cash payment. His demand to receive benefits from Lawrence was inextricably related to his extortion of Wedtech. Proof of one scheme was helpful to a full understanding of the other. See United States v. Turoff, 853 F.2d at 1044.
Simon's tax evasion for 1985 (Count 23) was also properly joined under Rule 8(b). Turoff recognized the propriety of joining tax counts to non-tax counts in multi-defendant cases where the revenue on which the tax was evaded resulted from the criminal conduct charged in the non-tax counts. See United States v. Roselli, 432 F.2d 879 (9th Cir. 1970), cert. denied, 401 U.S. 924, 91 S. Ct. 883, 27 L. Ed. 2d 828 (1971). The core of the tax count was the income extorted from Wedtech and Lawrence. Since a tax count deals with taxes evaded on a single year's income, it was not error in this case to join the tax count, even though it included a relatively small amount of income from the unrelated transaction involving Fogliano. See United States v. McGrath, 558 F.2d 1102, 1106 & n. 6 (2d Cir. 1977). That principle, however, has its limits. We would have a very different case if the Government had sought to join several defendants who all extorted benefits from Fogliano and then joined a tax count that charged Simon with evading taxes not only on income from Fogliano but also on income extorted from Wedtech. But where, as here, the Wedtech extortion is central to the trial and income from it forms the core of the tax count, that count need not be severed just because it includes a small amount of unreported income from other sources.
A. The Southern District's Jury Plan. The Southern District's Jury Plan uses voter registration lists as the exclusive source of names of prospective jurors. After a two-day hearing, Judge Motley found the following facts pertinent to Mariotta's claim that use of voter registration lists resulted in unlawful underrepresentation of Blacks and Hispanics. Based on 1984 figures, the percentage of Blacks in the population of the Southern District was 19.9, and the percentage of Blacks in the Master Jury Wheel for the Manhattan seat of court was 16.3. The comparable percentages for Hispanics were 15.7 and 11.0. The disparity for Blacks, i.e., the underrepresentation, was 3.6 percentage points and for Hispanics, 4.7 percentage points. See United States v. Biaggi, 680 F. Supp. 641, 647, 652 (S.D.N.Y. 1988).
1. Equal Protection Claim. Focusing first on the Fifth Amendment claim, based on the equal protection component of that amendment's Due Process Clause, Judge Motley applied this Court's analysis in Alston v. Manson, 791 F.2d 255, 257 (2d Cir. 1986), cert. denied, 479 U.S. 1084, 107 S. Ct. 1285, 94 L. Ed. 2d 143 (1987). Alston read Castaneda v. Partida, 430 U.S. 482, 97 S. Ct. 1272, 51 L. Ed. 2d 498 (1977), to establish a three-part test for a prima facie case of jury discrimination amounting to a denial of equal protection: (a) a cognizable group (b) that is substantially underrepresented and (c) a selection procedure that is not racially neutral.4 Agreeing with Mariotta that the first two elements of the test were met, findings the Government does not contest on appeal, the District Judge rejected the equal protection challenge on the ground that use of the voter registration list as the sole source of prospective jurors had not been shown to deprive the Jury Plan of racial neutrality or render it susceptible to abuse.
2. Sixth Amendment Claim. Mariotta also challenged the Jury Plan as a violation of his rights under the Sixth Amendment and the Jury Selection and Service Act of 1968, 28 U.S.C. §§ 1861-1869 (1988). In Alston we recognized that a jury selection system yielding a significant underrepresentation of a minority group in jury venires can violate the "fair cross-section" requirement of the Sixth Amendment, even if proof of discriminatory intent necessary for a Fifth Amendment violation is absent. 791 F.2d at 258; see Duren v. Missouri, 439 U.S. 357, 368 n. 26, 99 S. Ct. 664, 670 n. 26, 58 L. Ed. 2d 579 (1979). Judge Motley correctly observed that we arguably blurred that distinction in United States v. Young, 822 F.2d 1234, 1239-40 (2d Cir. 1987), in rejecting a Sixth Amendment challenge to a venire drawn from voter lists. See United States v. Biaggi, 680 F. Supp. at 653-54. Yet, as she also pointed out, Young and Alston are reconcilable, id. at 654, and we agree with Judge Motley that discriminatory intent is not an element of a Sixth Amendment "fair cross-section" claim.
The District Judge rejected Mariotta's Sixth Amendment claim on the ground that the degree of underrepresentation was not great enough to violate the "fair cross-section" requirement. In reaching that conclusion, she applied the so-called "absolute numbers" approach, used by this Court in United States v. Jenkins, 496 F.2d 57 (2d Cir. 1974), cert. denied, 420 U.S. 925, 95 S. Ct. 1119, 43 L. Ed. 2d 394 (1975). In Jenkins, we deemed an underrepresentation too small to violate Sixth Amendment standards where proper representation would have required the addition of only one member of the minority group to a typical venire of 60 persons. Though the "absolute numbers" approach has been called into question, see Alston v. Manson, 791 F.2d at 259, we have recently reaffirmed its use. United States v. Rosario, 820 F.2d 584, 585 & n. 1 (2d Cir. 1987); see Anderson v. Casscles, 531 F.2d 682, 685 & n. 1 (2d Cir. 1976). The risk of using this approach is that it may too readily tolerate a selection system in which the seemingly innocuous absence of small numbers of a minority from an average array creates an unacceptable probability that the minority members of the jury ultimately selected will be markedly deficient in number and sometimes totally missing. Of course, the Sixth Amendment assures only the opportunity for a representative jury, rather than a representative jury itself, see Roman v. Abrams, 822 F.2d 214, 229 (2d Cir. 1987), cert. denied, --- U.S. ----, 109 S. Ct. 1311, 103 L. Ed. 2d 580 (1989); McCray v. Abrams, 750 F.2d 1113, 1124-25 (2d Cir. 1984), vacated and remanded, 478 U.S. 1001, 106 S. Ct. 3289, 92 L. Ed. 2d 705 (1986), but that opportunity can be imperiled if venires regularly lack even the small numbers of minorities necessary to reflect their proportion of the population.
In this case, Judge Motley found that addition of two Blacks and two to three Hispanics to a venire of typical size would be required to eliminate underrepresentation, and she concluded that these figures, though larger than those in Jenkins, "are not so great as to amount to a violation of the fair cross-section requirement." United States v. Biaggi, 680 F. Supp. at 655. We think the facts of this case press the Jenkins "absolute numbers" approach to its limit, and would find the Sixth Amendment issue extremely close if the underrepresentations had resulted from any circumstance less benign than use of voter registration lists. Nevertheless, we agree with the conclusion reached by the District Court and reject the Sixth Amendment challenge. We also agree that rejection of the Sixth Amendment claim, in the circumstances of this case, necessarily requires rejection of the statutory claim. Id. at 657.
The District Judge ruled that the defendants had shown a sufficient pattern of Government use of peremptory challenges against Hispanics and Italian-Americans to constitute a prima facie case of discrimination, obliging the Government to demonstrate neutral explanations for its challenges. See Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986); United States v. Alvarado, 891 F.2d 439 (2d Cir. 1989), vacated on other grounds, 58 U.S.L.W. 3815 (U.S. June 25, 1990). The Government had challenged four of the six Hispanics and five of the six Italian-Americans chosen for the regular jury, and two of the four Hispanics chosen for service as alternates. Judge Motley then found that the prosecution's explanations for its challenges were neutral and not pretextual, and satisfactorily rebutted the claim of discrimination. These findings have considerable support in the record and are not clearly erroneous. See United States v. Biaggi, 853 F.2d 89, 96 (2d Cir. 1988), cert. denied, --- U.S. ----, 109 S. Ct. 1312, 103 L. Ed. 2d 581 (1989).
Two aspects of the Batson claim merit brief additional comment. First, Batson objections should be entertained and adjudicated during the process of jury selection. Though the District Court's preference for written motions in a complex trial is understandable, that preference must give way to the need to resolve a Batson claim at the point where prompt corrective action can be taken if the claim is successful. "We recognized in McCray [v. Abrams, 750 F.2d 1113 (2d Cir. 1984),] and Roman [v. Abrams, 822 F.2d 214 (2d Cir. 1987),] that the prosecutor's unwarranted exclusion of cognizable groups should be remedied on the spot, without waiting to see the ultimate composition of the jury." United States v. Alvarado, 891 F.2d at 445. Postponing consideration of a Batson claim until the trial is in progress, or even completed, as in this case, risks infecting what would have been the prosecutor's spontaneous explanations with contrived rationalizations, and may create a subtle pressure for even the most conscientious district judge to accept explanations of borderline plausibility to avoid the only relief then available, a new trial. Cf. United States v. Tunnessen, 763 F.2d 74, 78 (2d Cir. 1985) (requiring contemporaneous statement of "ends of justice" continuance under 18 U.S.C. § 3161(h) (8) (A) (1988) to guard against risk that district judge "may simply rationalize his action long after the fact"). The postponement of the Batson inquiry is no ground for complaint in this case, however, because the defendants did not object to the requirement of a written motion and did not present the motion until the end of the trial.
Second, though we accept the District Court's findings as to the prosecution's neutral explanations, we reject the Government's effort to bolster its denial of discrimination by showing how closely the ethnic composition of the jury resembled that of the venire from which it was selected. The composition of the jury may be relevant to rebutting a claim of discrimination in the trial court, see United States v. Biaggi, 673 F. Supp. 96, 107 (E.D.N.Y. 1987), aff'd, 853 F.2d 89 (2d Cir. 1988), cert. denied, --- U.S. ----, 109 S. Ct. 1312, 103 L. Ed. 2d 581 (1989), but the pertinent comparison is between the jury as selected and the racial or ethnic composition of the population of the judicial district, not the composition of the venire drawn for the particular case, id. The latter might contain an underrepresentation of a cognizable group compared to the pertinent population. Cf. United States v. Jenkins, 496 F.2d at 65. In this case, however, Hispanics were in fact 17.2 percent of the venire, compared to 15.7 percent of the Southern District population.
There is sufficient evidence, unchallenged by Biaggi or Ehrlich, that they knew why the shares were issued. And it is possible that the Congressman told his son the true reason. But knowledge, though inferable from circumstances, must be based on evidence, not speculation. What little evidence exists as to Richard's knowledge would have supported a finding that he knew that his father's stock was put in his name to circumvent the limits on a Congressman's outside income. Had Richard been charged with aiding and abetting a violation of that restriction, a conviction could stand. But the evidence did not permit a rational jury to find beyond a reasonable doubt that Richard knew that his father received the shares as a bribe or a gratuity, and without evidence of such knowledge, Richard's conviction for aiding and abetting the bribery and the gratuity may not stand. See United States v. Zambrano, 776 F.2d 1091, 1097 (2d Cir. 1985) (aider and abetter must have the mental state necessary to convict the principal); United States v. Perry, 643 F.2d 38, 46 (2d Cir.) (same), cert. denied, 454 U.S. 835, 102 S. Ct. 138, 70 L. Ed. 2d 115 (1981).
The reversal of these counts, however, does not affect Richard's conviction on the two counts charging the filing of false income tax returns. Since the evidence sufficed to show Richard's knowledge that the shares were owned by his father, he was properly convicted of over-stating his income to include receipt of the shares and the subsequent profit from their sale. The false tax return counts require knowledge only of the true ownership of the shares, not of the unlawful purpose for which they were issued. As to the mail fraud count, the Government advises only that since Richard's attack on his mail fraud conviction "rests" on his challenge to the bribery and gratuity convictions, it will not "address the mail fraud count separately." Brief for Appellee at 63 n. *. This appears to concede that Richard's mail fraud conviction cannot survive reversal of his bribery conviction, and the mail fraud conviction will therefore be reversed. Reversal of Richard's bribery, gratuity, and mail fraud convictions results in vacation of the $51,000 in fines imposed on those counts but does not reduce his sentence since he received concurrent two-year sentences. Nevertheless, since the District Judge may well have regarded the tax return offenses as aggravated because of their relation to the bribery offense, we think there should be an opportunity for resentencing on the tax return counts, now that the bribery conviction has been reversed. See United States v. Sperling, 506 F.2d 1323, 1343 (2d Cir. 1974), cert. denied, 420 U.S. 962, 95 S. Ct. 1351, 43 L. Ed. 2d 439 (1975); United States v. Rizzo, 491 F.2d 1235, 1236 (2d Cir. 1974).
The Government contends that this opportunity for reconsideration of the sentence should not be afforded, pointing out that we have previously denied the Government's request to permit reconsideration of a sentence claimed to be lenient where conviction on a count carrying a more severe sentence is reversed. See United States v. Pisani, 787 F.2d 71 (2d Cir. 1986). We are not persuaded that claims for reconsideration of sentences must be treated symmetrically. A sentencing judge has the option of imposing a sentence of adequate severity on a less serious count no matter what happens to the sentence on a more serious count. An opportunity to consider increasing a sentence on a minor count after a sentence on a major count is vacated is not required. See id. at 75-76. But the initial sentence on a comparatively minor count may well have been influenced upwards in part by a defendant's conviction on serious charges, and the reversal of a conviction on such charges should afford an opportunity for consideration of a reduction of the sentences on the remaining counts, unless the sentencing judge's intent to scale sentences according to the seriousness of the several offenses is clear.
B. The $50,000 Loop Drive Payment. Ehrlich contends, in an argument that applies as well to Biaggi and Mariotta, that the evidence is insufficient to show that the $50,000 Loop Drive payment was unlawful. It is undisputed that Biaggi & Ehrlich billed Wedtech $50,000 for legal services rendered in connection with the leasing of the Loop Drive property from New York City. That payment formed the basis of Biaggi's convictions for extortion, accepting a bribe, and mail fraud, Ehrlich's convictions for aiding and abetting these offenses, and Mariotta's conviction for bribing Biaggi. The mail fraud convictions rested on the alleged falsity of the law firm's bill in stating that it was rendered for legal services. The issue as to the criminality of the payment is whether the demand for the payment was extortion by Biaggi and whether the payment was a bribe of Biaggi, as the Government contends, or whether the payment was sought and made lawfully as a fee for legal services, as appellants contend. The issue presents difficulties because this case is not the garden variety of extortion/bribery in which a payment is made to a public official who has no colorably lawful claim to it. Where a federal law enforcement officer is paid cash, for example, it will usually be clear that the payment is unlawful; the payment will at least be a gratuity if paid because of his official act, 18 U.S.C. § 201(c) (1) (B), it will be a bribe if paid in exchange for his being influenced in his duties, id. Sec. 201(b) (2) (A), and it will be extortion if he demanded it under color of official right, id. Sec. 1951(b) (2). However, a payment to a law firm is normally a legitimate payment for services rendered, and the payment does not necessarily become unlawful because the firm used its political contacts to assist its client in a matter that requires governmental approvals, in addition to rendering traditional legal services such as negotiating and drafting a lease. Distinguishing between a lawful fee and an unlawful bribe or extortion is further complicated in this case because the payment alleged to be a lawful fee was received by a firm with which Congressman Biaggi maintained an "of counsel" relationship and in which his son was initially employed and later a partner.
It thus appears, and surely the jury was entitled to find, that the $50,000 payment had two purposes. It was sought in part as compensation for legal services rendered by the law firm. But in part it was also a payment demanded by Biaggi (and directed to his son's firm) to obtain his assistance as a public official in securing favorable action from other public officials. Biaggi expected to be influenced by the payment to render such assistance, thereby satisfying the quid pro quo element of bribery and he obtained the payment, at least in part, by virtue of the action he could be expected to take as a Congressman, thereby satisfying the inducement element of extortion. Only two years previously, in connection with the demand for the five percent stock interest, Biaggi had reminded Wedtech officials that he had "brought up the company to the point it was" and "could also destroy it." Thus, the issue as to the $50,000 payment becomes whether a payment may be found to constitute a bribe and an extortion where it is sought and paid for both lawful and unlawful purposes. We think it may. A valid purpose that partially motivates a transaction does not insulate participants in an unlawful transaction from criminal liability. For example, if a Congressman demands a payment for taking official action as to a matter that requires some legal services, his demand is nonetheless extortion if he instructs the payer to retain his son's law firm for the needed legal services and to pay a sum for both the firm's legal services and his own official action. In such cases, however, the evidence must suffice to permit the jury to find beyond a reasonable doubt that the unlawful purposes were of substance, not merely vague possibilities that might attend an otherwise legitimate transaction. A client paying his law firm's legal fee does not commit bribery simply because a Congressman is "of counsel" to the firm and the client hopes the Congressman will some day be helpful. In some cases of payments to service providers who hold public office, the evidence has been deemed insufficient to show any purpose for a payment other than a lawful one. See United States v. O'Keefe, 825 F.2d 314, 319-20 (11th Cir. 1987).
C. Neglia's Bribery Offense. Neglia mounts a substantial challenge to his bribery conviction on the ground that the evidence showed at most a gratuity violation and did not establish the quid pro quo necessary to establish a bribery violation. See United States v. Myers, 692 F.2d 823, 841 (2d Cir. 1982), cert. denied, 461 U.S. 961, 103 S. Ct. 2437, 77 L. Ed. 2d 1322 (1983). A public official commits a gratuity violation when he accepts something of value, here the promise of a job, "for or because of any official act performed or to be performed." 18 U.S.C. § 201(c) (1) (B). He commits a bribery violation when he accepts something of value "in return for (A) being influenced in the performance of any official act." Id. Sec. 201(b) (2). Neglia contends that the job was promised "in gratitude for past services." Brief for Neglia at 69. Testimony of Moreno, Neuberger, and Shorten supports Neglia's claim that the job was promised as a reward for prior assistance.
The Government contends, however, that the job was promised not only as a reward for past services but also in return for being influenced in the performance of official duties in the future. We have recognized, especially with respect to public officials, that evidence of the receipt of benefits followed by favorable treatment may suffice to establish circumstantially that the benefits were received for the purpose of being influenced in the future performance of official duties, thereby satisfying the quid pro quo element of bribery. See United States v. Friedman, 854 F.2d 535, 554 (2d Cir. 1988), cert. denied, --- U.S. ----, 109 S. Ct. 1637, 104 L. Ed. 2d 153 (1989).7 After learning of the job promise in the fall of 1984, Neglia acted to assist Wedtech in forestalling its decertification from the section 8(a) program. First, he showed Wedtech officials a copy of a confidential letter Congressman Parrin Mitchell had sent the SBA Administrator raising questions about Wedtech's continued section 8(a) eligibility. Next he assured Moreno that the response to a subsequent inquiry from Mitchell to the SBA would be prepared "in a form that would not hurt Wedtech." Later he told Moreno and Ehrlich that "he could help" in delaying the process of decertification.
Whether this evidence suffices is a close question. This is not the usual bribery case where a public official accepts cash or some other valuable benefit that is obviously improper. Public officials regularly leave government service to return to private employment and on occasion discuss and formalize private employment opportunities while still in government service. Where that occurs, a specific conflict-of-interest statute prohibits the public official from participating in a matter in which the prospective employer has a financial interest. 18 U.S.C. § 208 (1988). Clearly Neglia's involvement in Wedtech matters after the promise of future employment at Biaggi & Ehrlich violated section 208, since, in the words of the statute, Wedtech had an "arrangement concerning prospective employment" by virtue of its promise to pay one half of Neglia's salary at the law firm. See id. Sec. 208(a). But the issue here is whether the arrangement and the activity of Neglia escalated his offense beyond conflict of interest into bribery. That issue is close not only because a job promise is not unlawful under all circumstances but also because it was part of Neglia's duties as an SBA official to assist companies participating in the section 8(a) program.
Nevertheless, we are satisfied that the evidence permitted the jury to find that Neglia accepted the job promise in return for being influenced in his duties. Prior to the job promise, Neglia had already rendered unlawful assistance to Wedtech, countenancing the sham stock arrangements that misrepresented Mariotta's majority interest in Wedtech and thereby perpetuated the company's participation in the 8(a) program. Some indication that Neglia understood that Wedtech had agreed to contribute to his salary at Biaggi & Ehrlich in the expectation of his continued assistance is inferable from Moreno's statement to Neglia: "We always take care of our friends when they are in government and we never forget them after they leave government." When Neglia was told by Moreno that the initial threat of an investigation by Congressman Mitchell had been "taken care of," Neglia asked, "How did you do it?" and was told, " [T]here is no need for you to know." Neglia never alerted the SBA to these clear indications of improprieties. In fact, the initial investigation was deflected after a payment by Wedtech of $50,000 to Congressman Mitchell's nephews. From all of the evidence the jury could reasonably find that the job promise was more than a gratuitous offer of post-government employment, it was a bribe accepted by Neglia in exchange for his willingness to be influenced in performing his duties for Wedtech's benefit.
Preliminarily, as Neglia notes, had the Government charged his false statements as a violation of 18 U.S.C. § 1001 (1988), that offense would not have been eligible for use as a RICO predicate act because section 1001 violations are not within the offenses that define "racketeering activity." See 18 U.S.C. § 1961(1). By charging the false statements as obstruction of justice in violation of 18 U.S.C. § 1503, the Government was able to identify an offense within the category of "racketeering activity." But the fact that an obstruction offense is eligible for use to establish a RICO pattern does not necessarily mean that it suffices in every case. The Government already charges with a heavy hand when it alleges in one count the acceptance of a bribe and in another count the false denial of that same bribe.9 Before we will countenance a further escalation in the maximum sentence by the addition of a RICO charge, we would have to be persuaded that Congress intended that a bribe and the false denial of that same bribe would satisfy the "pattern" element of a RICO offense. See 18 U.S.C. § 1962(c). We are not so persuaded.
Despite the Government's frequent preference to charge a RICO violation whenever evidence indicates two eligible offenses, RICO was not enacted as an automatic sentence enhancement device. If Congress wants the maximum penalty for bribery to be 20 years, it may so provide, but we do not believe a prosecutor can accomplish that result by providing a bribe taker with an opportunity to deny the bribe, and then allege the bribe and the false denial as a RICO "pattern." We have recently made it clear that proof of two predicate acts "without more" does not suffice to establish a RICO pattern. United States v. Indelicato, 865 F.2d 1370, 1381 (2d Cir.) (in banc), cert. denied, --- U.S. ----, 110 S. Ct. 56, 107 L. Ed. 2d 24 (1989). Neglia contends that the bribe and the false denial, though obviously bearing the requisite "relationship" to each other, see Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 n. 14, 105 S. Ct. 3275, 3285 n. 14, 87 L. Ed. 2d 346 (1985), lack the requisite "continuity" to establish a "pattern." That may well be so, but the more basic objection is that aggregating the bribe and its denial into a "pattern" perverts the meaning of that word, at least as it is used in the RICO statute. The "pattern" element guards against permitting RICO to be used against sporadic criminal activity. Neglia's bribe does not cease to be a sporadic offense simply because he later falsely denied committing it. If the commission of an offense and its false denial could establish a "pattern," then every offense related to a criminal enterprise would be eligible for inclusion in a pattern whenever the offender falsely denied its commission. That is not what Congress intended.
The Government endeavors to draw support for its position from United States v. Teitler, 802 F.2d 606 (2d Cir. 1986), pointing out that we there did not suggest any deficiency in a pattern established by a mail fraud offense and an obstruction of justice involving an attempt to induce false grand jury testimony. It is one thing to build a pattern out of an offense followed by an attempt to persuade grand jury witnesses to lie; it is quite a different matter to aggregate an offense and the offender's own false denial of it. In the former case, the offender extends his criminal conduct beyond a denial of wrongdoing. He enlists others into a corruption of justice. In the latter case, the offender simply maintains his innocence. The fact that his denial is false may warrant some enhancement of punishment for his criminal conduct within the statutory range established for his offense, see United States Sentencing Guidelines Sec. 3C1.1 (Nov. 1989) (two-level enhancement for obstructing justice); cf. United States v. Grayson, 438 U.S. 41, 98 S. Ct. 2610, 57 L. Ed. 2d 582 (1978) (enhancement for perjury committed at trial), and might, in an extreme case, warrant additional punishment for the separate offense of obstruction. But the false denial does not convert the two offenses into a distinct RICO offense.
E. Neglia's Obstruction of Justice Conviction. Neglia contends that the evidence failed to show an obstruction of justice because his statements to a Department of Defense investigator, which constituted the offense, amounted to no more than an "exculpatory no." That doctrine has provided a defense to false statement prosecutions under 18 U.S.C. § 1001 under some limited circumstances. See United States v. Medina De Perez, 799 F.2d 540, 543-44 (9th Cir. 1986). Even if the doctrine applies to obstruction offenses under 18 U.S.C. § 1503, a matter we do not decide, it would not assist Neglia. We have indicated that the doctrine, if applicable in this Circuit, would have an extremely narrow scope even as to section 1001 offenses. See United States v. Capo, 791 F.2d 1054, 1069 (2d Cir. 1986), vacated in part on other grounds, 817 F.2d 947 (2d Cir. 1987) (in banc). In Capo, we expressed doubt that any statement beyond a simple "no" would fall within the exception. 791 F.2d at 1069. Neglia's responses to the investigator went beyond bare denials of wrongdoing. He manufactured a false version as to how he happened to handle work for Biaggi & Ehrlich after he left the SBA and was actively misleading with respect to his discussions with Ehrlich.
F. The Section 8(a) Fraud. Mariotta challenges his mail fraud convictions based on the section 8(a) fraud on the ground that he was not shown to have devised a scheme to deprive a victim of money or property. Count 31 charged him with mail fraud by misrepresenting his majority interest in Wedtech before the public offering of stock, and Count 13 charged a similar misrepresentation with respect to the sham stock purchase agreements. Both counts alleged a scheme to defraud "the DOD [Department of Defense] of its right to award millions of dollars in Section 8(a) contracts." Mariotta contends that these schemes allege and were shown to involve no more than a deprivation of intangible rights, which he asserts does not constitute mail fraud after McNally v. United States, 483 U.S. 350, 107 S. Ct. 2875, 97 L. Ed. 2d 292 (1987).
McNally required a scheme intended to deprive a victim of money or property, but did not preclude deprivation of intangible property rights, as the Supreme Court made clear in Carpenter v. United States, 484 U.S. 19, 108 S. Ct. 316, 98 L. Ed. 2d 275 (1987). We agree with Judge Motley, see United States v. Biaggi, 675 F. Supp. 790, 801-02 (S.D.N.Y. 1987), that Mariotta's schemes were actionable mail frauds that deprived the Department of Defense of its property right to control the award of section 8(a) contracts, even though DOD used the services of SBA to administer the section 8(a) program. See United States v. King, 860 F.2d 54, 55 (2d Cir. 1988) (mail fraud involving public funds), cert. denied, --- U.S. ----, 109 S. Ct. 2062, 104 L. Ed. 2d 628 (1989); Ingber v. Enzor, 841 F.2d 450, 455-56 (2d Cir. 1988) (mail fraud involving public contract awarded upon concealment of conflict of interest).
A. Use of Immunized Testimony. Mariotta and Richard Biaggi contend that the prosecution made use of testimony they had given to a New York state grand jury under grants of immunity and that Judge Motley erred in ruling, without holding a so-called Kastigar hearing, see Kastigar v. United States, 406 U.S. 441, 92 S. Ct. 1653, 32 L. Ed. 2d 212 (1972), that the Government had adequately demonstrated its independent sources for its evidence. Mariotta and Richard Biaggi testified under grants of immunity to a grand jury empaneled by the Manhattan District Attorney. The testimony was reviewed by Judge Motley. Mariotta denied knowledge or participation in any criminal conduct at Wedtech. Richard Biaggi testified concerning two episodes of bribery. One involved efforts by Wedtech and Ehrlich to make payments, through a company known as Portatech, to General Vito Castellano of the New York State National Guard. The other involved payments on behalf of Citisource, Inc. from former Bronx County Democratic Chairman Stanley Friedman, through Portatech, to Ehrlich, who was a general in the National Guard. See United States v. Friedman, 854 F.2d at 547-50. Judge Motley ruled, at the conclusion of the trial, that the transcripts of the testimony given under grants of immunity and the trial record in this case demonstrated, without the need for a hearing, that the Government's case was derived from sources independent of the immunized testimony.
Preliminarily, the Government contends that appellants failed to sustain their burden of showing that their immunized testimony related to the charges in this case. See Kastigar v. United States, 406 U.S. at 460, 92 S. Ct. at 1664; In re Corrugated Container, 644 F.2d 70, 75 (2d Cir. 1981). Mariotta's denials disclosed no fact relevant to the instant charges. Richard's testimony concerned Wedtech and bribery, but the charges in this case did not involve the Portatech bribes. The Government's evidence made fleeting and inconsequential reference to Castellano, but not to any attempt by Wedtech to bribe him. The Castellano bribe was elicited on cross-examination by counsel for Ehrlich and Richard Biaggi.
Appellants contend that Richard's grand jury testimony and even Mariotta's denials of wrongdoing were "used" against them in the sense that they provided the motivation for the four cooperating Wedtech witnesses to testify. In United States v. Kurzer, 534 F.2d 511, 517-18 (2d Cir. 1976), we recognized that the self-incrimination protection assured by Kastigar could be violated if it were shown that a witness was motivated to come forward with evidence against a defendant because of that defendant's immunized testimony. At the same time we pointed out that the Government should have the opportunity to persuade the trial judge that the witness would have provided adverse testimony entirely apart from the motivating effect of the immunized testimony, thus applying a Mt. Healthy dual motivation analysis. See Mt. Healthy City School District Board of Education v. Doyle, 429 U.S. 274, 97 S. Ct. 568, 50 L. Ed. 2d 471 (1977).
The Government also contends that evidence of immunity negotiations should be excluded because of the same considerations that bar evidence of plea negotiations. Preliminarily, we note that plea negotiations are inadmissible "against the defendant," Fed. R. Crim. P. 11(e) (6); Fed.R.Evid. 410, and it does not necessarily follow that the Government is entitled to a similar shield. More fundamentally, the two types of negotiations differ markedly in their probative effect when they are sought to be offered against the Government. When a defendant rejects an offer of immunity on the ground that he is unaware of any wrongdoing about which he could testify, his action is probative of a state of mind devoid of guilty knowledge. Though there may be reasons for rejecting the offer that are consistent with guilty knowledge, such as fear of reprisal from those who would be inculpated, a jury is entitled to believe that most people would jump at the chance to obtain an assurance of immunity from prosecution and to infer from rejection of the offer that the accused lacks knowledge of wrongdoing. That the jury might not draw the inference urged by the defendant does not strip the evidence of probative force. See United States v. DiMaria, 727 F.2d 265, 271-72 (2d Cir. 1984).
Rejection of an offer to plead guilty to reduced charges could also evidence an innocent state of mind, but the inference is not nearly so strong as rejection of an opportunity to preclude all exposure to a conviction and its consequences. A plea rejection might simply mean that the defendant prefers to take his chances on an acquittal by the jury, rather than accept the certainty of punishment after a guilty plea. We need not decide whether a defendant is entitled to have admitted a rejected plea bargain. Cf. United States v. Verdoorn, 528 F.2d 103 (8th Cir. 1976) (approving exclusion of a rejected plea bargain offered by a defendant to prove prosecutor's zeal, rather than defendant's innocent state of mind). The probative force of a rejected immunity offer is clearly strong enough to render it relevant. Fed.R.Evid. 401. As Dean Wigmore has written:
Where evidence of a defendant's innocent state of mind, critical to a fair adjudication of criminal charges, is excluded, we have not hesitated to order a new trial. See United States v. Detrich, 865 F.2d 17 (2d Cir. 1988); United States v. Kohan, 806 F.2d 18 (2d Cir. 1986); United States v. Harris, 733 F.2d 994 (2d Cir. 1984); United States v. DiMaria, supra. Whether the error in excluding evidence of Mariotta's innocent state of mind warrants a new trial on all charges requires further consideration. He was convicted of RICO substantive and conspiracy offenses, two bribery offenses based on the five percent stock transfer and the $50,000 Loop Drive payment, two mail fraud offenses based on the false claim of majority stock ownership at the time of the original section 8(a) application and the subsequent section 8(a) submissions after the public offering and the sham stock purchase agreements, and four tax evasion offenses based on unreported receipt of funds from the FHJ account in 1981, 1982, 1984, and 1985. The issue in dispute as to some of these counts was whether Mariotta had knowledge of the unlawful activities of other Wedtech officials and of Biaggi. That issue was central to the Loop Drive bribery, which required a finding that Mariotta knew that the payment was demanded and made for Biaggi's political influence, rather than for legal work. It was also critical to the five percent stock bribery; though Mariotta unquestionably knew of the transfer, he did not necessarily know that issuance of the stock was a bribe. On the other hand, Mariotta's knowledge of the wrongdoing of others had little if anything to do with his mail fraud and tax offenses. There was strong evidence that he and Neuberger were 50-50 partners when he falsely claimed to the SBA that he owned two-thirds of the company, and the evidence was also clear that he was not the bona fide owner of more than 51 per cent of the stock when the sham stock purchase agreements were arranged to support an appearance of majority ownership. His guilt on the tax offenses turned on the credibility of his claim, unsupported in the evidence, that his withdrawals from the FHJ account represented repayments of loans he had made to Neuberger.
Thus, the erroneous exclusion of evidence supporting the inference that Mariotta was truthfully denying knowledge of the wrongdoing of others might well have affected the jury's verdicts on the bribery counts, but was not significant with respect to the mail fraud and tax counts. The effect of the exclusion on the RICO counts is problematic. In addition to the bribery offenses, the two mail fraud offenses were charged as RICO predicate acts and found to be such by the jury in its answers to interrogatories. See United States v. Ruggiero, 726 F.2d 913, 922-23 (2d Cir. 1984); id. at 925-28 (Newman, J., concurring in part). Thus, we face no issue as to whether the jury found that Mariotta participated in the conduct of the affairs of a RICO enterprise through a pattern that included at least two predicate acts. See Brennan v. United States, 867 F.2d 111, 114-16 (2d Cir. 1989). Our question is whether, had the excluded evidence been admitted, the jury would have found that Mariotta not only committed the two mail fraud offenses but did so as part of a pattern of racketeering activity by which he participated in the conduct of the affairs of a RICO enterprise.
The prosecution made no attempt to dispute the allegations of Meese's involvement on behalf of Wedtech or the unlawfulness of that involvement. The prosecution's response in summation was that Wedtech "bribed a whole ream of people ... everyone including these people [the defendants]." The prosecution argued that Wedtech had unlawfully sought to influence both the Executive and the Legislative Branches: " [W]hatever they did with Meese was wrong, but that was done separately in the Executive Branch." The prosecution's position was clearly stated, " [O]ur office referred the allegations regarding Mr. Meese to Washington because the law doesn't permit us to prosecute our own boss." The prosecutor added, in a memorable phrase, "Meese was a sleaze."
Simon specifically objected to this portion of the charge, contending that it permitted the jury to infer inducement from receipt of entirely lawful campaign contributions.12 The Government contends that this portion of the charge was expressly approved by a majority of this Court in United States v. O'Grady, 742 F.2d 682 (2d Cir. 1984) (in banc). The Government's reliance on O'Grady is a classic example of the danger of enlisting language from an appellate opinion to serve in situations beyond the point at issue that occasioned the language.
There is a line between money contributed lawfully because of a candidate's positions on issues and money contributed unlawfully as part of an arrangement to secure or reward official action, though its location is not always clear. See United States v. Brewster, 506 F.2d 62, 78-83 (D.C. Cir. 1974); see generally J.T. Noonan, Jr., Bribes 621-51 (1984). The laws governing extortion and bribery may sometimes be too blunt to be used as instruments to police that line, though cases may be imagined where egregious facts, submitted to a jury under careful instructions, would permit a conviction for bribery based on campaign contributions. Fortunately, this case does not require precise delineation of that line, nor, under the circumstances, does the inapplicable charge language from O'Grady warrant reversal of Simon's conviction for extortion.
At the conclusion of the charge, Simon objected generally to the Court's failure to include requested instructions, but did not complain of the precise wording of the charge on reportable income. Generally, the proffer of a requested instruction does not excuse a defendant from the need to object specifically to its omission from the charge in order to preserve the issue for appeal. See United States v. Friedman, 854 F.2d at 554-56. A general complaint of failure to give requested instructions might suffice to preserve a claim concerning a request fully considered and denied by the trial court at a charge conference and wholly omitted from the charge, but where the topic is covered in the charge, a complaint that the charge language incorrectly or inadequately covers the topic must be specifically called to the Court's attention after the charge is given. Counsel is obliged to state "distinctly" the grounds of his objection. Fed. R. Crim. P. 30.
C. Ehrlich's Defense to the Five Percent Stock Interest. Ehrlich contends that the District Court mischaracterized his defense to receipt of half the five percent stock interest. His counsel argued in summation, and several witnesses testified, that the five percent interest was given to Ehrlich and Richard Biaggi in appreciation of the forbearance of Biaggi & Ehrlich to bill for all legal services rendered or to press for payment of bills rendered in the early days before Wedtech became successful--for "stay [ing] with us in the hard times," as one witness put it. Judge Motley characterized the defense contention to be that the stock was issued in payment for past legal services. Ehrlich contends this obscured the defense to the extent that it was based on receipt of stock for loyalty in general, rather than as compensation for particular services rendered. Though it would have been preferable to characterize the defense as counsel wished it put, see United States v. Pedroza, 750 F.2d 187, 205 (2d Cir. 1984), cert. denied, 479 U.S. 842, 107 S. Ct. 151, 93 L. Ed. 2d 92 (1986), Judge Motley's formulation did not affect the substantial rights of any defendant. Ehrlich's lawyer himself told the jury, at one point, that the stock had been given "in payment for past legal services rendered," The "loyalty" rationale was not so distinct from the motivation of paying for past services that it had to be separately mentioned by the District Judge.
Rule XLVII was adopted after enactment of the Ethics in Government Act of 1978, Pub. L. 95-521, 92 Stat. 1824 (1978), codified at 5 U.S.C. app. Sec. 210 (1988), which limited outside income of Executive Branch officials
Judge Motley questioned whether Castaneda established a three-part test for a prima facie case or required only substantial underrepresentation of a cognizable group, pointing out that the Supreme Court in Castaneda said that " 'a selection procedure that is susceptibIe of abuse or is not racially neutral supports the presumption of discrimination raised by the statistical showing.' " United States v. Biaggi, 680 F. Supp. at 651 (quoting Castaneda v. Partida, 430 U.S. at 494, 97 S. Ct. at 1280 (emphasis added by Judge Motley)). Nevertheless, the District Judge felt bound by Alston. We share her doubts, but feel equally bound by Alston
Simon also contends that in shifting from a June meeting to a November meeting, the Government has constructively amended the indictment in violation of the Fifth Amendment. The count charging Simon with extortion of $50,000 alleged conduct beginning in mid-1984 and continuing through early 1986; the RICO counts more specifically alleged that Simon's demand for $50,000 occurred in "mid-1984." In any event, the evidence of a November demand did not constitute a modification of an essential element of the offense that amounts to an amendment of the indictment, see United States v. Weiss, 752 F.2d 777, 787 (2d Cir.), cert. denied, 474 U.S. 944, 106 S. Ct. 308, 88 L. Ed. 2d 285 (1985). At most, there was a non-prejudicial variance, see United States v. Attanasio, 870 F.2d 809, 817 (2d Cir. 1989); United States v. Heimann, 705 F.2d 662, 666 (2d Cir. 1983)