Court Opinion

ID: 2964828
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:31:44.670964+00
Date Added: 2024-06-11T15:02:01.606337
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                 ____________________

        No. 96-2286

                                    UNITED STATES,

                                      Appellee,

                                          v.

                                 STANTON D. SHIFMAN,

                                Defendant, Appellant.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                     [Hon. Robert E. Keeton, U.S. District Judge]
                                             ___________________

                                 ____________________

                                        Before

                                Torruella, Chief Judge,
                                           ___________

                           Campbell, Senior Circuit Judge,
                                     ____________________

                              and Boudin, Circuit Judge.
                                          _____________
                                 ____________________

            Paul G. Holian for appellant.
            ______________
            Donald C. Lockhart, Trial Attorney, with whom Donald K. Stern,
            __________________                            _______________
        United States Attorney, were on brief for appellee. 

                                 ____________________

                                   August 19, 1997
                                 ____________________

                      CAMPBELL, Senior Circuit Judge.  Stanton Shifman
                                ____________________

            challenges his convictions on charges arising out of an

            illegal loan-sharking operation run by Joseph A Yerardi, Jr. 

            He argues, inter alia, that there was insufficient evidence

            to support the convictions.

                                          I.

                      Stanton Shifman and nine others were indicted on

            October 14, 1993 for multiple offenses based on their

            involvement in an illegal gambling and loan-sharking

            operation.  Shifman, whose activities pertained only to the

            loan-sharking side of the operation, was charged with

            violation of, and conspiracy to violate, the Racketeer

            Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C.

               1962(c) & (d).  He was also charged with four counts of

            aiding and abetting the making of extortionate extensions of

            credit, 18 U.S.C   892(a), and a single count of aiding and

            abetting the collection of an extension of credit by

            extortionate means, 18 U.S.C   894(a).  

                      Shifman was tried separately from the others.  The

            government's evidence consisted primarily of the testimony of

            the alleged victims of the loan-sharking activities, seized

            records of loans, and admissions made by Shifman to law

            enforcement officials.  We recite the facts in the light most

            favorable to the verdicts being appealed.  United States v.
                                                       _____________

            Valerio, 48 F.3d 58, 63 (1st Cir. 1995).
            _______

                                         -2-

                      Joseph Yerardi operated a large-scale gambling and

            loan-sharking enterprise that made loans to borrowers at

            weekly interest rates of from 3 percent to 5 percent.  These

            rates translate into annual interest rates of from 153

            percent to 260 percent.  The maximum legal annual rate

            allowed in Massachusetts is 20 percent.  Mass. Gen. Laws. ch.

            271,   49.    

                      Shifman first came into contact with Yerardi when

            he needed the loan shark's services because of his own

            mounting debts.  Shifman subsequently borrowed from Yerardi

            numerous times and on each occasion made interest payments of

            3 percent or 4 percent a week.  At times, Shifman fell behind

            in his weekly payments and was threatened with physical

            injury by a Yerardi employee, Jack Murphy, also known as Jack

            Kelley.  At some point, Yerardi encouraged Shifman to refer

            anyone he knew in need of money to Yerardi.  In return for

            these referrals, which totaled approximately ten over a

            twelve to sixteen month period, Shifman received either fees

            from the borrowers or "points"    a reduction in the interest

            rate on his loan    from Yerardi.  Lieutenant-Detective

            William McDermott testified that Shifman admitted to him that

            Yerardi would reduce his debt after he referred a customer

            who proceeded to take out a loan from Yerardi.

                      Much of the testimony came from the borrowers, Mark

            LaChance, Gerald Moore, Craig Inge, Randall Gasbarro, and

                                         -3-

            Paul Mahoney, whose loans were all documented by entries in

            the records seized from Yerardi.  

                      LaChance testified that he approached Shifman, who

            he knew to be in the mortgage business, for legitimate

            financing on his construction equipment.  Shifman told him

            the financing would come through without a problem.  After

            weeks of waiting, LaChance, desperately in need of money,

            approached Shifman for help in obtaining a short-term loan. 

            Shifman referred LaChance to Yerardi, clearly conveying that

            Yerardi was a loan shark.  The legitimate financing Shifman

            was allegedly procuring for LaChance never materialized.

                      Gerald Moore testified that he too was introduced

            to Yerardi by Shifman.  He also testified that he was paying

            4 percent interest a week on the money he borrowed from

            Yerardi, and that he knew that he could be physically hurt if

            he didn't repay the money.  Moore gave a portion of the

            proceeds of his loan from Yerardi to Shifman.  At one point,

            when Moore was behind in his payments, Jack Murphy and two

            other men visited Moore on Yerardi's behalf and attempted to

            break Moore's hand.

                      Craig Inge testified that he went to Shifman with

            the hope of obtaining legitimate financing for his video

            business.  When the financing failed to materialize, Shifman

            referred Inge to Yerardi.  Shifman represented that the loan

            with Yerardi would serve only to meet Inge's needs until the

                                         -4-

            legitimate financing came through.  Again, the legitimate

            financing never materialized.  Inge paid Shifman $1,000 from

            the money he borrowed from Yerardi for what Shifman described

            as a fee for his services.

                      Randall Gasbarro and Paul Mahoney both testified

            that Shifman referred them to Yerardi.  They both understood,

            from Shifman's description, that Yerardi was a loan shark. 

            Both men testified that they were paying 3 percent interest a

            week on the money they borrowed from Yerardi.  Mahoney

            testified that he gave a portion of the money he borrowed

            from Yerardi to Shifman.

                      Another witness, Paul Terranova, testified that he

            approached Shifman for a second mortgage on his home.  When

            the mortgage didn't come through, Shifman referred Terranova

            to Yerardi suggesting that the loan would be a short-term

            loan to tide him over until the mortgage came through.  He

            also testified that he paid Shifman approximately $2,500, and

            that the mortgage never came through, causing him to remain

            indebted to Yerardi. 

                      Shifman himself testified that he gave numerous

            people Yerardi's telephone number, and that these people

            would not have known about Yerardi, nor would they have taken

            out extortionate loans from Yerardi, had he not referred

            them.  Shifman testified to knowing Yerardi to be a loan

                                         -5-

            shark, and that people could be physically injured if they

            did not repay the loans from Yerardi.

                      The jury found Shifman guilty of both violating

            RICO and conspiring to violate RICO.  The jury also found

            Shifman guilty on all four counts of aiding and abetting the

            making of extortionate extensions of credit.  The jury

            acquitted Shifman on the charge that he had aided and abetted

            the collection of an extension of credit by extortionate

            means.  Shifman was sentenced to 51 months imprisonment. 

            This appeal followed.

                                         II.

            A.   Sufficiency of the Evidence
                 ___________________________

                      Shifman contends that the evidence was insufficient

            as a matter of law to support his convictions.  "In reviewing

            sufficiency claims, we consider the evidence 'in the light

            most favorable to the prosecution' and then ask whether the

            evidence 'would allow a rational jury to determine beyond a

            reasonable doubt that the defendant[] w[as] guilty as

            charged.'"  United States v. Hurley, 63 F.3d 1, 11 (1st Cir.
                        _____________    ______

            1995)(quoting United States v. Mena Robles, 4 F.3d 1026, 1031
                          _____________    ___________

            (1st Cir. 1993)), cert. denied, __ U.S. __, 116 S. Ct. 1322
                              ____________

            (1996).  

                 1.   The RICO Counts
                      _______________

                      For a defendant to be found guilty of a substantive

            RICO violation, the government must prove beyond a reasonable

                                         -6-

            doubt that (1) the "enterprise affect[ed] interstate or

            foreign commerce, (2) that the defendant under consideration

            associated with the enterprise, (3) that [the] defendant

            participated in the conduct of the enterprise's affairs, and

            (4) that [the] defendant's participation was through a

            pattern of racketeering activity."   Aetna Cas. Sur. Co. v. P
                                                 ___________________    _

            & B Autobody, 43 F.3d 1546, 1558 (1st Cir. 1994).1
            ____________

                      For a defendant to be found guilty of conspiring to
                                                            __________

            violate RICO, the government must prove "(1) the existence of

            an enterprise affecting interstate commerce, (2) that the

            defendant knowingly joined the conspiracy to participate in

            the conduct of the affairs of the enterprise, (3) that the

            defendant participated in the conduct of the affairs of the

            enterprise, and (4) that the defendant did so through a

            pattern of racketeering activity by agreeing to commit, or in

            fact committing, two or more predicate offenses."  Id. at
                                                               ___

            1561.

                      Hence liability for a substantive RICO violation

            under   1962(c) and liability for a RICO conspiracy violation

            under   1062(d) rest on very similar elements.  There are,

            however, two notable differences.  As stated in Aetna:
                                                            _____

                                
            ____________________

            1.  Aetna dealt with a civil RICO claim, but it is
                _____
            appropriate to rely on civil RICO precedent when analyzing
            criminal RICO liability.  The standard is the same for both
            criminal and civil RICO violations.  See 18 U.S.C.   1962. 
                                                 ___
            The RICO Act differentiates between criminal and civil
            liability by providing for criminal penalties in 18 U.S.C.  
            1963, and civil remedies in 18 U.S.C.   1964.  

                                         -7-

                      The major difference between a violation
                      of   1962(c) itself . . . and a violation
                      of   1962(d) based on   1962(c) . . . is
                      the additional required element that the
                      defendant knowingly joined a conspiracy
                      to violate   1962(c).  Another difference
                      is that, to prove that a defendant
                      violated   1962(c), it is necessary for
                      the plaintiff to prove two predicate
                      offenses; under   1962(d), in contrast,
                      this is not an element required to be
                      proved.  To prove a violation of  
                      1962(d), it is enough to prove that a
                      defendant agreed with one or more others
                                ______
                      that two predicate offenses be committed.

            Id. at 1562.   
            ___

                      a.   The Substantive RICO Violation
                           ______________________________

                           i.   Affecting Interstate Commerce
                                _____________________________

                      Shifman does not challenge the adequacy of the

            proof that Yerardi's loan-sharking enterprise affected

            interstate commerce.  

                          ii.   Association with the Enterprise
                                _______________________________

                      The second element of the substantive RICO violation

          is "that the defendant under consideration associated with the

          enterprise."  Id. at 1558.  The jury could reasonably have found
                        ___

          from the evidence presented that Shifman deliberately associated

          himself with Yerardi's enterprise.  Not only did Shifman himself

          borrow from Yerardi, he referred borrowers to Yerardi with the

          goal of obtaining either a reduction in the interest rate on his

          own debt to Yerardi, or a cash fee from the borrower.  Infra.
                                                                 _____

                         iii.   Participation in the Conduct
                                ____________________________

                                         -8-

                      The third element of the substantive RICO violation

          under   1962(c) requires that the defendant have participated in

          the conduct of the enterprise's affairs.  The Supreme Court has

          interpreted the phrase "to participate in the conduct of the

          enterprise's affairs" to mean participation in the operation or

          management of the criminal enterprise.  See Reves v. Ernst &
                                                  ___ _____    _______

          Young, 507 U.S. 170, 185 (1993).  Appellant argues that there was
          _____

          insufficient evidence for the jury to find that his conduct met

          the "operation or management" test.  We disagree.

                      Reves differs from the present case in that it
                      _____

          addressed the civil RICO liability of an independent adviser

          outside of the RICO enterprise's chain of command.  The Supreme

          Court held in Reves that an accounting firm employed by the
                        _____

          enterprise could not be held civilly liable under RICO for

          preparing an inaccurate accounting statement as it had not

          "participate[d] in the operation or management of the enterprise

          itself."  Id.  Respecting Reves, we have said:
                    ___             _____

                      Special care is required in translating
                      Reves' concern with "horizontal"
                      _____
                      connections--focusing on the liability of
                      an outside adviser--into the "vertical"
                      question of how far RICO liability may
                      extend within the enterprise but down the
                      organizational ladder.  In our view, the
                      reason the accountants were not liable in
                      Reves is that, while they were undeniably
                      _____
                      involved in the enterprise's decisions,
                      they neither made those decisions nor
                      carried them out; in other words, the
                      accountants were outside the chain of
                      command through which the enterprise's
                      affairs were conducted.

                                         -9-

          United States v. Oreto, 37 F.3d 739, 750 (1st Cir. 1994).
          _____________    _____

                      We have held, post-Reves, however, that a defendant
                                         _____

          who is "plainly integral to carrying out" the enterprise's

          activities may be held criminally liable under RICO."  See id.  
                                                                 ___ ___

                      In the present case, Shifman was "plainly integral to

          carrying out" Yerardi's loan-sharking plans.  There was evidence

          that Yerardi encouraged Shifman to refer persons in need of money

          to the enterprise and that Shifman did so on a number of

          occasions.  The evidence was plain that Shifman knew Yerardi to

          be engaged in illegal loan-sharking operations, that Shifman gave

          Yerardi's number to many people, and that the victims would not

          have known of Yerardi had Shifman not referred them.  Shifman,

          moreover, could be found to have "set up" certain victims so as

          to make it more likely they would borrow from Yerardi.  He did

          this by first promising legitimate financing, and when this was

          not forthcoming, and they were desperate, offering them Yerardi's

          services.  The evidence also supported a finding that Shifman

          benefitted financially from the transactions by either receiving

          points on his debt to Yerardi, or else obtaining fees from the

          borrowers.

                      The jury could infer that, but for Shifman's

          referrals, the extortionate loans to LaChance, Moore, Inge,

          Gasbarro, and Mahoney would not have taken place, and that these

          referrals were calculated and regular efforts taken by Shifman on

          behalf of the Yerardi enterprise.  We are satisfied there was

                                         -10-

          sufficient proof of Shifman's participation in the conduct of the

          enterprise's affairs, albeit at a relatively low level, to

          support the verdict. 

                      iv.  Pattern of Racketeering Activity
                           ________________________________

                      The final element for substantive RICO liability is

          that the defendant's participation was through a "pattern of

          racketeering activity."

                      In order to have engaged in a "pattern" of

          racketeering activity, a defendant must have committed at least

          two racketeering acts within ten years of one another.  See 18
                                                                  ___

          U.S.C.   1961(5).  These acts must be related and "amount to or

          pose a threat of continued criminal activity."  H.J. Inc. v.
                                                          _________

          Northwestern Bell Telephone Co., 492 U.S. 229, 239 (1989).  
          _______________________________

                      The definition of "racketeering activity" includes

          making or conspiring to make an extortionate extension of credit. 

          See 18 U.S.C.   1961(1) (defining "racketeering activity" in part
          ___

          as including an offense indictable under 18 U.S.C.   892, which

          bans the making of extortionate extensions of credit).  Aiding

          and abetting one of the activities listed in   1961(1) as

          racketeering activities makes one punishable as a principal and

          amounts to engaging in that racketeering activity.  See 18 U.S.C.
                                                              ___

            2.2

                                
            ____________________

            2.   (a) Whoever commits an offense against the United States
            or aids, abets, counsels, commands, induces or procures its
            commission, is punishable as a principal.
                 (b) Whoever willfully causes an act to be done which if
            directly performed by him or another would be an offense

                                         -11-

                      In this case, the racketeering acts that formed the

          basis of Shifman's RICO conviction were the four extortionate

          credit transactions he was convicted of aiding and abetting. 

          Shifman contends there was insufficient evidence from which to

          find that he committed these racketeering acts.

                      In order to convict Shifman of aiding and abetting

          the making of extortionate extensions of credit, the government

          had to prove Shifman aided and abetted "[a]ny extension of credit

          with respect to which it is the understanding of the creditor and

          the debtor at the time it is made that delay in making repayment

          or failure to make repayment could result in the use of violence

          or other criminal means to cause harm to the person, reputation,

          or property of any person."  18 U.S.C.   891(6).

                      A basic element of aiding and abetting is proof "that

          the defendant consciously shared the principal's knowledge of the

          underlying criminal act, and intended to help the principal." 

          United States v. Taylor, 54 F.3d 967, 975 (1st Cir. 1995).   
          _____________    ______

                      The present record provided sufficient evidence for

          the jury to find that Shifman aided and abetted the making of the

          four extortionate extensions of credit.  

                      There was ample evidence that Yerardi's loans to

          LaChance, Moore, Gasbarro, and Mahoney were extortionate.  The

          jury could infer an understanding between Yerardi and the

                                
            ____________________

            against the United States, is punishable as a principal.
            18 U.S.C.   2.

                                         -12-

          borrowers that if a borrower delayed in repaying, violence would

          be used to force repayment.  The rate of interest on the loans

          far exceeded the legal rate; legal collection means were

          unavailable.  LaChance, Moore, Gasbarro, and Mahoney all

          testified to knowing that Yerardi was a loan shark.  LaChance and

          Gasbarro were each told by Shifman that Yerardi was a hard money

          lender, and that they should be aware of what type of person they

          were dealing with.  Both understood this to mean that Yerardi was

          a loan shark.  Moore was warned by Yerardi himself that violence

          would ensue if he did not make his payments on time.  Mahoney

          testified that he understood Yerardi's business, as Shifman

          explained it, to be loan-sharking.  Mahoney also understood that

          loan sharks would use force to collect payment.  From this

          evidence the jury was entitled to find that there was an

          understanding between Yerardi and the borrowers that violence

          would be used if they failed to make their loan repayments.  

                      There was also sufficient evidence at trial for the

          jury to find beyond a reasonable doubt that Shifman aided and

          abetted the making of these extortionate loans.  Shifman knew

          that the loans Yerardi would make to the borrowers Shifman

          referred to him would be extortionate, having himself borrowed

          from Yerardi at an illegal rate of interest and, when he fell

          behind, having been threatened with violence by Yerardi's

          henchmen.  Shifman informed the borrowers of the realities of

          doing business with Yerardi, with its potential for violence.  It

                                         -13-

          could be inferred that Shifman referred the borrowers to Yerardi

          fully expecting them to take out loans from him.  There was also

          evidence, as explained above, that Shifman was actively helping

          Yerardi find new borrowers in order to gain fees from the

          borrowers or a reduction in the interest rate on his outstanding

          debt to Yerardi.  Accordingly, the jury was warranted in

          concluding that Shifman knowingly rendered tangible aid to

          Yerardi's loan-sharking activities and was desirous, in the case

          of the four borrowers, that those illegal activities succeed. 

          The jury's finding that Shifman was guilty of aiding and abetting

          the extortionate extensions of credit involving these four men

          was amply supported. 

                      b.   The RICO Conspiracy
                           ___________________

                           i.   Affecting Interstate Commerce
                                _____________________________

                      As noted, Shifman does not challenge the sufficiency

          of the evidence offered to prove that Yerardi's enterprise

          affected interstate commerce.

                          ii.   Knowingly Joining the Conspiracy
                                ________________________________

                      The second element of the conspiracy charge requires

          that the defendant "knowingly joined the conspiracy to

          participate in the conduct of the affairs of the enterprise." 

          Aetna, 43 F.3d at 1561.  "All that is necessary to prove this
          _____

          element of the RICO conspiracy . . . is to prove that [the

          defendant] agreed with one or more co-conspirators to participate

          in the conspiracy."  Id. at 1562.  The evidence showed an
                               ___

                                         -14-

          agreement between Yerardi and Shifman for the latter to refer

          borrowers to Yerardi.  The evidence also supported a finding of

          an understanding between Yerardi and Shifman that, at least in

          some cases, if Shifman referred a borrower to Yerardi who

          proceeded to take out a loan his own debt would be reduced. 

          There was clearly sufficient proof of an agreement between

          Shifman and a co-conspirator for the former to have joined in the

          conspiracy.

                         iii.   Participation in the Conduct
                                ____________________________

                      This element is identical to the third element of the

          substantive RICO violation.  As indicated in our discussion of

          that element, supra, there is sufficient evidence to prove this
                        _____

          element of the RICO conspiracy count.

                          iv.   Pattern of Racketeering Activity
                                ________________________________

                      The fourth element of the RICO conspiracy violation

          is met if the defendant agrees to commit or actually commits two

          or more acts of racketeering activity.  As discussed under the

          substantive RICO violation section, there was sufficient evidence

          for the jury to find that Shifman committed four of the charged

          racketeering acts.  Accordingly, the fourth element is met.  

                 2.   Aiding and Abetting Extortionate Extensions of Credit
                      _____________________________________________________

                      Appellant contends that there was insufficient

          evidence to convict him of the four substantive counts of aiding

          and abetting the extortionate extensions of credit.  We have

                                         -15-

          already considered and rejected this argument in the course of

          discussing the substantive RICO violations, supra.
                                                      _____

          B.     Miscellaneous Trial Issues
                 __________________________

                 1.   The Cooperation Evidence

                      Appellant argues that the court erroneously excluded

          certain evidence showing his cooperation with government

          authorities; that the court unduly limited his counsel's opening

          statement; and that the pretrial stipulation that the government

          would not attempt to show that Shifman participated in Yerardi's

          enterprise after he began cooperating with law enforcement

          officials in June of 1991 should have been read to the jury.  All

          these matters, Shifman argues, tended to show a "consciousness of

          innocence" that he should have been able to place before the

          jury.  We find no reversible error.

                      Turning first to the cooperation evidence, the jury

          was ultimately allowed to hear and to consider extensive evidence

          of Shifman's cooperation with law enforcement officials.  It is

          not clear to us that the court excluded any significant amount of

          this evidence.  We see no abuse of discretion in the court's

          handling of the cooperation evidence.

                      As for the alleged restriction on defense counsel's

          opening statement, we found no such restriction in the record. 

          The court merely stated:

                      I'm not going to preclude [appellant's
                      attorney] from saying what he wishes in
                      light of what I have said previously,
                      that of course I have instructed and will

                                         -16-

                      instruct the jury again that what counsel
                      says in opening statement is not
                      evidence, and if he makes any promises to
                      offer in evidence something that I have
                      not ruled on, he's doing it at his peril.

          We see nothing improper in these remarks.

                      Regarding the stipulation, appellant argues that it

          should have been read to the jury after the government said in

          its opening statement that Shifman told authorities "half the

          story."  The government plausibly argues, however, that the "half

          the story" remark had to do with Shifman's pre-June conduct,

          unrelated to the stipulation.  Shifman, however, did not then

          request that the stipulation be read at trial, so we review for

          plain error.  Fed. R. Crim. P. 52(b).  Under the plain error

          standard of review, appellant bears "the burden of persuasion" to

          establish that there was an error, that the error was "clear" or

          "obvious," and that the error "affect[ed] substantial rights." 

          United States v. Olano, 507 U.S. 725, 734 (1993).  
          _____________    _____

                      We do not see how the district court's failure, on

          its own initiative, and without request, to read the pretrial

          stipulation to the jury amounted to an error of any kind.  Nor

          has appellant met the burden of showing prejudice under Rule

          52(b).3  In accordance with the stipulation, he was not

          prosecuted for any offenses after his cooperation with law

          enforcement officials began in June of 1991.  The government

                                
            ____________________

            3.  Normally, "the defendant must make a specific showing of
            prejudice to satisfy the 'affecting substantial rights' prong
            of Rule 52(b).  Olano, 507 U.S. at 735.
                            _____

                                         -17-

          presented evidence pertaining to Shifman's conversations with

          police after June, but only to rebut Shifman's direct testimony

          concerning these conversations and his state of mind during the

          alleged offenses.  We find no prejudice to Shifman from the

          district judge's failure to advise the jury of the stipulation.   

                 2.   The Response to the Jury Question
                      _________________________________

                      Appellant contends that the court erred when, with

          his counsel's approval, it referred the jury to the written jury

          instructions in response to a question about conducting or

          participating in an enterprise's affairs.  The government

          responds that Shifman waived any objection to the answer when his

          attorney explicitly agreed to the district judge's response to

          the jury question.  See United States v. Rojo-Alvarez, 944 F.2d
                              ___ _____________    ____________

          959, 971 (1st Cir. 1991) (holding that there was waiver when

          defense counsel stated he was satisfied with the reworded

          instruction); see also United States v. Lakich, 23 F.3d 1203 (7th
                        ___ ____ _____________    ______

          Cir. 1994) (holding that there was waiver when counsel explicitly

          agreed to the court's instruction).  But see United States v.
                                               _______ _____________

          Marder, 48 F.3d 564, 571 (1st Cir. 1995) (waiver in these
          ______

          circumstances is an open question), cert. denied, 514 U.S. 1056
                                              ____________

          (1995).  Regardless whether an actual waiver took place, we see

          nothing even remotely close to an error meeting the plain error

          standard. 

                      Affirmed.
                      ________

                                         -18-