Court Opinion

ID: 9471894
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:43:34.000709+00
Date Added: 2024-06-11T17:42:37.788746
License: Public Domain

ROSENN, Circuit Judge,
concurring and dissenting.
I concur in and join the majority opinion except insofar as it sustains the RICO conviction. I respectfully dissent from part VII (the RICO charge) and part VIII because the Government has not proved that *228Schwartz committed the offense charged in the RICO indictment.
I.
As the majority opinion notes, both appellants, members of the Philadelphia City Council, were convicted of having conspired to obstruct interstate commerce in violation of the Hobbs Act by accepting payments in return for promises to expedite the construction of a major hotel complex in the city. The construction plan, however, was only part of a “sting” operation. On the same operative facts, the jury also found the defendant Schwartz guilty of conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962(d) (1976).
The RICO indictment (count II) charged Schwartz and Jannotti, together with Criden, Johanson, and an unindicted coconspirator, Ellis Cook, with conspiracy to conduct and participate in the conduct of the affairs of a law firm, Criden, Johanson, Dolan, Morrissey & Cook (the firm), through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(d) (1976). The first paragraph of the indictment defined the firm as a business and legal entity engaged in the practice of law in Philadelphia, Pennsylvania, and as constituting an “enterprise engaged in, and the activities of which affected, interstate commerce.” Criden and Johanson were partners in that firm; Schwartz and Jannotti were not.
The object of a RICO conspiracy is to violate a substantive provision of the. RICO statute. The substantive provision of RICO that the indictment charged Schwartz with having conspired to violate is section 1962(c). It provides in pertinent part:
It shall be unlawful for 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____
II.
Criden implicated Schwartz in this fictitious project before Schwartz had any knowledge of it or its principals. On Friday, January 18, 1980, Criden met with undercover agents Wald and Haridopolos at Philadelphia’s Barclay Hotel. Wald told Criden that an Arab sheik was interested in constructing a large hotel complex in Philadelphia and desired advance assurances that there would be no zoning or labor problems. Criden hastily assured the agents there would be no such problems and suggested the possibility of dealing with Johanson, a member of the City Council, and Schwartz, its president. They discussed “the tariff” for each of the men and agreed to arrange a meeting with Councilman Johanson. The agents promised Criden a fee of $10,000 for introductions to Johanson and Schwartz.
With visions of the $10,000 in hand, Criden lost no time in returning that same evening with Johanson. Johanson gave the agents the assurances they sought. The agents, in turn, presented him with $25,-000. Wald then asked Johanson whether Schwartz could help the sheik and Johanson replied that Schwartz and Councilman Jannotti controlled the City Council. Johanson indicated that he would explore the possibility of arranging a meeting with Schwartz and Jannotti. He then departed. Criden remained and discussed with the agents how they might enlist the services of Schwartz and Jannotti and how much they might have to spend. At the end of the meeting, Wald gave Criden $5,000 for his personal services and promised him “five [more] for the next delivery.”
Johanson never introduced Schwartz or Jannotti to the agents. Over the weekend he had second thoughts about his conversation with the agents and Criden. When Criden called Monday morning to arrange for a meeting with Schwartz, Johanson refused to make the introduction or to set up a meeting with Jannotti. There is no indication that Johanson had any subsequent involvement in the matter.
*229Criden had never met Schwartz, and he contrived to obtain an introduction through two intermediaries. He informed them that one of his clients wished to use Schwartz as a consultant. He then paid the intermediaries $3,000 for arranging the introduction.
On January 23, 1980, Schwartz made his first and only appearance on this stage. He met with Criden and agent Wald at the hotel. Criden informed Wald that he had discussed the project with Schwartz. Schwartz spoke enthusiastically of the positive business environment in Philadelphia. When the conversation turned to the question of obtaining zoning variances in advance of construction, Schwartz indicated that he controlled the City Council, as well as the Zoning Board of Adjustment and the Board of Building Standards.
Wald mentioned that his client had other investments in mind besides the hotel construction and asked whether Schwartz could “suggest” a local, politically savvy law firm. When Criden suggested Schwartz’s former law firm, Blank, Rome, Comiskey & McCauley (Blank, Rome), Wald inquired whether that would create a conflict of interest. Schwartz replied that he had completely severed his relationship with the firm. He commented that the firm had expertise in all types of construction and financing and would be a proper firm to use for this kind of work. Criden offered to set up an appointment with the firm and to make the referral. Schwartz also suggested another major Philadelphia law firm, Wolf, Block, Schorr and Solis-Cohen. With respect to using his old law firm, Schwartz commented that “[tjhere are certain protocol that should be worked out in advance and that’s where the law firm Howard [Criden] will become involved. To put it together so that it doesn’t boomerang.”
Wald asked Schwartz if the “dollars we’re talking are in the right ballpark.” Schwartz replied that money was not his prime concern, and that his interest was in Philadelphia’s economic and tax development. He confirmed Wald’s statement that they had made a business deal and that the sheik had a friend in Philadelphia. Wald then handed Schwartz an envelope containing $30,000 and asked him if the sum was “appropriate.” Schwartz took the envelope and departed, but not before advising Wald that he was “very much available” if the sheik required his future services. Following Schwartz’s departure, Wald gave Criden the $5,000 he had previously promised him for Schwartz’s “delivery.”
Schwartz made his debut in this alleged conspiracy on January 23, 1980, and the record shows no further meetings between him and the agents. The day after the agents met with Schwartz, Criden arranged to have Jannotti meet with them. They met that evening and the agents again described the project. Jannotti promised to help. Wald then handed Jannotti an envelope with $10,000 and Jannotti left.
III.
Although the entire hotel project was imaginary, the law of this case is, as the majority has noted, that there is Hobbs Act jurisdiction. See United States v. Jannotti, 673 F.2d 578 (3d Cir.) (in banc), cert. denied, 457 U.S. 1106, 102 S.Ct. 2906, 73 L.Ed.2d 1315 (1982). On the record we have here, the conduct of Schwartz and Jannotti provides sufficient evidence to convict each of them of a Hobbs Act conspiracy. But whether the Government proved that Schwartz is also guilty of the RICO charge is an entirely different question. I believe the answer is that it did not.
The thrust of the statute, as is indicated by its title “Racketeer Influenced and Corrupt Organizations Act” and the language of sections 1962(a), (b), and (c), is the perversion of a business, organization, or enterprise through a pattern of racketeering activity. The principal purpose of Congress in enacting RICO was to protect legitimate businesses from the infiltration by organized crime by eradicating “the criminal means of acquiring, maintaining and conducting any enterprise affecting com*230merce.” United States v. Stofsky, 409 F.Supp. 609, 613 (S.D.N.Y.1973).1
This purpose is demonstrated by the very structure of the statute’s operative provisions. As to enterprises engaged in interstate commerce, section 1962(a) prevents the use or investment of racketeering income in the acquisition of any interest in such an enterprise. Section 1962(b) makes it unlawful through a pattern of racketeering activity to acquire a direct interest in or control of such an enterprise. Section 1962(c) reaches employees and persons already associated with the enterprise and prohibits them from conducting its affairs through a pattern of racketeering activity. The statute also provides severe mandatory forfeiture penalties for a section 1962 violation. 18 U.S.C. § 1963(a).2
The gravamen of a section 1962(d) RICO offense is not a conspiracy to commit bribery or some other predicate offense, but a conspiracy to operate or participate in the conduct of the affairs of an enterprise through a pattern of racketeering activity. The enterprise concept, a distinct element, is the focus of the RICO crime. “Although the provisions create a cluster of substantive offenses, a RICO violation, broadly speaking, arises from the use of power, acquired by crime, to gain or maintain a foothold in an enterprise that operates in interstate commerce.” Bridges, Private RICO Litigation Based Upon “Fraud in the Sale of Securities,” 18 Ga.L.Rev. 43, 48 (1983) (hereinafter cited as “Private RICO Litigation”) (footnote omitted). Thus, the court of appeals in United States v. Mandel, 591 F.2d 1347 (4th Cir.), vacated on other grounds, 602 F.2d 653 (1979) (in banc) (district court’s order granting judgment N.O.Y. on the RICO charge undisturbed), cert. denied, 445 U.S. 961, 100 S.Ct. 1647, 64 L.Ed.2d 236 (1980), approved the district court’s holding “that the ‘conduct or participate’ language in section 1962(c) required some involvement in the operation or management of the business ____” 591 F.2d at 1376 (emphasis added). Section 1962(c) “requires more than merely some connection or even a ‘substantial nexus’ between a lawful enterprise and the prohibited pattern of racketeering.” United States v. Webster, 639 F.2d 174, 185 (4th Cir.), cert. denied, 454 U.S. 857, 102 S.Ct. 307, 70 L.Ed.2d 152 (1981), modified 669 F.2d 185 (1982).
In discussing what constitutes a conspiracy under RICO, this court in United States v. Riccobene, 709 F.2d 214 (3d Cir.), cert. denied, — U.S.-, 104 S.Ct. 157, 78 L.Ed.2d 145 (1983), reasoned that:
An agreement merely to commit the predicate offenses would not be sufficient to support a RICO conspiracy. Nor is it sufficient if the defendants merely participate in the same enterprise____ This is so because, under RICO, it is an agreement “to conduct or participate ... in the conduct of [an] enterprise’s activities” through the commission of predicate offenses that is prohibited, not an agreement to commit a pattern of racketeering activity alone.
Id. at 224. This statement in Riccobene reflects the fear that Congress had that organized crime could obtain a foothold in the commerce and industry of the country and from there “intimidate all competition out of the market. The results of this *231activity would be the typical antitrust vices of monopolization, price fixing and so forth.” Private RICO Litigation, supra, at 70. These concerns were expressed during the Senate and House hearings. Id. at 70, n. 136. In United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981), the Supreme Court recognized that a great concern of Congress in enacting RICO was “the infiltration of legitimate businesses,” id. at 592-93, 101 S.Ct. at 2533, and resolved a much disputed question by holding that the statute also reached the operation and management of criminal enterprises.
IV.
In this case, the indictment charges that Schwartz conspired to conduct and participate in the conduct of the affairs of an enterprise — the Criden, Johanson, Dolan, Morrissey & Cook law firm — through a pattern of racketeering activity. Proof of an agreement only to participate in a conspiracy to commit two or more predicate crimes of bribery is insufficient to establish a RICO violation. “More specifically, to convict for conspiracy to violate RICO the government must prove that the person objectively manifested, through words or actions, an agreement to participate in the conduct of the affairs of the enterprise through the commission of two or more predicate crimes.” United States v. Martino, 648 F.2d 367, 394 (5th Cir.), cert. denied, 456 U.S. 949, 102 S.Ct. 2020, 72 L.Ed.2d 474 (1982). Accord United States v. Winter, 663 F.2d 1120, 1136 (1st Cir.1981), cert. denied, — U.S.-, 103 S.Ct. 1249, 75 L.Ed.2d 479 (1983). And under United States v. Mandel, supra, the required proof must demonstrate “some involvement in the operation or management of the business.” 591 F.2d at 1375.
Applying these principles of RICO construction, this court held in United States v. Provenzano, 688 F.2d 194, 200 (3d Cir.), cert. denied, 459 U.S. 1071, 103 S.Ct. 492, 74 L.Ed.2d 634 (1982), that a union officer who accepted bribes in exchange for the union’s countenancing of the violations by employers of collective bargaining agreements was conducting union affairs through a pattern of racketeering activity. It was the conduct of the union office that provided the requisite element for the RICO offense. The court observed, however, that “when the predicate acts are unrelated to the enterprise or the actor’s association with it [then] the nexus element is missing, and consequently there is no RICO violation.” Id. at 200. I read this language to mean that the predicate acts must be related to managing or participating in the operation of the affairs of the enterprise. The evidence does not support such a conspiracy here.
The Government might have proven that Schwartz, as president of the City Council, had conspired to conduct the affairs of the Council through a pattern of racketeering activity.3 United States v. Frumento, 563 F.2d 1083 (3d Cir.1977), cert. denied, 434 U.S. 1072, 98 S.Ct. 1256, 1258, 55 L.Ed.2d 775, 776 (1978), could have been an analogue for such an indictment and prosecution. The Government, however, chose to indict Schwartz and Jannotti for conspiracy to conduct and participate in the conduct of the Criden, Johanson, Dolan, Morrissey & Cook law firm. There is nothing to show that Schwartz was even in the firm’s office, or that he used its telephones, library, or facilities. The pertinent evidence does not prove that Schwartz had any intention or objective of conspiring to conduct or participate in the conduct of the affairs of that firm.
Further, although Criden, a partner in the firm, played a key role in inducing Schwartz to accept the bribe, the evidence demonstrates that Criden was acting in his personal capacity — not as a member of the *232law firm — to pick up some fast money by merely introducing the agents to Schwartz, Jannotti, and Johanson. None of these meetings was concerned with the conduct of the affairs of the law firm. Not one bit of evidence was introduced to show any firm record of any transaction pertaining to the conspiracy to bribe. The firm never opened a record, or made a note in connection with the transactions, despite its usual practice of opening a file whenever a matter became firm business. True, Criden and Johanson shared some of the money with Cook, a partner, but they shared the money among themselves and not with the firm. They placed the funds in a special safe deposit box. Neither the monies they received, nor the safe deposit box in which they stored the cash, were registered with the firm. The safe deposit box, opened the year before, had been registered in the individual names of Criden and Cook and only they had access to it. They later added Johanson’s name. The record demonstrates that the box did not belong to the firm.4
The record discloses that at all times Criden acted on his own — not in his capacity as a member of the law firm — in dealing with Wald and his mythical sheik. Criden engaged in a pattern of racketeering activity for Criden personally, not in behalf of the law firm or in the name of the law firm. He involved Johanson in his capacity as a member of the City Council, not in his role as a member of the law firm. He sought nothing from Johanson that involved the firm. Although he directed Cook to withdraw $3,000 from the safe deposit box, Criden instructed Cook that this money was to be advanced to pay bills of the firm.5 This “advance” by Criden to meet a cash shortage in the firm is hardly evidence that Schwartz conspired to conduct the firm’s affairs “through a pattern of racketeering activity.”
Even if Criden were engaged in RICO racketeering activity, Schwartz’s and Jannotti’s limited association with him does not ipso facto make them guilty of a RICO conspiracy unless they conspired with him to violate the substantive provisions of section 1962(c). Although Schwartz’s betrayal of the public trust is indefensible, his recommendation of a law firm to represent the sheik does not expand a conspiracy to violate the Hobbs Act into a RICO conspiracy. Wald asked Schwartz to “suggest” a law firm to handle legal work for his principal and Schwartz gave him the names of the firm of Blank, Rome and the firm of Wolf, Block, Schorr & Solis-Cohen. Wald made no selection but Criden intended to push the legal business to Blank, Rome, perhaps in the hope that he might obtain a “referral fee.” During a luncheon a week later with a Blank, Rome partner, Schwartz mentioned the recommendation that he had made in connection with the projected hotel complex and suggested that Criden might want to participate in fees. The evidence shows that Criden’s expectation of a financial benefit from the legal work presumably to be accomplished by Blank, Rome was not for any legal services to be performed by Criden or his law firm, but was merely a form of “referral fee” to accrue to him personally. Furthermore, as Schwartz *233pointed out in his luncheon conversation, “Mr. Criden’s firm could not participate in the legal representation of this enterprise, nor could Mr. Criden.” The suggestion of the Blank, Rome or Wolf, Block law firms is not evidence of any intention by Schwartz to conduct the affairs of the Criden, Johanson firm.
There is not the slightest evidence that Schwartz conspired to conduct the affairs of the firm when he accepted a payoff from Wald. The purpose of the January 23 meeting with Schwartz was solely to have him accept a personal bribe. The separate meetings with Johanson and Jannotti had a similar purpose. The undercover agents enlisted Criden’s services only because they knew from their prior Abscam dealings with him that he would be a willing tool in setting up Philadelphia councilmen for the bribery “sting.” Even though Criden did not know Schwartz or Jannotti, he contrived to meet them and separately introduce them to the agents to advance the bribery plans. In each instance, the councilmen were on venal journeys of their own; none of the journeys entailed conducting the affairs of the firm of Criden, Johanson, Dolan, Morrissey & Cook. Rather than revealing a conspiracy to conduct the affairs of the firm through a pattern of racketeering activity, the record shows that the essence of the conspiracy was to bribe Schwartz and Jannotti in return for illegal favors from the City Council.
V.
In conclusion, I would affirm the conviction of the appellants under the Hobbs Act. I would reverse Schwartz’s conviction under the RICO Act and remand to the district court with directions to dismiss count II (the RICO count) of the indictment.

. "Title IX is aimed at removing organized crime from our legitimate organizations ____ Unless an individual not only commits such a crime but engages in a pattern of such violations, and uses that pattern to obtain or operate an interest in an interstate business, he is not subject to the proceedings under Title IX." 116 Cong.Rec. 585 (1970) (emphasis added), quoted in Note, Organized Crime and the Infiltration of Legitimate Business: Civil Remedies for “Criminal Activity,” 124 U.Pa.L.Rev. 192, 205 n. 74 (1975).

. “A close reading of § 1962 ... reveals that subsections (a), (b), and (c) are designed to work together to deal with the three different ways in which organized crime infiltrates and corrupts legitimate organizations____ All three sections considered together represent a unified plan to deal with the infiltration of legitimate organizations." Note, Elliott v. United States: Conspiracy Law and the Judicial Pursuit of Organized Crime through RICO, 65 Va.L.Rev. 109, 117 (1979); see H.R.Rep. No. 1549, 91st Cong., 2d Sess., reprinted in 1970 U.S.Code Cong. & Ad.News 4007, 4033.

. Evidence in support of such a conspiracy might have been found in a meeting between Criden, Schwartz, and Jannotti prior to Jannotti's meeting with Wald. Schwartz advised Jannotti that these "people ... want to be assured that they are not going to have any problems, they want your support, want you to go up with [Criden] tonight and meet these people tonight and get your 10 thou, okay.” In addition, Cook testified that Criden gave Schwartz some money for introducing Criden to Jannotti.

. Cook testified on cross examination:
Q: And when that safe deposit box was opened, it was not opened in the name of the law firm of Criden, Johanson, Dolan, Morrissey & Cook, is that correct?
A: Yes sir.
Q: And, specifically, what was the name under which that safety deposit box was opened when it was initially opened?
A: I don’t know. It was Criden and Cook, or through Criden & Ellis Cook, but was the two of us.
Q: Whichever one it was specifically not in the name of the firm, but in the name of you and Mr. Criden?
A: Yes sir.
it * it it it it
Q: And at no time was that box in the name of — I don’t want to repeat that whole long name of the law firm—
A: No, it was not sir.
(621 A)

. These funds were not transmitted to the law firm as fees or income, as the majority seems to suggest, supra at 227 n. 4, but were merely a unilateral “advance" by Criden personally.