Opinion ID: 654260
Heading Depth: 2
Heading Rank: 4

Heading: Netters' RICO Conviction

Text: 57 Netters was convicted of violating RICO by conducting the affairs of an enterprise through a pattern of racketeering activity. See 18 U.S.C. Sec. 1962(c). He challenges this conviction on several grounds.
58 Section 1962(c) provides that it is unlawful for 59 any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.... 60 18 U.S.C. Sec. 1962(c). A violation of section 1962(c) requires (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985). 61 First, Netters argues that because he did not violate California Penal Code Sec. 68, there are no predicate acts; therefore, there is no pattern of racketeering activity to support his conviction. California Penal Code Sec. 68 provides: 62 Sec. 68. Bribes; executive or ministerial officers, employees, or appointees; asking or receiving; punishment 63 Every executive or ministerial officer, employee or appointee of the State of California, county or city therein or political subdivision thereof, who asks, receives, or agrees to receive, any bribe, upon any agreement or understanding that his vote, opinion, or action upon any matter then pending, or which may be brought before him in his official capacity, shall be influenced thereby, is punishable by imprisonment in the state prison for two, three or four years; and, in addition thereto, forfeits his office, and is forever disqualified from holding any office in this state. 64 (Emphasis added). Netters maintains that he could not have violated section 68 because he had no official capacity or officially defined duties as a legislative aide. 65 The plain language of the statute makes it clear that section 68 may be applied to Netters as an employee ... of the State of California. Moreover, California courts have rejected lack of official capacity as a defense to the crime of bribery under section 68. SeePeople v. Megladdery, 40 Cal.App.2d 748, 106 P.2d 84, 102 (1940) (private secretary to the governor); see alsoPeople v. Silver, 75 Cal.App.2d 1, 170 P.2d 80, 82 (1946) (acting investigator of the state board of architectural examiners). Thus, Netters, as a legislative aide, could be found guilty of violating section 68. 66 There was extensive evidence that Netters used his duties and responsibilities as a legislative aide to move two special interest bills through the California legislature in exchange for payments from the fictitious corporations, in violation of section 68. The Government proved the requisite number of predicate acts of bribery necessary to establish the existence of a pattern of racketeering activity. See 18 U.S.C. Sec. 1961(5) (pattern of racketeering activity requires at least two acts of racketeering activity). 67 Second, Netters asserts that the Government failed to prove the existence of a pattern of racketeering activity because this case involved only one activity--the introduction of special interest legislation. He contends that the fact that there may have been two statutory offenses is irrelevant. Netters' contention that because all of the predicate acts related to a single scheme, there could be no pattern is simply meritless. See United States v. Kirk, 844 F.2d 660, 663-64 (9th Cir.), cert. denied, 488 U.S. 890, 109 S.Ct. 222, 102 L.Ed.2d 213 (1988). 68 Third, Netters argues that even if there were two racketeering acts, there is no pattern because there was no threat of continuing activity. The Supreme Court has concluded that although two predicate acts are needed for a pattern, Congress had a fairly flexible concept of a pattern in mind. H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239, 109 S.Ct. 2893, 2900, 106 L.Ed.2d 195 (1989). The Government must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity. Seeid. (emphasis in original). 69 Racketeering predicates are related if they have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events. Seeid. at 240, 109 S.Ct. at 2901; Ticor Title Ins. Co. v. Florida, 937 F.2d 447, 450 (9th Cir.1991). In this case, the predicate state law bribery crimes were related as they had the same purpose--obtaining Netters' agreement to use his duties and responsibilities as a legislative aide to influence the legislative process. They also shared similar results, participants, and methods of commission. SeeDischner, 974 F.2d at 1510 (evidence that defendants repeatedly solicited and accepted bribes in connection with public matters, and received substantial kickbacks from companies for steering public works contracts in their direction, satisfied RICO's pattern requirement; the consistency of their methods, purposes, results, and the participants involved made the predicate acts sufficiently related). 70 With respect to the continuity requirement, the Supreme Court has explained: 71 Continuity is both a closed- and open-ended concept, referring either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition.... A party alleging a RICO violation may demonstrate continuity over a closed period by proving a series of related predicates extending over a substantial period of time. Predicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this requirement: Congress was concerned in RICO with long-term criminal conduct. [When] a RICO action [is] brought before continuity can be established in this way ... liability depends on whether the threat of continuity is demonstrated. 72 H.J., Inc., 492 U.S. at 241-42, 109 S.Ct. at 2902. However, as Justice Scalia pointed out in his concurrence, it would be absurd to say that at least a few months of racketeering activity ... is generally for free, as far as RICO is concerned. Id. at 254, 109 S.Ct. at 2908 (Scalia, J., concurring). If the predicate acts involve a distinct threat of long-term racketeering activity, either implicit or explicit, a RICO pattern has been established. Id. at 242, 109 S.Ct. at 2902. 73 In this case, the evidence showed that Netters accepted a series of improper payments over a two-year period consistent with the closed-ended concept of continuity. SeeDischner, 974 F.2d at 1507 (3 years); Kirk, 844 F.2d at 661 (2 years); United Energy Owners v. United Energy Management, 837 F.2d 356, 359 (9th Cir.1988) (15 months). Moreover, the nature of his crime and his statements suggest the existence of a distinct threat of long-term racketeering activity. SeeDischner, 974 F.2d at 1510-11 (in political corruption cases, activities such as receiving bribes and kickbacks feed on themselves so as to become a pattern). 74 The evidence demonstrated that the predicate state law bribery crimes were both related and amounted to or posed a threat of continued criminal activity. Thus, Netters' third attack on the Government's proof of a pattern of racketeering activity fails.
75 Netters contends that the Government failed to prove the existence of an enterprise because neither the offices of the 49th Assembly District nor any other governmental or political entity constitutes an enterprise within the meaning of RICO. An enterprise is defined as including 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. Sec. 1961(4). 76 The Ninth Circuit has never squarely addressed the issue raised by Netters, although we have ruled in a closely related situation. SeeDischner, 974 F.2d at 1511 (The statute adequately warned [defendants] that their association with each other and the Office of the Mayor and the Department of Public Works constituted a RICO enterprise.). However, seven other circuit courts have found that a government entity may constitute an enterprise within the meaning of RICO. SeeUnited States v. Thompson, 685 F.2d 993, 998-1000 (6th Cir.) (en banc), cert. denied, 459 U.S. 1072, 103 S.Ct. 494, 74 L.Ed.2d 635 (1982); United States v. Dozier, 672 F.2d 531, 543 & n. 8 (5th Cir.1982); United States v. Angelilli, 660 F.2d 23, 30-35 (2d Cir.1981), cert. denied sub nom. Butler v. United States, 455 U.S. 945, 102 S.Ct. 1442, 71 L.Ed.2d 657 (1982); United States v. Lee Stoller Enters., Inc., 652 F.2d 1313, 1316-19 (7th Cir.) (en banc), cert. denied, 454 U.S. 1082, 102 S.Ct. 636, 70 L.Ed.2d 615 (1981); United States v. Clark, 646 F.2d 1259, 1261-67 (8th Cir.1981); United States v. Altomare, 625 F.2d 5, 7 (4th Cir.1980); United States v. Bacheler, 611 F.2d 443, 450 (3d Cir.1979). 77 We adopt the view of seven circuit courts and hold that a governmental entity may constitute an enterprise within the meaning of RICO. Accordingly, we reject Netters' argument.
78 Netters urges us to adopt the position of the Second and Seventh Circuits that a RICO violation requires both that the enterprise and the racketeering activity have an economic purpose. He asserts that neither the enterprise (the 49th Assembly District) nor the racketeering activity (the predicate state law bribery crimes) in this case had an economic purpose; therefore, his conviction cannot stand. 79 Contrary to Netters' contention, the Second and Seventh Circuits do not require that both the enterprise and the racketeering predicates have an economic motive. Rather, they require an economic motive for either the enterprise or the predicate acts of racketeering. SeeNational Org. for Women v. Scheidler, 968 F.2d 612, 614, 625-30 (7th Cir.1992), cert. granted, --- U.S. ----, 113 S.Ct. 2958, 125 L.Ed.2d 659 (1993); United States v. Ivic, 700 F.2d 51, 58-65 (2d Cir.1983); see alsoUnited States v. Flynn, 852 F.2d 1045, 1052 (8th Cir.), cert. denied, 488 U.S. 974, 109 S.Ct. 511, 102 L.Ed.2d 546 (1988); compareNortheast Women's Center v. McMonagle, 868 F.2d 1342, 1349-50 (3d Cir.), cert. denied, 493 U.S. 901, 110 S.Ct. 261, 107 L.Ed.2d 210 (1989). The predicate state law bribery crimes clearly had an economic motive. We hold that the economic motive of the predicate acts is sufficient to uphold a RICO conviction.
80 First, Netters argues that the term enterprise is unconstitutionally vague as applied to the facts of this case. We rejected a comparable argument in Dischner. See 974 F.2d at 1511. Nor do we find the 'enterprise' requirement vague as applied to [defendants'] conduct.... The statute adequately warned [defendants] that their association with each other and the Office of the Mayor and the Department of Public Works constituted a RICO enterprise. Id. (citations omitted). 81 Second, Netters asserts that the RICO statute is unconstitutional as applied to cases such as this one because it impermissibly infringes on states' rights to control their electoral processes. He adds that the statute is unconstitutional because it chills the exercise of First Amendment rights, namely the solicitation of campaign contributions. The Supreme Court decided a case which responds to this argument. SeeMcCormick v. United States, 500 U.S. 257, ----, 111 S.Ct. 1807, 1816, 114 L.Ed.2d 307 (1991). Although the defendant state representative in McCormick was charged with violating the Hobbs Act rather than RICO, the Supreme Court's decision in that case controls this question. 82 In McCormick, the Court recognized that [s]erving constituents and supporting legislation that will benefit the district and individuals and groups therein is the everyday business of a legislator[, and] ... campaigns must be run and financed. McCormick, 500 U.S. at ----, 111 S.Ct. at 1816. Nevertheless, [p]olitical contributions are ... vulnerable ... if the payments are made in return for an explicit promise or undertaking by the official to perform or not to perform an official act. Id.