Opinion ID: 654260
Heading Depth: 1
Heading Rank: 2

Heading: netters' convictions

Text: 31
32 Netters challenges his convictions for RICO and Hobbs Act violations 1 on the ground that he could not have committed extortion under color of official right within the meaning of the Hobbs Act. Netters asserts that as a nonelected, nonappointed, legislative aide employed by an elected state assemblyperson, he could not act under color of official right. 33 When reviewing a district court's denial of a motion for acquittal, we examine the evidence presented in the light most favorable to the Government to determine whether any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. United States v. Shirley, 884 F.2d 1130, 1134 (9th Cir.1989) (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979) (emphasis in original)). We review the district court's interpretation of the applicable statute, in this case the Hobbs Act, 18 U.S.C. Sec. 1951, de novo. SeeUnited States v. Brannan, 898 F.2d 107, 109 (9th Cir.), cert. denied, 498 U.S. 833, 111 S.Ct. 100, 112 L.Ed.2d 71 (1990). The Hobbs Act provides, in pertinent part: 34 (a) Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined not more than $10,000 or imprisoned not more than twenty years, or both. 35 (b) As used in this section-- 36 .... 37 (2) The term extortion means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. 38 18 U.S.C. Sec. 1951 (emphasis added). 39 The Hobbs Act does not define under color of official right. Furthermore, the Ninth Circuit has not directly addressed the question of whether a defendant must be an elected or appointed public official in order to act under color of official right. The majority of our cases in this area involved either elected or appointed officials. SeeUnited States v. Carpenter, 961 F.2d 824 (9th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 332, 121 L.Ed.2d 250 (1992) (state senator); United States v. Montoya, 945 F.2d 1068 (9th Cir.1991) (state senator); United States v. Egan, 860 F.2d 904 (9th Cir.1988) (city councilperson); United States v. Bordallo, 857 F.2d 519 (9th Cir.1988), amended on unrelated grounds, 872 F.2d 334 (9th Cir.1989), cert. denied, 493 U.S. 818, 110 S.Ct. 71, 107 L.Ed.2d 38 (1989) (governor); United States v. Gates, 616 F.2d 1103 (9th Cir.1980) (director of county business license bureau). Recently, we decided a case involving defendants charged with Hobbs Act extortion who had been hired to serve as advisors and consultants to the mayor and the Department of Public Works; however, the case did not go to the jury on a color of official right theory. SeeUnited States v. Dischner, 974 F.2d 1502, 1515 n. 15 (9th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1290, 122 L.Ed.2d 682 (1993). 40 We have decided some cases which suggest that a private person may act under color of official right. SeeUnited States v. Ward, 914 F.2d 1340 (9th Cir.1990) (defendant, who pretended to be an undercover agent for the Department of Transportation, convicted of attempting an act of extortion in violation of the Hobbs Act); United States v. Bagnariol, 665 F.2d 877 (9th Cir.1981), cert. denied, 456 U.S. 962, 102 S.Ct. 2040, 72 L.Ed.2d 487 (1982) (defendant, who was a lobbyist and secretary of the Cardroom Owners Association, was convicted of an attempt to extort from a fictitious corporation in return for his help in enacting legislation favorable to gambling in Washington). However, the defendant in Ward was prosecuted on a fear theory, and it is unclear which theory of Hobbs Act extortion was utilized in Bagnariol. 41 Today we join the other circuit courts which have applied official right extortion under the Hobbs Act to nonelected, nonappointed, government employees, such as Netters. See, e.g.,United States v. Wright, 797 F.2d 245, 249-50 (5th Cir.1986), cert. denied, 481 U.S. 1013, 107 S.Ct. 1887, 95 L.Ed.2d 495 (1987) (assistant city attorney); United States v. Rindone, 631 F.2d 491, 494-95 (7th Cir.1980) (municipal electrical inspector); United States v. Cerilli, 603 F.2d 415 (3d Cir.1979), cert. denied, 444 U.S. 1043, 100 S.Ct. 728, 62 L.Ed.2d 728 (1980) (superintendent and assistant superintendents of state department of transportation); see alsoUnited States v. Ray, 690 F.Supp. 508, 510-12 (M.D.La.1988) (aide and assistant to the governor). 42 On its face, the Hobbs Act does not limit official right extortion to public officers. Rather, it applies to anyone acting under color of official right. As the Supreme Court has stated, the statutory language and the legislative history of the Hobbs Act impels us to the conclusion that Congress intended to make criminal all conduct within the reach of the statutory language. United States v. Culbert, 435 U.S. 371, 380, 98 S.Ct. 1112, 1117, 55 L.Ed.2d 349 (1978). We conclude that the Hobbs Act reaches anyone who actually exercises official powers, regardless of whether those powers were conferred by election, appointment, or some other method. 43 Furthermore, we conclude that the Hobbs Act reaches those public employees who may lack the actual power to bring about official action, but create the reasonable impression that they do possess such power and seek to exploit that impression to induce payments. See, e.g.,United States v. Blackwood, 768 F.2d 131, 134-36 (7th Cir.), cert. denied, 474 U.S. 1020, 106 S.Ct. 569, 88 L.Ed.2d 554 (1985); United States v. Margiotta, 688 F.2d 108, 132-33 (2d Cir.1982), cert. denied, 461 U.S. 913, 103 S.Ct. 1891, 77 L.Ed.2d 282 (1983); United States v. Mazzei, 521 F.2d 639, 643-44 (3d Cir.), cert. denied, 423 U.S. 1014, 96 S.Ct. 446, 46 L.Ed.2d 385 (1975); United States v. Wingo, 723 F.Supp. 798, 803-04 (N.D.Ga.1989). The district court's instructions correctly enunciated this principle. 44 Accordingly, we reject Netters' contention that as a nonelected, nonappointed, legislative aide, he could not act under color of official right. There was ample evidence that legislative aides exercise a great deal of control over pending bills in the legislative process. Moreover, the Government presented a substantial amount of evidence that Netters not only created the impression that he could affect legislation, but also that he did, in fact, use his official position to shepherd both AB 3773 and AB 4203 through the legislative process to induce payments from the undercover FBI agents. 45 Because the evidence demonstrates that Netters possessed and misused official powers in connection with his position as a legislative aide, we hold that a rational trier of fact could have found the essential elements of the crime [of official right extortion] beyond a reasonable doubt. Jackson, 443 U.S. at 319, 99 S.Ct. at 2789. The district court's decision to deny Netters' Rule 29 motion for judgment of acquittal was proper.
46 Netters asserts that even if a nonelected, nonappointed, legislative employee may be found guilty of official right extortion, his convictions must be reversed because the Hobbs Act failed to give him adequate notice that his conduct was prohibited. [A] penal statute [must] define the criminal offense with sufficient definiteness that ordinary people can understand what conduct is prohibited and in a manner that does not encourage arbitrary and discriminatory enforcement. United States v. Varbel, 780 F.2d 758, 760 (9th Cir.1986) (quoting Kolender v. Lawson, 461 U.S. 352, 357, 103 S.Ct. 1855, 1858, 75 L.Ed.2d 903 (1983)). 47 Although Netters was not himself an elected official, the facts of this case demonstrate that, as a staff assistant to an elected official, he exercised considerable power in shepherding bills through the legislative process. The many cases upholding convictions for official right extortion of nonelected, nonappointed, government employees were adequate notice to Netters. See, e.g.,Wright, 797 F.2d at 245; Rindone, 631 F.2d at 491; Cerilli, 603 F.2d at 415. The fact that Freeman had to assure Netters that FBI Agent Brennan was not ab-scamming him evidences Netters' understanding that his conduct was prohibited. 48 Furthermore, the plain language of the Hobbs Act applies to anyone acting under color of official right. The ordinary person would understand the statute to mean that the misuse of official responsibilities and powers is unlawful. Thus, we reject Netters' contention that he lacked notice that his conduct was prohibited by the Hobbs Act. 49
50 Netters challenges the district court's jury instruction # 40 as a misstatement of the law concerning acts under color of official right. Specifically, Netters contends that the district judge instructed the jury that a legislative employee could act under color of official right whenever that employee did his job. 51 Whether a jury instruction misstates the elements of a statutory crime is a question of law reviewed de novo. United States v. Johnson, 956 F.2d 197, 199 (9th Cir.1992). Jury instruction # 40 provided: 52 An individual employed by the Legislature, but who is not himself an elected official, may act under color of official right (1) if the employee exercised powers that are expressly or impliedly delegated to that employee by an elected official, or (2) if the employee acts with the apparent authority to exercise official powers, whether actually delegated or not, and the alleged victim believes that the employee is authorized to exercise such powers. 53 The district court also instructed the jury that to prove that the defendant acted under color of official right, the Government was required to show specific conduct by the defendant demonstrating a corrupt intent to induce a payment. The district court made it clear that the mere acceptance of a payment by a public official, even when the public official knows that his office is the motivation behind the payment, is not extortion under color of official right. 54 Finally, the district court advised the jury that it is not illegal, in and of itself, for a public official or legislative employee to solicit or accept campaign contributions from individuals who have a special interest in legislation. If the payments the Government alleges were extorted were made in the form of campaign contributions, the Government must prove a quid pro quo, that is, that the payments were made in return for an explicit promise or undertaking by the defendant to perform or not to perform an official act. 55 When the district court's jury instructions are considered together, it becomes clear that Netters' argument that the district judge instructed the jury that a legislative employee could act under color of official right whenever that employee did his job is completely without merit. The district court repeatedly emphasized that the Government must prove both that the defendant demonstrated a corrupt intent to induce a payment and that there was a quid pro quo, not simply a campaign contribution. 56 Because we hold that a nonelected, nonappointed, government employee may be found guilty of official right extortion, we approve the district court's instructions. They were neither misleading nor inadequate to guide the jury's deliberations. SeeUnited States v. Joetzki, 952 F.2d 1090, 1095 (9th Cir.1991).
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.
83 Netters' only challenge to his convictions for money laundering is the absence of underlying criminal conduct. These convictions were predicated upon his violations of the Hobbs Act and bribery under California Penal Code Sec. 68. Because we hold that the underlying criminal conduct occurred, we affirm Netters' convictions for money laundering.