Opinion ID: 408161
Heading Depth: 1
Heading Rank: 3

Heading: Hobbs Act Convictions.

Text: 57
58 Margiotta argues that his conviction under Counts Two through Six charging violations of the Hobbs Act, 18 U.S.C. § 1951, should be reversed and the indictment dismissed. Section 1951 proscribes various kinds of extortionate interference with interstate commerce, and defines extortion as the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, fear, or under color of official right. 18 U.S.C. § 1951(b)(2) (1976). Margiotta was charged with violating the Act by inducing the Williams Agency to make payments by means of wrongful use of fear, and alternatively, under color of official right. Judge Sifton instructed the jury that it could find Margiotta guilty if it decided that he had employed one of these two methods. We find no error infecting Margiotta's conviction on five counts of extortion. 59
60 Extortion under color of official right is committed when a public official makes wrongful use of his office to obtain money not due him or his office. United States v. French, 628 F.2d 1069, 1072 (8th Cir.), cert. denied, 449 U.S. 956, 101 S.Ct. 364, 66 L.Ed.2d 221 (1980); United States v. Trotta, 525 F.2d 1096, 1100 n.7 (2d Cir. 1975), cert. denied, 425 U.S. 971, 96 S.Ct. 2167, 48 L.Ed.2d 794 (1976). The public officer's misuse of his office supplies the necessary element of coercion, and the wrongful use of official power need not be accompanied by actual or threatened force, violence, or fear. See United States v. Mazzei, supra, 521 F.2d at 644. The district court concluded that although Margiotta was not a public official, he could be found guilty of extortion under color of official right pursuant to 18 U.S.C. § 2(b), which provides: 61 (b) Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal. 62 Judge Sifton charged the jury that if it determined that the defendant willfully and knowingly caused officials of the Town of Hempstead and County of Nassau under color of office to contribute in a substantial way to inducing the Williams Agency to consent to pay out the moneys ... then the defendant is as responsible for the official action as if he was himself the public official concerned and had performed the action directly. 63 Margiotta asserts that the district court erred in applying 18 U.S.C. § 2(b) to this case because it was not shown that Margiotta had caused a public official to commit extortion under color of official right in violation of the Hobbs Act and because the trial court's instructions were improper. We disagree, and conclude that the requirements of 18 U.S.C. § 2(b) were met. This section is based on the precept that an individual with the requisite criminal intent may be held liable as a principal if he is a cause in fact in the commission of a crime, notwithstanding that the proscribed conduct is achieved through the actions of innocent intermediaries. 25 United States v. Kelner, 534 F.2d 1020, 1022 (2d Cir.), cert. denied, 429 U.S. 1022, 97 S.Ct. 639, 50 L.Ed.2d 623 (1976). See also United States v. Giles, 300 U.S. 41, 48-49, 57 S.Ct. 340, 344, 81 L.Ed. 493 (1937). It is unnecessary that the intermediary who commits the act have a criminal intent. United States v. Kelner, supra, 534 F.2d at 1023; United States v. Bryan, 483 F.2d 88, 92 (3rd Cir. 1973) (en banc). In causing the innocent intermediary to commit the challenged actions, the individual adopts both the intermediary's act and his capacity. See, e.g., United States v. Ruffin, 613 F.2d 408, 415 (2d Cir. 1979); United States v. Wiseman, 445 F.2d 792, 795 (2d Cir.), cert. denied, 404 U.S. 967, 92 S.Ct. 346, 30 L.Ed.2d 287 (1971). Section 2(b) has been broadly interpreted to cover not only the voluntary acts of a defendant's agents, but also involuntary conduct on the part of his victims. See United States v. De Cavalcante, 440 F.2d 1264, 1268 (3rd Cir. 1971). These principles are consistent with Congressional intent. The House Report accompanying an earlier version of § 2(b) stated that one of the principal purposes of the section was to eliminate any doubt that an individual who causes the commission of an indispensable element of the offense by an innocent agent or instrumentality, is guilty as a principal, in accord with such judicial decisions as United States v. Giles, supra. H.Rep.No.304, 80th Cong., 1st Sess. 2448-49 (1949). See generally United States v. Ruffin, supra, 613 F.2d at 412-16. 64 In light of these guidelines, Margiotta could be found guilty of extortion pursuant to 18 U.S.C. § 2(b). One of the indispensable elements in the extortion kickbacks from the Williams Agency was the official act of Ralph Caso and other public officials of Nassau County and the Town of Hempstead in appointing and retaining the Williams Agency as Broker of Record. Had that conduct, which the jury could reasonably find from the evidence was caused by Margiotta, never occurred, the Williams Agency would not have been in a position to make the challenged payments. If the public officials were aware that the Agency was making the kickbacks at the direction of Margiotta as a result of their exercise of official power in designating and retaining the Agency as Broker, the public officials could have been found guilty of extortion as principals, for unlawfully obtaining the consent to the payments under color of official right. See, e.g., United States v. Butler, 618 F.2d 411 (6th Cir.), cert. denied, 447 U.S. 927, 100 S.Ct. 3024, 65 L.Ed.2d 1121 (1980); United States v. Trotta, supra. In light of Ralph Caso's testimony that he was unaware of any commission sharing by the Williams Agency and the absence of proof, or contention by the Government, that Caso was party to the secret understandings concerning the designation of the Agency as Broker of Record for Town and County, it is likely that the public officials could not be found guilty of a Hobbs Act violation under color of official right, since it could not be established they were aware that Margiotta had caused them to exercise their power in a manner which induced the Williams Agency to make the kickbacks. Nonetheless, the defendant who caused them to act in this way is viewed as having adopt(ed) not only (their) act but (their) capacity as well. United States v. Ruffin, supra, 613 F.2d at 415. See also United States v. Wiseman, supra, (defendants, who were private process servers, could be found guilty of 18 U.S.C. § 242, which prohibits those acting under color of any law from depriving citizens of their civil rights, by operation of 18 U.S.C. § 2(b), where the defendants had caused a state employee, the Clerk of the New York City Civil Court, to enter judgments against third persons, although the Clerk did not know that the judgments were fraudulently obtained); United States v. Lester, 363 F.2d 68 (6th Cir. 1966), cert. denied, 385 U.S. 1002, 87 S.Ct. 705, 17 L.Ed.2d 542 (1967). Since Margiotta could reasonably be found to have caused a public official to commit the act necessary for inducing the Agency's consent to make the kickback payments, he could be convicted of extortion pursuant to the provisions of 18 U.S.C. § 2(b), even though the public official may have been a mere innocent intermediary, and did not participate in all aspects of the extortionate enterprise that is the subject matter of the criminal offense. See United States v. Wiseman, supra. These principles were reflected in Judge Sifton's careful jury instruction, that the jury would have to find that Margiotta had caused officials of the Town of Hempstead and Nassau County under color of office to contribute in a substantial way to inducing the Williams Agency to consent to pay out the monies referred to in Counts Two through Six. 65 In short, the jury could reasonably find that Margiotta had caused public officials in Hempstead and Nassau County to appoint and retain the Williams Agency as Broker of Record, a prerequisite step in the process of extorting insurance payments. The insurance commissions simply could not have been generated but for this official action. Moreover, this conclusion is not undercut by Margiotta's other arguments in support of his claim that he could not be found guilty of obtaining money under color of official right pursuant to 18 U.S.C. § 2(b). His contention that there is no proof that the Presiding Supervisor of the Town of Hempstead or the Nassau County Executive attempted to induce the Williams Agency to make the payments or that the Agency was motivated to make the kickbacks as a result of the assertion of pressure by the public officials is unavailing. Affirmative pressure in the form of force, fear, or direct solicitation of money may transform an official's act into a violation of the Hobbs Act, but it is the utilization of the power of public office to induce consent to the payments that is the gist of an offense of obtaining money under color of official right. See, e.g., United States v. Jannotti, 673 F.2d 578 (3rd Cir.) (Hobbs Act covers actions by public officials under color of official right even when payment is not obtained by force, threats or use of force), cert. denied, --- U.S. ----, 102 S.Ct. 2906, 72 L.Ed.2d ---- (1982). The use of public office, with the authority to grant or withhold benefits, takes the place of pressure or threats. In this case, the appointment and retention of the Agency as Broker of Record thus satisfies the requirement of a use of public office or action under color of official right. Moreover, it is clear that the victim's motivation for the payment of portions of the insurance commissions focused on the public officials' power of office. United States v. Braasch, 505 F.2d 139, 151 (7th Cir. 1974), cert. denied, 421 U.S. 910, 95 S.Ct. 1561, 43 L.Ed.2d 775 (1975). It is reasonable to conclude that the Williams Agency consented substantially for the reason that the positions held by the public officials, who were controlled by Margiotta, gave the officials the power to choose another as Broker of Record if the Agency did not consent to the payments. See United States v. Hedman, 630 F.2d 1184, 1194 n.4 (7th Cir. 1980), cert. denied, 450 U.S. 965, 101 S.Ct. 1481, 67 L.Ed.2d 614 (1981). 66 Furthermore, it is not necessary to support a Hobbs Act charge by showing that a public official offer a quid pro quo in the form of some specific exercise of the powers of his office or a forbearance to carry out a duty; a public official may be guilty of obtaining money under color of official right if the payments are motivated as a result of his exercise of the powers of his public office and he is aware of this fact. United States v. Trotta, supra, 525 F.2d at 1100. While the lack of awareness on the part of the public officials may have relieved them of criminal liability for extortion under color of official right, it does not relieve Margiotta of criminal responsibility, for, pursuant to 18 U.S.C. § 2(b), he could be found guilty of having caused the public officials unknowingly to use their power of office in such a manner that would induce the payments. See United States v. Wiseman, supra. In addition, Margiotta may not seek refuge in the claim that Ralph Caso and the other public officials were not themselves the recipients directly or indirectly of payments by the Williams Agency, and therefore did not make wrongful use of (public office) to gain personal financial reward. United States v. Butler, supra, 618 F.2d at 419. A Hobbs Act prosecution may lie where the extorted payments are transferred to third parties, including political allies and political parties, rather than to the public official who has acted under color of official right. See United States v. Trotta, supra, 525 F.2d at 1098 n.2. Finally, the focus of the prosecution on the actions of Margiotta in causing public officials unknowingly to use their power in such a way as to induce the Williams Agency to make kickbacks to Margiotta's political allies and the carefully drawn instructions of the district court ensured that Margiotta's prosecution under the Hobbs Act did not draw within its ambit conduct that has traditionally been viewed as legitimate lobbying and political activity. Since Judge Sifton specifically charged that Margiotta could be convicted only if the jury found that he had acted with the requisite criminal intent, the application of the Hobbs Act's proscription of extortion under color of official right by operation of 18 U.S.C. § 2(b) in this case does not open a Pandora's box of liability in connection with lobbying or other legitimate political activities. 67
68 As noted above, Judge Sifton alternatively instructed the jury that it could find Margiotta had violated the Hobbs Act by extortion through wrongful use of fear. Margiotta claims that the evidence was insufficient as a matter of law to establish that the payments made by the Williams Agency were induced by the wrongful use of fear. In light of the overwhelming evidence that the principals of the Williams Agency understood the Agency would lose its position as Broker of Record for Town and County if it ceased making the payments specified in Counts Two through Six, Margiotta's claim is plainly without merit. 69 Richard A. Williams first testified about his state of mind when he was called as a witness before the New York State Investigation Commission. When asked what would happen if he did not make the payments to other insurance brokers, Williams responded that he believed the municipal insurance business would be distributed to someone else, and that he would be excluded. Williams's testimony at trial concerning his state of mind in making the challenged payments was generally consistent with this prior testimony, and was sufficient for a reasonable jury to find that the principals of the Williams Agency had reasonably been induced to fear that the Agency's participation as Broker of Record would be terminated if it did not make the payments in accordance with Margiotta's directions. See, e.g., United States v. Brown, 540 F.2d 364, 373 n.6 (8th Cir. 1976); United States v. Provenzano, 334 F.2d 678, 687 (3rd Cir.), cert. denied, 379 U.S. 947, 85 S.Ct. 440, 13 L.Ed.2d 544 (1964). Proof that the Williamses' fear was reasonable includes Margiotta's own statement that he would convene a meeting of the Executive Committee of the Republican Party in the event that the Agency ceased making payments. Moreover, putting the victim in fear of economic loss can satisfy the element of fear required by the Hobbs Act. See United States v. Brecht, 540 F.2d 45, 52 (2d Cir. 1976), cert. denied, 429 U.S. 1123, 97 S.Ct. 1160, 51 L.Ed.2d 573 (1977). Since the parties to the agreement understood this would be the result, Margiotta was able to exploit the fear of the brokers and thereby wrongfully obtain portions of their insurance commissions with their consent. See United States v. Furey, 491 F.Supp. 1048, 1061 (E.D.Pa.), aff'd without opinion, 636 F.2d 1211 (3rd Cir. 1980), cert. denied, 451 U.S. 913, 101 S.Ct. 1987, 68 L.Ed.2d 304 (1981). That the Agency concealed its practice of reducing the amount of kickbacks as the size of the commissions increased corroborates the finding that the Agency feared the loss of the municipal insurance business if Margiotta learned that the Agency was reneging on the secret deal to divide the commissions on a 50-50 basis. 70 We note that the evidence is particularly compelling as to Count Three which charged extortion in connection with the payments to William and Neil Cahn, and Count Five, which set forth a Hobbs Act violation arising from payments to former Assemblyman Reilly. Margiotta directed a series of monthly payments in the amount of $2,000 to attorneys William Cahn and his son, as an alleged legal retainer by the Williams Agency. Margiotta admitted that payments to lawyers were not part of any prior patronage system. Moreover, on several occasions, Richard A. Williams approached Margiotta to determine whether the Agency could stop making payments to Cahn. In 1976, Williams asked Margiotta if the Agency should continue to make the payments, and Margiotta responded in the affirmative. Later, in 1978, after continuing to pay the monthly $2,000 kickbacks, Williams again sought Margiotta's permission to halt the payments. Although Margiotta initially agreed, Cahn appealed to Margiotta, and Williams was directed to commence making the payments again. After Williams's third request, in 1979, Margiotta gave his permission to cease making payments to the Cahns. At trial, Margiotta admitted that his recommendation was relevant to Williams's decision to continue to make the monthly payments. Although Williams testified that he had a high opinion of Neil Cahn's legal abilities, he stated that the work done by William Cahn for the Williams Agency was insubstantial. Accordingly, ample evidence supports the inference that the Cahn payments were induced by a reasonable fear stemming from Margiotta's power to ensure the Williams Agency would suffer adverse consequences if it did not follow his directions. 71 Count Five was based upon a series of payments totalling approximately $50,000 to Assemblyman Reilly in 1979 and 1980, after Margiotta allegedly terminated the practice upon which he and Williams had agreed many years earlier. In 1978, according to Margiotta himself, he met with Williams to determine whether Williams could see his way clear to continue Reilly as an employee at a salary of $25,000 each year. During the several years Reilly was paid by the Agency, he performed no meaningful work, and generated only a few hundred dollars in commissions. Williams testified that he understood the Agency could lose the municipal insurance business if the Agency did not continue to make the payments to Reilly. 72 In light of this evidence, the jury could reasonably find that the principals of the Williams Agency were induced to make the payments by the fear they would lose their position of Broker of Record if they did not comply with Margiotta's instructions. The jury could properly disbelieve Williams's isolated answer of no in response to a question whether he had any state of mind of fear at the time (he) made any of these payments, and that, instead, he distributed portions of the commissions earned by the Agency because he understood that he had to live up to a verbal contract between the elder Williams and Margiotta. In his testimony, Williams repeatedly made clear his belief that the Agency would have lost the municipal insurance commissions if it had breached its secret agreement with Margiotta. Moreover, the jury could reasonably infer that Williams did not believe he was carrying out a valid contract from the evidence of Williams's participation in the creation of fictitious property inspection reports, his dissembling testimony before the New York State Investigation Commission, and the decision to reduce the portions of the commissions distributed from the agreed upon fifty percent. Cf. United States v. Barber, 668 F.2d 778, 783 n.2 (4th Cir. 1982) (falsification of documents amply supports inference that donations were compelled, not voluntary, campaign contributions). 73 Furthermore, there is no merit to Margiotta's claim that he could not have induced the Williams Agency to consent to the payments through the wrongful use of fear because the Williams Agency initially approached him to secure the positions of Broker of Record for Hempstead and Nassau County and therefore was a willing collaborator. See United States v. Rabbitt, 583 F.2d 1014, 1027 (8th Cir. 1978), cert. denied, 439 U.S. 1116, 99 S.Ct. 1022, 59 L.Ed.2d 75 (1979). Margiotta relies upon dictum in United States v. Brecht, supra, 540 F.2d at 51, in which the court stated that extortion under the Hobbs act involves initiative on the part of the defendant and coercion on the part of the victim. The court made this statement for the purpose of distinguishing bribery and extortion, not for the purpose of holding that a defendant cannot be guilty of extortion when the victim has taken the initiative, even if the victim was induced by fear to make the initial approach. We believe extortion under the Hobbs Act encompasses just such a situation, and well-reasoned precedent confirms our view. See United States v. Duhon, 565 F.2d 345, 351 (5th Cir.) (agreement of putative victims to offer union leaders money to remove pickets prior to meeting with the union leaders does not preclude a finding that the defendants intended to obtain money from the victims through wrongful use of fear; (t)he extortionist need not explicitly demand property before it is offered), cert. denied, 435 U.S. 952, 98 S.Ct. 1580, 55 L.Ed.2d 802 (1978); United States v. Hathaway, 534 F.2d 386 (1st Cir.) (although the victim may have initiated the subject of payments, the jury could find that such approach arose from a reasonable fear that without paying he would not be considered by the authority), cert. denied sub nom., Baptista v. United States, 429 U.S. 819, 97 S.Ct. 64, 50 L.Ed.2d 79 (1976). In this case, the elder Williams was aware that kickbacks were essential for the Williams Agency to secure and retain the position of Broker of Record. Indeed, prior practice was Margiotta's principal defense to the charge of mail fraud in Count One. Moreover, Margiotta acknowledged that the Williams Agency faced the prospect of losing the municipal insurance business if it ceased making the payments. The jury could reasonably find that in this atmosphere of coercion, the Williams Agency labored under a well-founded fear that without agreeing to pay, and continuing to pay once appointed Broker, it would not be considered by the authority representing the Town and County: Joseph Margiotta. In short, as appellant's counsel stated at oral argument, the elder Williams agreed to the secret kickback arrangement because he was doing what he had to do to get the business. Accordingly, the evidence is sufficient to support a finding that Margiotta was guilty of extortion in violation of 18 U.S.C. § 1951 through the wrongful use of fear. 74 Since the jury could properly have found Margiotta guilty on Counts Two through Six either by a theory of extortion under color of official right or by a theory of extortion through the wrongful use of fear, both of which were included by Judge Sifton in his jury instructions, it is not necessary to consider Margiotta's argument that reversal of the jury's verdict is required unless both were correct as a matter of law and supported by the record. See United States v. Ballard, 663 F.2d 534 (5th Cir. 1981). Moreover, the district court's instructions on the mail fraud count, which we believe were correct in all respects, did not prejudice the jury's consideration of the extortion charges in Counts Two through Six. Margiotta argues that Judge Sifton, in charging on the mail fraud count, instructed the jury that Margiotta was essentially a public official with a public official's fiduciary duty to render honest and loyal services to the general citizenry, and that this impaired his defense that he was not acting under color of official right, under the Hobbs Act. This claim is without merit. Judge Sifton's charge on Count One did not state that Margiotta was essentially a public official. Moreover, in its instructions on Counts Two through Six, the district court explained that Margiotta was not a public official and the liability on the Hobbs Act counts could only be based on 18 U.S.C. § 2(b). 75