Source: http://openjurist.org/558/f2d/171/united-states-v-benedetto-76-1779-sheehan-76-2042
Timestamp: 2017-02-22 19:59:13
Document Index: 96663283

Matched Legal Cases: ['§ 8941', '§ 8922', '§ 894', '§ 894', '§ 891', '§ 892', '§ 891', '§ 892']

558 F2d 171 United States v. Benedetto 76-1779 Sheehan 76-2042 | OpenJurist
558 F. 2d 171 - United States v. Benedetto 76-1779 Sheehan 76-2042 HomeFederal Reporter, Second Series 558 F.2d.
558 F2d 171 United States v. Benedetto 76-1779 Sheehan 76-2042 558 F.2d 171
UNITED STATES of Americav.Carlo BENEDETTO, Benito John DeGaetano, James Sheehan.Appeal of Benito John DeGAETANO, in No. 76-1779.Appeal of James SHEEHAN, in No. 76-2042.
Nos. 76-1779, 76-2042.
Argued May 6, 1977.Decided June 22, 1977.As Amended July 14, 1977.
Michael D'Alessio, Jr., West Orange, N. J., for DeGaetano and Sheehan.
David A. Ruhnke, Asst. Federal Public Defender, John F. McMahon, 1st Asst. Federal Public Defender, Newark, N. J., for Sheehan.
Before GIBBONS, MARIS, HUNTER, Circuit Judges.
Benito DeGaetano and James Sheehan were convicted by a jury on all eight counts of an indictment charging them with conspiracy to use extortionate means to collect extensions of credit in violation of 18 U.S.C. § 8941 (Count I), making extortionate extensions of credit in violation of 18 U.S.C. § 8922 (Counts II, III, IV, and VII), and using extortionate means to collect or attempt to collect extensions of credit in violation of 18 U.S.C. § 894 (Counts V, VI, and VIII). Because of the insufficiency of proof and an improper charge connected with Counts I, VII, and VIII, we must vacate and remand appellants' convictions on those counts. We must also vacate and remand the convictions on all the counts charging the making of extortionate loans (II, III, IV, and VII), since the court in its charge on those counts improperly deprived the jury of its fact-finding role. We find no error, however, in the convictions on Counts V and VI (using extortionate means to collect extensions of credit) and affirm the judgments of conviction on those counts.
John Massaro testified that he was in a financial bind in the summer of 1971. A friend told him that he could obtain a loan from Sheehan and DeGaetano. Accordingly, Massaro went to Budget Auto Sales in Passaic, New Jersey, where he found Sheehan, DeGaetano, and "Rocky" Benedetto. He borrowed $600 on which he agreed to pay "vig" interest of five dollars per hundred per week. Thus, Massaro was paying thirty dollars a week interest on the $600 loan.
In October, Massaro said, his sister finally obtained the $500, and Massaro once again began meeting his interest payments. But in December, he again fell short. When he went to Budget Auto Sales to explain, Benedetto, in the presence of Sheehan and DeGaetano, "smacked (Massaro) around a few times." Tr. at 44-45.
Ronald Puczilowski testified that he borrowed $600 from "Rocky" at Budget Auto Sales in January of 1971. He stated that he had "bought a car off him and . . . had a loan from him before." Tr. at 242. Neither Sheehan nor DeGaetano were involved, according to Puczilowski. He was to pay "Rocky" back seventy-eight dollars a week for ten weeks. Rocky said to him: "(D) on't take the money unless you can pay it back." When questioned about that remark, Puczilowski denied ascribing any threatening meaning to it at the time.
Defendants moved to dismiss Counts VII and VIII the counts dealing with the Puczilowski loan since there was no evidence that either of them was in any way involved in that transaction. They also moved to dismiss Count I conspiracy to use extortionate means to collect the loans from Massaro and Puczilowski for a similar reason: there was no evidence linking DeGaetano and Sheehan to the Puczilowski loan, but the bad acts of the absent co-conspirator, Benedetto, could "spill over" and prejudice defendants, since the count charged a conspiracy with respect to both Massaro and Puczilowski. The trial court denied these motions, and defendants raise this denial as error on appeal.
The Government contends that Sheehan and DeGaetano are tied into the substantive counts dealing with the Puczilowski loan by virtue of their conviction on Count I, charging conspiracy to use extortionate means to collect loans from both Massaro and Puczilowski. There was sufficient evidence to convict on the conspiracy count, argues the Government, in that several witnesses had testified to the concerted lending activities of the defendants centering on Budget Auto Sales. The Government's theory is that the jury believed that Benedetto, Sheehan, and DeGaetano were part of a general conspiracy to collect loans by extortionate means and convicted Sheehan and DeGaetano under Count I. By virtue of this conviction, they became liable for the acts of their co-conspirator, Benedetto, in furtherance of the conspiracy namely, making an extortionate loan to Puczilowski (Count VII) and using extortionate means to collect it (Count VIII).
I suggest as the orderly approach that you first consider counts two through eight, which are the "making" and "using" charges, before you decide count one (conspiracy). This is merely a suggestion, and the jury is free to disregard it because the jury is entitled to approach its deliberation in any way it chooses.
Under the Government's view, the only way DeGaetano and Sheehan could be linked to Counts VII and VIII the Puczilowski loan was if they were first found guilty of a broader conspiracy under Count I. Instead of emphasizing that fact, the court told the jury to consider all the substantive counts, including Counts VII and VIII, before deciding on the conspiracy charge. If the jury followed the court's suggestion, then, it could have first found defendants guilty under Counts VII and VIII even though no evidence directly connected them to Puczilowski because of their mere association with Benedetto. Then the jury could have used those improper convictions of substantive offenses to convince itself that the broad conspiracy outlined in Count I must have existed.
This course of events, if true, relegates the Government's theory to the level of bootstrap: defendants were convicted of conspiracy at least partly on the basis of their conviction of substantive offenses involving the Puczilowski loan, but the only way they could have been found guilty of those substantive offenses was if they were first found to have been members of the conspiracy. Thus, the court did not fulfill its duty to state the issues and the applicable law in their proper, logical sequence. See Elbel v. United States, 364 F.2d 127, 134 (10th Cir. 1966), cert. denied, 385 U.S. 1014, 87 S.Ct. 726, 17 L.Ed.2d 550 (1967).
Although counsel did not focus upon this erroneous charge on appeal, it is plain error. See Silber v. United States, 370 U.S. 717, 82 S.Ct. 1287, 8 L.Ed.2d 798 (1962). And because we cannot say with any degree of certainty that the jury did not follow the court's suggested, erroneous path through the indictment, the convictions on Counts I, VII, and VIII must be vacated. See, e. g., Kotteakos v. United States, 328 U.S. 750, 764-65, 66 S.Ct. 1239, 90 L.Ed. 1557 (1946); United States v. Arias-Diaz, 497 F.2d 165, 171 (5th Cir.) reh. denied, 504 F.2d 760 (1974), cert. denied, 420 U.S. 1003, 95 S.Ct. 1445, 43 L.Ed.2d 761 (1975).
You are allowed to take this instruction into account along with all the other circumstances. Please keep in mind that a loan of more than 50% interest is and was entirely illegal in New Jersey. The rates we are talking about are more than five times that great, and the Court instructs you that anyone lending money at those rates simply could not go to court to collect anything, either the loan or the interest, and that such a lender has no legal way to enforce payment. He can only use illegal or criminal means, and he knows it, and the borrower knows it, and you can use this instruction or not, depending upon what you, the jury find to be the fact. Were these loans, or any of them, at 260 or 264% a year, or were they without any interest at all?
We agree with the defendants that the trial court erroneously invaded the province of the jury by directing it to assume a fact at issue, see, e. g., Lyons v. United States, 325 F.2d 370 (9th Cir. 1963), cert. denied, 377 U.S. 969, 84 S.Ct. 1650, 12 L.Ed.2d 738 (1964). Under section 892, it is the awareness of the parties at the time the loan was made that is crucial,3 see note 2 supra, and the existence of this awareness was sharply disputed by defendants. Yet the court in effect told the jury that it had conclusively to presume such awareness from the existence of a very high interest rate. If Congress had intended the amount of interest to serve as conclusive evidence of extortionate lending, it could easily have said so, or it could simply have written the statute to prohibit loans at an interest rate above a certain percentage. It did neither. Instead, it required the Government to prove each party's state of mind.4 United States v. DeCarlo, 458 F.2d 358, 367 n.12 (3d Cir. 1972) (en banc). The trial court here simply eliminated the Government's burden of proof on that element. This was reversible error, In re Winship, 397 U.S. 358, 90 S.Ct. 1068, 25 L.Ed.2d 368 (1970), unless we are convinced that it was harmless beyond a reasonable doubt, Chapman v. California, 386 U.S. 18, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967).
Thus, the fact that the trial court erroneously instructed the jury to find that there had been extortionate loans made under Counts II, III, and IV could have had no bearing on the jury's decision with respect to Counts V and VI, dealing with the use of extortionate means to collect. The jury was plainly told that the existence vel non of an extortionate loan made no difference on those counts, that they affirmatively had to find the use of extortionate means. In view of the strong evidence relating to the hounding, threatening, and beating of Massaro and his wife, no inference of any attenuated taint arises.
For the foregoing reasons, the judgments of conviction in both No. 76-1779 and No. 76-2042 will be vacated as to Counts I, II, III, IV, VII, and VIII. The cases will be remanded for new trials on those counts. The judgments of conviction in both cases will be affirmed as to Counts V and VI.5
18 U.S.C. § 894 provides as follows:
18 U.S.C. § 891(7) defines an "extortionate means" as follows:
18 U.S.C. § 892 provides as follows:
(A) in the jurisdiction within which the debtor, if a natural person resided or
18 U.S.C. § 891(6) defines an "extortionate extension of credit" as follows:
Thus, the subsequent use of extortionate means to collect from Massaro, as testified to by Massaro, Park, and D'Amore, does not prove the requisite awareness at the time the loan was made
It is true that lending at an interest rate in excess of forty-five percent is one of the factors that the Government can use to establish a prima facie case under § 892. See note 2 supra. But other elements of that prima facie case were not shown, and in any event their establishment would not have obviated the Government's requirement to prove the parties' state of mind where that was disputed by defendants. See United States v. DeCarlo, 458 F.2d 358, 361 n.12 (3d Cir. 1972) (en banc)
Whenever the district "court imposes a jail sentence on only one count, appellate action may, unavoidably, result in an overall miscarriage of justice." McMillen v. United States, 386 F.2d 29, 37 (1st Cir. 1967). Because the "anchor" count in the sentencing scheme Count I has been overturned, defendants will "cheat the hangman" on Counts V and VI. Pugliese v. United States, 353 F.2d 514, 515-16 (1st Cir. 1965); see Whaley v. North Carolina, 379 F.2d 221 (4th Cir. 1967); cf. United States v. Welty, 426 F.2d 615 (3d Cir. 1970)