Opinion ID: 439957
Heading Depth: 2
Heading Rank: 1

Heading: Extensions of Credit.

Text: 22 Title II of the Consumer Credit Protection Act, codified as chapter 42, 18 U.S.C. Secs. 891-896, establishes as federal crimes several types of extortionate credit transactions. The appellants stand convicted under section 894(a), which provides: 23 Whoever knowingly participates in any way, or conspires to do so, in the use of any extortionate means 24 (1) to collect or attempt to collect any extension of credit, or 25 (2) to punish any person for the nonrepayment thereof. 26 shall be fined not more than $10,000 or imprisoned not more than 20 years, or both. 27 Under the definitional section, [t]o extend credit means to make or renew any loan, or to enter into any agreement, tacit or express, whereby the repayment or satisfaction of any debt or claim, whether acknowledged or disputed, valid or invalid, and however arising, may or will be deferred. 18 U.S.C. Sec. 891(1). 28 Despite this sweeping definition, the appellants contend that the indictment did not charge, the district court did not properly define, and the evidence did not reveal, any extensions of credit. Above all else, the appellants deny that they made loans to their victims or that they agreed to defer the repayment of debts. 29 1. Sufficiency of the Indictment. The district court denied the appellants' pretrial motion to dismiss the indictment, which contains three separate counts that charge the use of extortionate means ... to collect and attempt to collect a claimed debt ... and to punish [the victim] for the non-repayment thereof. In similar language, the fourth count charges a knowing conspiracy to collect and to attempt to collect claimed debts and to punish victims for the non-repayment of claimed debts. Each count of the indictment states that these are acts in violation of 18 U.S.C. Sec. 894(a). The question is whether the indictment is legally sufficient. 30 An extension of credit is either a loan or an agreement to defer the repayment or satisfaction of a debt or claim. 18 U.S.C. Sec. 891(1). The debt or claim may be acknowledged or disputed, valid or invalid. Id. It may even be wholly fictitious. United States v. Cheiman, 578 F.2d 160, 164 n. 17 (6th Cir.1978), cert. denied, 439 U.S. 1068, 99 S.Ct. 834, 59 L.Ed.2d 33 (1979); United States v. Nace, 561 F.2d 763, 770 (9th Cir.1977); cf. United States v. Totaro, 550 F.2d 957, 958-59 (4th Cir.) (promised loan never received), cert. denied, 431 U.S. 920, 97 S.Ct. 2189, 53 L.Ed.2d 232 (1977). 31 Furthermore, the agreement 2 to defer repayment may be tacit or express. 18 U.S.C. Sec. 891(1). A tacit agreement may be implied from the circumstances surrounding the creation of the debt. For example, in United States v. Mase, 556 F.2d 671 (2d Cir.1977), cert. denied, 435 U.S. 916, 98 S.Ct. 1472, 55 L.Ed.2d 508 (1978), the court held that the placing of a bet evidenced a simultaneous agreement to defer repayment of the debt that would accrue when one party or the other lost the bet. 3 Id. at 674; see also United States v. Czarnecki, 552 F.2d 698, 703 (6th Cir.), cert. denied, 431 U.S. 939, 97 S.Ct. 2652, 53 L.Ed.2d 257 (1977). Similarly, in United States v. Horton, 676 F.2d 1165, 1171-72 (7th Cir.1982), cert. denied, 459 U.S. 1201, 103 S.Ct. 1184, 75 L.Ed.2d 431 (1983), the court suggested that there was an extension of credit to one Conkrite because Conkrite owed the defendant money in connection with a drug sale, see id. at 1172. 4 32 We conclude that under section 891(1), an agreement to defer the repayment of a debt may be implied from the debt, even if the debt is wholly fictitious. When a self-styled creditor appears before his debtor and demands satisfaction, the creditor posits both a debt and the prior deferral of its repayment. We believe that the definition of an extension of credit encompasses this type of transaction, which the indictment before us accurately describes as the collection of a claimed debt. 33 The appellants rely heavily on United States v. Boulahanis, 677 F.2d 586, 590-91 (7th Cir.), cert. denied, 459 U.S. 1016, 103 S.Ct. 375, 74 L.Ed.2d 509 (1982), in which the court held that neither a debt nor circumstantial evidence of an agreement to defer repayment of a debt is sufficient to prove an extension of credit. Citing Boulahanis, the appellants argue that we must not construe the definition of an extension of credit to include claimed debts. 34 Congress explicitly intended that chapter 42 be wielded with vigor and imagination. Conf.Rep. No. 1397, 90th Cong., 2d Sess. 31, reprinted in 1968 U.S.Code Cong. & Ad.News 1962, 2029. Specifically, Congress intended that chapter 42 reach transactions that are, by their nature, difficult to prove. Congress knew that extortionate credit transactions are characterized by the unwritten word, the silent threat. 114 Cong.Rec. 1608 (1968) (remarks of Rep. Widnall). President Ford, then a congressman, demonstrated that the difficulty of proving extortionate credit transactions effectively exempted them from the antiracketeering statutes. See House Republican Task Force on Crime, id. at 14105; see also Pub.L. 90-321, tit. II, Sec. 201(a), 82 Stat. 146, 159 (congressional findings). 35 The definition of an extension of credit in section 891(1) was generously drafted. The definition has been even more generously construed. Only the Boulahanis court has constrained the scope of chapter 42. We decline to follow Boulahanis because we believe that its construction is inconsistent with the language and purpose of chapter 42. We conclude that a claimed debt is one type of extension of credit under section 891(1). The indictment was therefore sufficient under 18 U.S.C. Sec. 894(a). 36 2. The Jury Instructions and the Evidence. The appellants contend that the district court erred when it charged the jury as to the possibly fictitious nature of the claimed debts. As we have already noted, claimed debts may be fictitious; thus, the instruction was not incorrect. Nor did the court err when it instructed that the claim could be based on the assertion that money had been stolen [or] that money was due for the delivery of drugs which had not been paid for. A debt or claim may arise from any source, by any means. See, e.g., Horton, 676 F.2d at 1172 (drug sale); United States v. Annerino, 495 F.2d 1159, 1166 (7th Cir.1974) (unauthorized use of credit cards and misappropriation of funds); see also 18 U.S.C. Sec. 891(1) (any debt ... however arising). 37 The district court also instructed that the elements of a crime under section 894 were violence, a claim of indebtedness and an agreement to accept payment at another time. See DiPasquale, 561 F.Supp. at 1356. This instruction required the government to prove more than was necessary to obtain a conviction, because it separated the claimed debt from the agreement to defer repayment. Although a claimed debt plus an independent agreement to defer repayment is one type of extension of credit, see, e.g., United States v. Keresty, 465 F.2d 36, 39 (3d Cir.), cert. denied, 409 U.S. 991, 93 S.Ct. 340, 34 L.Ed.2d 258 (1972), it is not the type charged in the indictment. 38 Citing Stirone v. United States, 361 U.S. 212, 80 S.Ct. 270, 4 L.Ed.2d 252 (1960), the appellants argue that this variance requires reversal. The indictment in Stirone predicated an essential element of a crime on the fact that the victim imported sand from another state, but the district court charged that the essential element could be proved either by the victim's importation of sand or by his planned future exportation of steel. See id. at 214, 80 S.Ct. at 271. Reversing Stirone's conviction, the Supreme Court held that it cannot be said with certainty that with a new basis for conviction added, Stirone was convicted solely on the charge made in the indictment the grand jury returned. Id. at 217, 80 S.Ct. at 273. 39 The appellants' invocation of Stirone is not persuasive. Although the district court required proof of more than the indictment charged, we can say with certainty that if the jury found a claimed debt and an independent agreement to defer repayment, it found a claimed debt. [I]f the indictment is sufficient, evidence which meets its allegations and proves something more without proving an offense different from that which is charged, cannot make a variance between the probata and the allegata. Goldberger v. United States, 4 F.2d 10, 12 (3d Cir.1925). 40 The district court told the jury that the violence, a claim of indebtedness, and an agreement to accept payment at another time could occur in any sequence on a particular occasion. See DiPasquale, 561 F.Supp. at 1356. The appellants argue that if the use of extortionate means antedates the extension of credit, there is no violation of section 894, although there may be an extortionate extension of credit 5 in violation of section 892. 41 Given the district court's instruction, the jury could have found that violence preceded or followed a claim of indebtedness. A claim of indebtedness is not itself the claimed debt. Whether the claimed debts in this case were fictitious or real, each was claimed to have arisen prior to its extortionate collection. Thus, the extensions of credit were posited as having occurred in the past, before the use of violent means to collect them. We need not decide whether this sequence is essential to a violation under section 894. 6 42 Finally, the appellants argue that the district court erred when it said that the essence of the crime is extortion. While this may be an incomplete description of a crime under section 894, any harm it might have caused was forestalled by the court's repeated explanation that a violation under section 894 requires a claim of indebtedness. 43