Source: https://law.justia.com/cases/federal/district-courts/FSupp/604/85/1402385/
Timestamp: 2019-10-21 06:25:07
Document Index: 65443739

Matched Legal Cases: ['§ 1332', '§ 1961', '§ 187', '§ 18', '§ 477', '§ 908', '§ 908', '§ 1962', '§ 1962', '§ 1961', '§ 1961', '§ 1961', '§ 1961', '§ 1961']

Allstate Ins. Co. v. AM Pugh Associates, Inc., 604 F. Supp. 85 (M.D. Pa. 1984) :: Justia
Justia › US Law › Case Law › Federal Courts › District Courts › Pennsylvania › Middle District of Pennsylvania › 1984 › Allstate Ins. Co. v. AM Pugh Associates, Inc.
Allstate Ins. Co. v. AM Pugh Associates, Inc., 604 F. Supp. 85 (M.D. Pa. 1984)
US District Court for the Middle District of Pennsylvania - 604 F. Supp. 85 (M.D. Pa. 1984)
604 F. Supp. 85 (1984)
A.M. PUGH ASSOCIATES, INC. and Louis and Jeanne Pugh, Defendants.
*86 *87 Harvey Freedenberg, McNees, Wallace & Nurick, Harrisburg, Pa., William B. Somerville, Howard G. Goldberg, Smith, Somerville & Case, Baltimore, Md., for plaintiff.
Theodore L. Krohn, Krohn & Alcaro, Wilkes-Barre, Pa., for A.M. Pugh Associates, Inc. and Louis Pugh, Jr. and Jeanne A. Pugh.
Linus E. Fenicle, Enrico & Fenicle, P.C., Harrisburg, Pa., Joseph F. Saporito, Pittston, Pa., for James F. Rittenhouse.
*88 Larry S. Keiser, Nogi, O'Malley, Harris & Schneider, Wilkes-Barre, Pa., for Andrew Newell.
Plaintiff, Allstate Insurance Company (Allstate), had issued performance bonds and payment bonds on behalf of defendant, A.M. Pugh Associates, Inc. (Pugh Associates), for certain construction projects to be performed by Pugh Associates. Allstate contends that Andrew Newell, an Allstate employee, received monetary bribes in exchange for approving these bonds. Defendant Louis Pugh, Jr., both individually and on behalf of Pugh Associates, and National U.S. Constructors, Inc. and defendant Jeanne A. Pugh, Mr. Pugh's wife, prior to the issuance of the bonds, executed an agreement of indemnity in favor of Allstate. When Pugh Associates defaulted on certain projects covered by the bonds, Allstate was required to expend significant amounts not only to pay past claims of subcontractors and materialmen but also to complete these projects. In this action, Allstate, asserting diversity jurisdiction under 28 U.S.C. § 1332(c) (1) and also invoking the Racketeer Influenced Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961, et seq., seeks to recover compensatory damages of $4,034,657.78, consisting of payments of $1,005,616.73 on the performance bonds and $3,029,041.05 on the payment bonds. Liability is predicated on the indemnity agreement, on fraud and conspiracy to defraud, and on the provisions of RICO. Plaintiff also requests punitive damages on the fraud claim and treble damages under RICO against Pugh Associates and Louis Pugh, Jr. The claims against National U.S. Constructors, Inc. and Jeanne A. Pugh are bottomed solely on the indemnity agreement. After considerable discovery and several pretrial conferences, the case proceeded to trial without a jury on May 21, 1984. The trial lasted but one day as defendants Louis Pugh, Jr. and Jeanne A. Pugh did not appear. Their counsel, however, in recognition of an obligation to his clients for whom he had entered an appearance, appeared and offered a defense.[1] Plaintiff's factual assertions were largely undisputed including the amounts claimed under the indemnity agreement, although defense counsel argued against any finding of liability under the fraud and RICO counts because (a) there was no evidence in the record showing personal gain by defendants; (b) there was no showing that Allstate, through its agent, Andrew Newell, would not have written bonds for Pugh Associates even if there had been no bribes paid to him; and (c) four of the five bonds were written by Allstate before the first bribe to Newell. The findings of fact by the court follow.
*89 5. In 1973 or 1974, National U.S. Constructors bid on a municipal sewer project in Harvey's Lake, Pennsylvania. After being awarded the contract, Pugh learned that his successful bid was approximately $600,000.00 lower than the bid of the second bidder. After failing in his effort to have the municipal authority reconsider his bid at a higher amount, Pugh, with the assistance of one Noel Laffan, a broker of surety bonds, decided upon an alternate means of recouping the losses caused by his own error. The plan involved subcontracting a substantial amount of work to a company near bankruptcy and having that subcontractor obtain a performance bond and a payment bond naming Pugh's company as the obligee. Thereafter, the subcontractor would declare bankruptcy and would default on its subcontract enabling Pugh's company to assert a claim against the surety company under the subcontractor's performance bond. The proceeds of the payment from the bonding company would be used in part to retain another subcontractor to complete the work on the project with the remainder of the monies to be shared by Pugh and others.
6. In November, 1974, Pugh's company, National U.S. Constructors, Inc., entered into a subcontract with Alagia Masons (Alagia), pursuant to which Alagia was to perform the masonry work on the Harvey's Lake project. Shortly thereafter, Alagia declared bankruptcy and defaulted on its subcontract with Pugh's company. Pugh filed a claim against Alagia's performance bond and, in July 1975, Pugh received $275,000.00 from the United States Fidelity and Guaranty Company (USF & G), the surety for Alagia, whose bond had been procured with the help of Laffan. According to Pugh, the mastermind of this activity was Noel Laffan. After he received the money from USF & G, Pugh had a company known as Somerset Valley Construction Company complete the work of Alagia Masons. Before Alagia ceased operations, it entered into a subcontract with a corporation known as Heller Mechanical Contractors, a New York corporation formed by Morton Heller, another employee of Pugh; Cumberland Bay Leasing Company, a company owned by Pugh; and Somerset Valley Construction Company. After Alagia's demise, each made claim upon Alagia's payment bond and received $13,800.00, $2,400.00, and $50,000.00 respectively.
*90 On the Harvey's Lake project, Pugh collected substantial monies but failed to pay subcontractors and vendors, instead diverting the payments to his own purposes and uses. The money was withdrawn from the construction company, causing it to become insolvent. One of the ways that the money was withdrawn was by making excess payments to Heller Mechanical. The subcontractors and vendors then made claim against Maryland Casualty Company, who was required under the terms of its payment bond to pay those claimants.
INDEMNITY. The Principal and the Indemnitors shall at all times exonerate, indemnify and keep indemnified Allstate and hold it harmless from any and all liability for losses, cost, damages, attorneys' fees and expenses of whatever kind including, but not limited to, those which Allstate may sustain or incur by reason of having executed or procured the execution of said Bonds, or any renewal, continuation, extension or successor thereof, and all other Bonds heretofore or hereafter executed or procured for or at the request of the Principal, and which Allstate may sustain or incur in making any investigation, in defending or prosecuting any actions, suits or other proceedings which may be brought under on in connection therewith, or in recovering or attempting to recover salvage or any unpaid premiums for said Bonds, in obtaining or attempting to obtain release *91 from liability, or in enforcing any of the covenants of this Agreement; it is further agreed that in any accounting which may be had between Allstate, the Principal and the Indemnitors, Allstate shall be entitled to charge for any disbursements made by Allstate in good faith in and about the matters herein contemplated by this Agreement or Indemnity, under the belief that it is or was liable for the sum or amounts so disbursed, or that it was necessary or expedient to make such disbursement to reduce, minimize or prevent any increase in the loss anticipated by and through Allstate's investigation, whether or not such liability, necessity or expediency existed, and that the vouchers or evidence of any such payments made by Allstate will be prima facie evidence of the fact and amount of the Principal's and the Indemnitor's liability to Allstate; the Principal and the Indemnitors agree to pay over, reimburse and make good to Allstate, its successors or assigns, all money which Allstate or its representatives shall pay, or cause to be paid or become liable to pay, by reason of the execution of said Bonds, and any renewal, continuance, extension or successor thereof, and all other Bonds heretofore or hereafter executed or produced for or at the request executed or produced for or at the request of the Principal; and such payment shall be made to Allstate as soon as it shall become liable therefor, whether Allstate shall have paid out such sum or any part thereof, or not.
TAKEOVER. In the event of any breach, delay or default asserted by the Obligee in any of said Bonds or failure by Principal to perform such bonded contracts or to pay obligations incurred thereunder, or in the event of Principal's death, disappearance, conviction of a felony, imprisonment, incompetency, insolvencey [sic], or bankruptcy, or the appointment of a receiver, assignment or for benefit of creditors or any action taken by or against the Principal under *92 the National Bankruptcy Act or state insolvency laws, Allstate shall have the right, at its option, and is hereby authorized, but not required, to take possession of any part or all of the work under any contract covered by any said Bonds, and at the expense of the Indemnitors to complete or arrange for the completion of same and the Indemnitors shall promptly, demand, pay to Allstate all losses and expenses so incurred.
16. From September, 1976 through the end of 1978, Pugh Associates received continued bonding from Allstate. Pugh Associates performed work in two principal geographical areaswestern Pennsylvania and the Norfolk-Newport News, Virginia area. In late 1978 or early 1979, Pugh Associates was experiencing severe financial difficulties as a result of several unprofitable projects then in progress. Eugene L. Kass (Kass), the accountant for Pugh Associates, advised Pugh that the deteriorating financial condition of Pugh Associates was jeopardizing Pugh's ability to continue to receive bonding from Allstate.
18. In November 1978, Pugh contacted Newell and arranged for Newell and Newell's wife Rita to accompany him on an all expense paid trip to Las Vegas, Nevada. Thereafter, Pugh, Pugh's son, Newell and Rita Newell went to Las Vegas all at Pugh's expense.
19. By the spring of 1979, Newell was becoming more specific with regard to his plans for leaving Allstate. Newell confided to Pugh that he desired to leave Illinois to purchase and operate a motel in a state with a more temperate climate. Pugh, concerned that his company would lose its source of bonding during this period of *93 acute financial distress, traveled to Chicago, met with Newell, and attempted to give Newell $10,000.00 in cash to induce Newell to continue to remain employed with Allstate and continue to write bonds for Pugh Associates. Newell refused the offer.
30. By the fall of 1979, Newell was actively looking for motels, first in the Texas gulf area and then in the southern *94 Florida area. On September 20, 1979, two days before the payment for the Newport Township bond, Newell went to Fort Meyer, Florida to inspect a motel.
33. The payments by Pugh to Newell further weakened Pugh Associates' financial condition, and Pugh was concerned that he might not be able to raise the additional money necessary to purchase the motel. In order to recoup the money paid to Newell and to raise additional funds, Pugh, Kass and Noel Laffan entered into a further arrangement to broker Allstate bonds to companies who could not themselves procure bonds. To put this scheme into effect, Pugh, Kass and Laffan met in Pennsylvania in the fall of 1979. At that meeting, the four agreed that Laffan would locate the companies which required bonds. Allstate was identified as the source of the bonds. They further agreed that the payoff from the customers would be split four ways, ¼ to Kass, ¼ to Laffan, ¼ to Eugene Hessian, another Allstate employee who reported to Newell, and who as has been pointed out, had assumed Newell's position as Regional Bond Manager in the Huntington Station, New York office; and ¼ split between Pugh and James Rittenhouse.
38. In November 1979, Pugh and Newell met in Chicago, Illinois. Newell was *95 very insistent that a motel be purchased. Pugh had submitted a bid on a motel in Daytona Beach, Florida, known as the Talisman Motel. The bid had not been accepted. Another bid was submitted on a motel called the Desert Isle. At the Chicago meeting, Newell told Pugh that he wanted "to see the stock of the motel on the top of [his] Christmas Tree", meaning that he wanted a motel by the end of 1979. Pugh concluded that he "couldn't stall [Newell] any longer," and understood Newell to mean that unless the motel was purchased, Pugh would not get any more bonds.
49. On or about September 23, 1977, Pugh Associates had entered into a contract (N62470-76-C-6233) with the United States Government for the construction of a processing facility at the Fleet Combat Training Center in Dam Neck, Virginia. On or about October 3, 1977, Allstate had executed a performance bond and a payment bond naming Pugh Associates as the *96 principal for the aforesaid project. Thereafter, Pugh Associates began to perform under the contract with the government. By letter dated October 16, 1980, Alan Wallace, Vice President of Pugh Associates notified the government that Pugh Associates was incapable of completing its obligations under the contract. By letter dated November 10, 1980, the government terminated for default the contract with Pugh Associates effective retroactively to November 5, 1980. On or about February 19, 1981, a Takeover Agreement was executed between Allstate and the United States Government pursuant to which Allstate was to undertake the completion of the work begun by Pugh Associates on this project. On or about February 20, 1981, Allstate entered into a contract with Conrad Brothers, Inc. for the completion of the project. Allstate paid Conrad $75,478.10 for labor and materials provided for the completion of the project. The loss incurred by Allstate under its performance bond totalled $0.00. In addition, Allstate paid claims under the payment bond for this project in the aggregate amount of $831,584.25.
52. On or about June 19, 1979, Pugh Associates had entered into a contract with the United States Government for the construction of projectile magazines at the Naval Weapons Station in Yorktown, Virginia. On the same date, Allstate issued a performance bond and a payment bond on behalf of Pugh Associates for this project. The government directed Pugh Associates to begin performance under this contract on July 4, 1979. The government notified Allstate that the contract with A.M. Pugh Associates for this project had been terminated for default. On February 19, 1981, Allstate entered into a Takeover Agreement *97 with the United States Government pursuant to which Allstate assumed responsibility under its performance bond for the completion of this project. Allstate entered into a contract with Cochran Construction Company for the completion for the work remaining on this project. As of May 1, 1983, Allstate had paid Cochran $2,214,564.25 for labor and materials supplied in the performance of the work on this project. The loss incurred by Allstate under its performance bond totalled $75,362.25. In addition, Allstate paid claims under the payment bond for this project in the aggregate amount of $523,781.69.
It is a well established rule that nondisclosure or concealment of material facts amounts to culpable misrepresentation no less than an intentional false affirmation. See Marian Bank v. International Harvester Credit Corp., 550 F. Supp. 456, 461 (E.D.Pa.1982), aff'd, 725 F.2d 668 (3d Cir.1983); Delahanty v. First Pennsylvania Bank, 318 Pa.Super. 90, 464 A.2d 1243, 1252 (1983). In addition, in order for fraud to be proved, it is not necessary to establish the motive of personal gain. A *98 finding of fraud may be made without anyone in fact having derived any benefit or advantage from making the false representation. See generally 37 Am.Jur.2d. Fraud and Deceit, § 187 at 249 and § 18 at 42. The burden of proof for one attempting to establish that fraud existed is higher than the usual preponderance of the evidence standard. The Supreme Court of Pennsylvania has held that fraud or intent to defraud must be proved by "evidence that is clear, precise and convincing." Snell v. Pennsylvania, 490 Pa. 277, 416 A.2d 468 (1980). See also Contractor Utility Sales Co. Inc. v. Certain-Teed Products Corp., 638 F.2d at 1082; Delahanty v. First Pennsylvania Bank, 464 A.2d at 1252-53.
In opposing a finding of fraud, Pugh alleges there is no evidence in the record establishing personal gain by the defendants. As stated above, one may be guilty of fraud without in fact having derived any benefit or advantage from making the false representation. Additionally, since Pugh is the majority, if not the sole shareholder of Pugh Associates, it is evident he did personally benefit from the bribes as he drew a salary from the company and borrowed $350,000.00 from the company for the purchase of the motel. The defendant also argues that there was no showing that Allstate, through its agent, would not have written bonds for Pugh Associates even if there had been no bribes paid to them. It is not necessary that there be a direct statement by one of the Allstate's agents in order to make a finding of fraud. Fraud may be established not only by direct proof but also by circumstantial evidence. See 37 Am.Jur.2d. Fraud and Deceit, § 477 at 659. As the Fifth Circuit Court of Appeals in Colonial Refrigerated Transportation, Inc. v. Mitchell, 403 F.2d 541 (5th Cir.1968), explained: "What was in a man's mind may be determined not only by what he says he thought, by what he said and did. In law, as elsewhere, actions may speak louder than words." Facts such as Kass, Pugh's accountant, telling Pugh before the first bribe to Newell that Pugh Associates' financial condition would not justify further bonding, clearly permits the finder of fact to determine that the individual receiving the bribe would not have acted otherwise but for the receipt of the bribe. It is common sense to assume that one would not pay a bribe to another if the bribe were unnecessary in order to receive the requested benefit. Pugh's final contention, that since four of the five bonds were written by Allstate before the first bribe to Newell no fraud can be found, also must fail. It is clear that Newell, holding a supervisory position, would have the ability to cancel the project or make Pugh Associates perform according to the contract in precise terms. The identical contention espoused by Pugh was made in Seaboard Surety Co. supra, and rejected. The Third Circuit Court of Appeals explained that "here was the situation where had the facts become known the whole picture could have changed very rapidly." Id. at 376. Had the background of the issuance of the first bond been disclosed to honest Allstate employees, no subsequent bonds would have been issued and no losses would have been incurred by Allstate. Moreover, knowledge of the ongoing payoffs would no doubt have caused plaintiff to terminate this unscrupulous activity as promptly as possible. Therefore, it is clear that the plaintiff has carried its burden of establishing by clear, precise and convincing evidence the existence of fraud on the part of the defendant, Pugh.
The plaintiff also alleged the actions of defendants Pugh, Rittenhouse, Newell and Kass constituted a conspiracy *99 to defraud Allstate. Conspiracy, under Pennsylvania law, is "a combination or agreement between two or more persons to do an unlawful thing or to do a lawful thing in an unlawful manner. A conspiracy to defraud on the part of two or more persons means a common purpose supported by a concerted action to defraud, that each has the intent to do it, and that it is common to each of them, and that each understands that the other has that purpose." Ballantine v. Cummings, 220 Pa. 621, 630, 70 A. 546 (1908) (citation omitted). See also Stern v. Bricklin, 455 F. Supp. 346, 349 (E.D.Pa.1978). The evidence in the record of meetings and of concerted actions of, inter alia, Rittenhouse, Newell, Kass and Pugh, amply demonstrate a knowing plan to defraud Allstate.
In addition to compensatory damages, Allstate also requests an award of punitive damages. Under Pennsylvania law, an award of punitive damages must be supported by evidence of conduct more serious than the mere commission of the underlying tort. Punitive damages are never awarded as a right, no matter how "outrageous" the defendant's conduct. See Smith v. Wade, 461 U.S. 30, 103 S. Ct. 1625, 1638, 75 L. Ed. 2d 632 (1983).
Pennsylvania courts have recognized the standards governing punitive damages set forth in § 908 of the Restatement of Torts (1939). See Chambers v. Montgomery, 411 Pa. 339, 344-445, 192 A.2d 355 (1963). The Pennsylvania Supreme Court in Chambers, quoting the Restatement of Torts § 908, has stated "`Punitive Damages' are damages, other than compensatory or nominal damages, awarded against a person to punish him for his outrageous conduct." Id. at 344, 192 A.2d 355. It further explained that, "[i]n determining whether punitive damages should be awarded, the act itself together with all the circumstances including the motive of the wrongdoer and the relations between the parties should be considered." Id. at 345, 192 A.2d 355. Therefore, conduct involving bad motive or reckless indifference may justify the special sanction of punitive damages. See Franklin Music Co. v. American Broadcasting Co., Inc., 616 F.2d 528, Inc., 616 F.2d 528, 542 (3d Cir. 1980); Delahanty v. First Pennsylvania Bank, 464 A.2d at 1262-63. The purpose of punitive damages is both to punish the wrongdoer for past conduct and to deter both him and others from engaging in similar conduct in the future. See Chuy v. Philadelphia Eagles Football Club, 595 F.2d 1265, 1277 (3d Cir.1979); Delahanty v. First Pennsylvania Bank, 464 A.2d at 1263.
It is clear in this case that within the past ten years Pugh has admittedly defrauded three surety companies: United States Fidelity and Guaranty Company; Maryland Casualty Company; and Allstate Insurance Company. He has devised various schemes and has caused the companies enormous losses. It is clear that the conduct of Pugh falls within the bounds of being deemed "outrageous"i.e., "malicious", "wanton", "reckless", "willful", or "oppressive." See Chambers v. Montgomery, 411 Pa. at 344-45, 192 A.2d 355; Delahanty v. First Pennsylvania Bank, 464 A.2d at 1263 (where the court stated "it is difficult to picture a fact pattern which would support a finding of intentional fraud without providing proof of "outrageous conduct" to support an award of punitive damages.") An award of punitive damages is therefore clearly justified.
Plaintiff's final allegation is that pursuant to 18 U.S.C. §§ 1962(c) and 1964(c), the anti-racketeering statute *100 (RICO), it is entitled to an award of "threefold the damages [it] sustains." The statute provides:
18 U.S.C. § 1962(c). Thus, there are several requirements in order to maintain a RICO claim: the activity involved must constitute "racketeering activity" pursuant to 18 U.S.C. § 1961(1); the defendant must be affiliated with an "enterprise" as defined in 18 U.S.C. § 1961(4), engaged in or affecting interstate commerce; and the enterprise must conduct its affairs through a "pattern of racketeering activity" pursuant to 18 U.S.C. § 1961(5). It is clear that this court's finding of fraud, resulting from Pugh's bribery of the Allstate employees, falls within the statute's definition of "racketeering."[2] It is also evident that the "pattern of racketeering activity" element, requiring at least two acts of racketeering activity within ten years, has been satisfied. See United States v. Salvitti, 451 F. Supp. 195, 199-200 (E.D.Pa.1978). The final requirement, that of an "enterprise," is more difficult to establish. An enterprise is defined as "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). There is a conflict existing in the federal courts concerning the proper scope of the "enterprise" element in RICO. The majority of courts, liberally construing the RICO statute, have found an enterprise to exist "where a group of individuals are associated solely because they jointly commit the predicate racketeering offenses under RICO." See, Comment, Reading the "Enterprise" Element Back into RICO Sections 1962 and 1964(c), 76 N.W.Univ.L. Rev. 100, 104 (1981). It is the opinion of other district courts within the circuit that the Third Circuit Court of Appeals would likely adopt such a broad reading of the statute. See United States v. Mazzio, 501 F. Supp. 340, 342 (E.D.Pa.1980) aff'd 681 F.2d 810 (3d Cir.1982); Comment, supra, at 104-06. A minority position, however, would narrowly confine an enterprise to a "pre-existing" economic associationi.e., "an association having an ascertainable *101 structure which exists for the purpose of maintaining operations directed toward an economic goal that has an existence that can be defined apart from the commission of the predicate acts." See United States v. Anderson, 626 F.2d 1358, 1372 (8th Cir. 1980) cert. denied 450 U.S. 912, 101 S. Ct. 1351, 67 L. Ed. 2d 356.
The findings of fact as determined by the court indicate that Pugh's arrangements with Newell, Laffan, Kass, Hessian and Rittenhouse, clearly constitute an "enterprise" within the broad definition of the statute. Additionally, since A.M. Pugh Associates was a pre-existing economic structure from which Pugh operated, the defendants' association would also fall within even the more narrow reading of the statute.[3] Therefore, the court finds a RICO violation has been made out and the plaintiff entitled to an award of treble damages.
[1] The other defendants in this case and in a related action, 81-0675, viz., Andrew Newell, Eugene L. Kass, Eastern Seaboard Constructors, Inc., James F. Rittenhouse and Karen M. Rittenhouse, entered into settlement agreements with Allstate and are no longer parties.
[2] 18 U.S.C. § 1961(1) provides:
"Raceteering activity" means (A) any act or threat involving murder, kidnaping, gambling, arson, robbery, extortion, or dealing in narcotic or other dangerous drugs, which is chargeable under State law and punishable by imprisonment for more than one year; (B) any act which is indictable under any of the following provisions of title 18, United States Code: Section 201 (relating to bribery), section 224 (relating to sports bribery), sections 471, 472, and 473 (relating to counterfeiting), section 659 (relating to theft from interstate shipment) if the act indictable under section 659 is felonious, section 664 (relating to embezzlement from pension and welfare funds), sections 891-94 (relating to extortionate credit transactions), section 1084 (relating to the transmission of gambling information), section 1341 (relating to mail fraud), section 1343 (relating to wire fraud), section 1503 (relating to obstruction of justice), section 1510 (relating to obstruction of criminal investigations), section 1511 (relating to the obstruction of State or local law enforcement), section 1951 (relating to interference with commerce, robbery, or extortion), section 1952 (relating to racketeering), section 1953 (relating to interstate transportation of wagering paraphernalia), section 1954 (relating to unlawful welfare fund payments), section 1955 (relating to prohibition of illegal gambling businesses), sections 2314 and 2315 (relating to interstate transportation of stolen property), sections 2341-2346 (relating to trafficking in contraband cigarettes), sections 2421-24 (relating to white slave traffic), (C) any act which is indictable under title 29, United States Code, section 186 (dealing with restrictions on payments and loans to labor organizations) or section 501(c) (relating to embezzlement from union funds), or (D) any offense involving fraud connected with a case under title 11, fraud in the sale of securities, or the felonious manufacture, importation, receiving, concealment, buying, selling, or otherwise dealing in narcotic or other dangerous drugs, punishable under any law of the United States.
[3] Other elements of the RICO statute such as activity related to interstate commerce and causation are likewise sufficiently satisfied.