Opinion ID: 478407
Heading Depth: 1
Heading Rank: 5

Heading: Extortion Convictions

Text: 18 Appellants were convicted of two counts of collecting extensions of credit by extortionate means in violation of 18 U.S.C. Sec. 894. They challenge their convictions on the grounds that (1) the debts owed to West Coast Metallics were not extensions of credit, and (2) the statute does not apply to the collection of legitimate debts. 19 The Maraton and Parisienne extortions charged in Counts 9 and 10 followed defaulted payments on bad checks. Appellants rely on United States v. Boulahanis, 677 F.2d 586 (7th Cir.), cert. denied, 459 U.S. 1016, 103 S.Ct. 375, 74 L.Ed.2d 509 (1982), as authority for the proposition that defaulted payments do not qualify as extensions of credit for purposes of section 894. Other circuits have declined to follow such a narrow definition of extension of credit. See United States v. McMahan, 744 F.2d 647, 650 (8th Cir.1984) (accepting a check constitutes an extension of credit); United States v. DiPasquale, 740 F.2d 1282, 1288 (3d Cir.1984) (a claimed debt is an extension of credit), cert. denied, 469 U.S. 1228, 105 S.Ct. 1226, 84 L.Ed.2d 364 (1985); see also United States v. Bonanno, 467 F.2d 14, 16-17 (9th Cir.1972) (rejecting contention that section 894 does not apply to collection of simple debt), cert. denied, 410 U.S. 909, 93 S.Ct. 964, 35 L.Ed.2d 271 (1973). However, we need not decide whether an extension of credit results merely from customer default. 20 Extension of credit is broadly defined by statute, 18 U.S.C. Sec. 891(1) (1982), to include any agreement to defer repayment of a debt. 2 See Boulahanis, 677 F.2d at 590. Nadir agreed to sell gold to Maraton with the understanding that Maraton's check would not be cashed until there were sufficient funds in the account. Nadir agreed to allow the owner of Parisienne to pay an additional amount each time he ordered gold to cover the amount owed on the bad checks. In both instances, Nadir deferred repayment of the debt and, therefore, extended credit for purposes of section 894. See United States v. Horton, 676 F.2d 1165, 1171-72 (7th Cir.1982), cert. denied, 459 U.S. 1201, 103 S.Ct. 1164, 75 L.Ed.2d 431 (1983); United States v. Mase, 556 F.2d 671, 674 (2d Cir.1977), cert. denied, 435 U.S. 916, 98 S.Ct. 1472, 55 L.Ed.2d 508 (1978). 21 Appellants' argument that the statute does not encompass the use of extortionate means to collect legitimate debts is without merit. Although Congress was primarily concerned with abuses by organized crime, it is clear that section 894 proscribes a class of activities, that is, extortionate credit transactions. United States v. Annerino, 495 F.2d 1159, 1164-65 (7th Cir.1974). The statute is directed to the use of extortionate means to collect monies which creditors claim are owing to them, regardless how the debt arose. United States v. Briola, 465 F.2d 1018, 1021 (10th Cir.1972), cert. denied, 409 U.S. 1108, 93 S.Ct. 908, 34 L.Ed.2d 688 (1973). Section 894 has been applied to the collection of lawful debts. See, e.g., United States v. Nace, 561 F.2d 763, 770-71 (9th Cir.1977) (loan to manage business); United States v. Schwartz, 548 F.2d 427, 429-30 (2d Cir.1977) (purchase and leaseback of trucking equipment); United States v. Sears, 544 F.2d 585, 586 (2d Cir.1976) (loan for downpayment on a house). It is irrelevant that the debts Maraton and Parisenne owed to West Coast Metallics were legitimate. The evidence was sufficient to establish that appellants used coercion to collect extensions of credit and this was a violation of section 894. 22