Opinion ID: 497978
Heading Depth: 1
Heading Rank: 2

Heading: Violation of Section 1962(c)

Text: 10 Horak challenges his section 1962(c) conviction on three grounds. 1 Horak contends that: (1) as an employee of a subsidiary of the charged enterprise, he was not employed by or associated with the enterprise; (2) the evidence failed to support a finding that he conducted the affairs of the enterprise; and (3) the evidence failed to support a finding that he engaged in a pattern of racketeering activity. We reject all three contentions and affirm the conviction. 11 First, the evidence manifestly permitted a jury to conclude beyond a reasonable doubt that Horak was employed by or associated with Waste, the charged RICO enterprise. Horak was employed by H.O.D., a division of WM-Ill., which, in turn, is a wholly-owned subsidiary of Waste. H.O.D.'s revenues flowed through to Waste. Horak's day-to-day control of H.O.D. was monitored by WM-Ill. and Waste, particularly Horak's right to contract on H.O.D.'s behalf. Contracts between $300,000 and $1 million required WM-Ill.'s approval; contracts over $1 million required Waste's approval. This evidence is clearly sufficient. See United States v. Yonan, 800 F.2d 164, 167 (7th Cir.1986) (defendant can associate with the enterprise by conducting business with it), cert. denied, --- U.S. ----, 107 S.Ct. 930, 93 L.Ed.2d 981 (1987); Haroco v. American Nat'l Bank & Trust Co., 747 F.2d 384, 402-03 (7th Cir.1984) (we think it virtually self-evident that a subsidiary acts on behalf of, and thus conducts the affairs of, its parent corporation), aff'd, 473 U.S. 606, 105 S.Ct. 3291, 87 L.Ed.2d 437 (1985); United States v. Starnes, 644 F.2d 673, 679 (7th Cir.), cert. denied, 454 U.S. 826, 102 S.Ct. 116, 70 L.Ed.2d 101 (1981). 12 Second, the evidence permitted the jury to conclude beyond a reasonable doubt that Horak conducted or participated in the conduct of the affairs of Waste. Essentially Horak argues that even assuming a pattern of racketeering activity were shown, he did not conduct the affairs of Waste--the evidence showed only that he conducted the affairs of H.O.D. Horak's argument is misplaced: conduct in section 1962(c) does not mean control or manage, and, in any event, section 1962(c) also proscribes participat[ion], directly or indirectly, in the conduct of the affairs of the enterprise. To establish the relationship required by 1962(c) between racketeering activity and the affairs of the enterprise, this circuit has held that the government must show, first, that the defendant committed racketeering acts, second, that the defendant's position in or relation with the enterprise facilitated commission of the acts and, third, that the acts had some effect on the enterprise. United States v. Blackwood, 768 F.2d 131, 138 (7th Cir.), cert. denied, 474 U.S. 1020, 106 S.Ct. 569, 88 L.Ed.2d 554 (1985); see also United States v. Cauble, 706 F.2d 1322, 1333 (5th Cir.1983), cert. denied, 465 U.S. 1005, 104 S.Ct. 996, 79 L.Ed.2d 229 (1984). 13 Horak's contention that his position as H.O.D. manager does not adequately establish a relationship with the affairs of Waste fails the Blackwood test. Horak's position at H.O.D. facilitated his commission of the racketeering acts used to procure the 1981 contract from the Village of Fox Lake. Because H.O.D.'s regular business was garbage collection and a portion of Waste's regular business was garbage collection through its subsidiaries and divisions, Horak, as manager of H.O.D., was acting on Waste's behalf, thus conducting or participating in its affairs. See Haroco, 747 F.2d at 402-03; see also Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771-74, 104 S.Ct. 2731, 2741-43, 81 L.Ed.2d 628 (1984). Also, Horak's procurement of the 1981 contract through his racketeering activity undoubtedly had some effect on H.O.D.'s parent corporation, Waste, because the revenues derived from the contract were channeled up to Waste through WM-Ill. Blackwood, 768 F.2d at 138; see also United States v. Conn, 769 F.2d 420, 424-25 (7th Cir.1985); United States v. Ambrose, 740 F.2d 505, 512 (7th Cir.1984) (such effect does not have to be monetary), cert. denied, 472 U.S. 1017, 105 S.Ct. 3479, 87 L.Ed.2d 614 (1985). 14 Finally, the evidence permitted a conclusion beyond a reasonable doubt that Horak engaged in a pattern of racketeering activity. The statutory definition of the pattern element requires at least two acts of racketeering activity within ten years, 2 but two acts do not necessarily fulfill the pattern requirement. 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); Marshall & Ilsley Trust Co. v. Pate, 819 F.2d 806, 809-10 (7th Cir.1987); Morgan v. Bank of Waukegan, 804 F.2d 970, 974 (7th Cir.1986). The Sedima Court concluded that the legislative history of RICO indicates that a confluence of continuity plus relationship between or among the predicate acts establishes the requisite pattern. 473 U.S. at 496 n. 14, 105 S.Ct. at 3285. This court recognizes the need to evaluate the facts of each case individually in order to balance properly the two prongs of continuity and relationship. See Morgan, 804 F.2d at 975. We have held that to require that predicate acts always occur as parts of separate schemes in order to satisfy the continuity prong would effectively negate the relationship prong and allow defendants who participated in one massive ongoing scheme to escape RICO liability. See Marshall & Ilsley Trust, 819 F.2d at 810; Morgan, 804 F.2d at 975. 15 Evidence of three separate bribes was presented to the jury in this case: (1) a $5,000 payment to Hamm regarding the 1981 contract; (2) a $5,000 payment to Gerretsen regarding the 1981 contract; and (3) a $2,000 payment to Hamm involving a dumpster problem at a condominium complex. We conclude that these acts satisfy the continuity plus relationship test and permit a conclusion that Horak engaged in a pattern of racketeering activity. 16 Horak does not dispute that he made the payments, but he claims that the two $5,000 payments were a part of a single scheme to win the 1981 contract and that insufficient evidence was introduced to permit the jury to conclude that the $2,000 payment was a bribe. Without the $2,000 payment, according to Horak, the evidence does not permit a finding of pattern, but rather only an isolated act of bribery to obtain one contract. Horak appropriately directs attention to Lipin Enterprises, Inc. v. Lee, 803 F.2d 322, 324 (7th Cir.1986), a civil RICO case where this court found no pattern established by twelve mail frauds perpetrated over a brief period of several months, relating to a single scheme to defraud a single victim in the sale of a business. However, as was noted in Lipin, acts of mail fraud are perhaps unique in that a multiplicity of mailings may be no evidence of the requisite continuity of the underlying fraudulent activity. 803 F.2d at 325 (Cudahy, J., concurring). In the present case, evidence indicated an ongoing relationship built on periodic monthly payments of bribes to officials of Fox Lake. Horak made payments to Gerretsen for several months and then subsequently to Hamm for another period of approximately a year. Recognizing the relevant factors set forth in Morgan, we believe that the ongoing bribes of two public officials, even if pertinent only to a single ongoing service contract, may well establish a pattern for purposes of section 1962(c). 17 We believe further that a pattern was established by the additional evidence indicating a second bribe related to discussions of a problem that arose in connection with the garbage service contract. Hamm testified that he met with Horak to discuss potential solutions to the problem and that their meeting resulted in an additional $2,000 payment. Horak contends that insufficient proof existed that the $2,000 was a separate bribe concerning a separate problem. However, it is clear that some two years after establishing the initial scheme to pay $10,000, Horak and Hamm met to negotiate about the garbage services, and Hamm received an additional $2,000. This is sufficient to show continuity and relationship--an ongoing scheme to bribe public officials to obtain and perform a service contract over a several year period.